The Foreign Service Journal, January-February 2019

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2019 87 NEW JERSEY Pensions and annuities from civilian government service are subject to state income tax, with exemptions for those aged 62 or older or totally and permanently dis- abled. However, see this link for the distinction between the “Three-Year Method” and the “General Rule Method” for contributory pension plans: http://www.state . nj.us/treasury/taxation/njit6. shtml. For 2018, qualifying singles and heads of house- holds may be able to exclude up to $45,000 of retirement income; those married filing jointly up to $60,000; those married filing separately up to $30,000 each. These exclusions are eliminated for New Jersey gross incomes over $100,000. Residents over 65 may be eligible for an additional $1,000 personal exemption. Social Security is excluded from taxable income. State sales tax is 6.675 percent. NEW MEXICO All pensions and annuities are taxed as part of Federal Adjusted Gross Income. Taxpayers 65 and older may exempt up to $8,000 (single) or $16,000 (joint) from any income source if their income is under $28,500 (individual filers) or $51,000 (married fil- ing jointly). The exemption is reduced as income increases, disappearing altogether at $51,000. New Mexico has a gross receipts tax, instead of a sales tax, of 5.125 percent; county and city taxes may add another 3.9375 percent. NORTH DAKOTA All pensions and annuities are fully taxed. Social Secu- rity is excluded from taxable income. General sales tax is 5 percent; 7 percent on liquor. Local jurisdictions impose up to 3 percent more. OHIO Retirement income is taxed. Taxpayers 65 and over may take a $50 credit per return. In addition, Ohio gives a tax credit based on the amount of the retirement income included in Ohio Adjusted Gross Income, reaching a maximum of $200 for any retirement income over $8,000. Social Security is excluded from taxable income. State sales tax is 5.75 percent. Counties and regional transit authorities may add to this, but the total may not exceed 8.75 percent. OKLAHOMA Individuals receiving FERS/ FSPS or private pensions may exempt up to $10,000, but not to exceed the amount included in the Federal Adjusted Gross Income. Since 2011, 100 percent of a federal pension paid in lieu of Social Security (i.e., CSRS and FSRDS—”old sys- tem”—including the CSRS/ FSRDS portion of an annuity paid under both systems) is exempt. Social Security included in FAGI is exempt. State sales tax is 4.5 percent. Local and other additions may bring the total up to 9.5 percent. NEW YORK Social Security, U.S. govern- ment pensions and annuities are not taxed. For those over age 59½, up to $20,000 of other annuity income (e.g., Thrift Savings Plan) may be excluded. See N.Y. Tax Publication 36 at https:// www.tax.ny.gov/pdf/publica- tions/income/pub36.pdf for details. Sales tax is 4 percent statewide. Other local taxes may add up to an additional 5 percent. NORTH CAROLINA Pursuant to the “Bailey” deci- sion (see http://dornc.com/ taxes/individual/benefits. html), government retire- ment benefits received by federal retirees who had five years of creditable service in a federal retirement system on Aug. 12, 1989, are exempt from North Carolina income tax. Those who do not have five years of creditable service on Aug. 12, 1989, must pay North Carolina tax on their federal annuities. In tax year 2014 and later, the $4,000 deduction is no lon- ger available. For those over 65, an extra $750 (single) or $1,200 (couple) may be deducted. Social Security is excluded from taxable income. State sales tax is 4.75 percent; local taxes may increase this by up to 3 percent. OREGON Generally, all retirement income is subject to Oregon tax when received by an Oregon resident. However, federal retirees who retired on or before Oct. 1, 1991, may exempt their entire federal pension; those who worked both before and after Oct. 1, 1991, must prorate their exemption using the instruc- tions in the tax booklet. If you are over age 62, a tax credit of up to 9 percent of taxable pension income is available to recipients of pension income, including most pri- vate pension income, whose household income was less than $22,500 (single) and $45,000 (joint), and who received less than $7,500 (single)/$15,000 (joint) in Social Security benefits. The credit is the lesser of the tax liability, or 9 percent of tax- able pension income. Social Security is excluded from taxable income. Oregon has no sales tax. PENNSYLVANIA Government pensions and Social Security are not sub- ject to personal income tax. Pennsylvania sales tax is 6 percent. Other taxing entities may add up to 2 percent.