The Foreign Service Journal, January-February 2021

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2021 81 ILLINOIS Illinois does not tax U.S. government pensions, TSP distributions or Social Secu- rity. State sales tax is 6.25 percent. Local additions can raise sales tax to 11 percent in some jurisdictions. INDIANA Social Security is excluded from taxable income. All other retirement income is taxed at the flat 3.23-per- cent Indiana income tax rate. Sales tax and use tax is 7 percent. IOWA Generally taxable. A married couple with an income for the year of less than $32,000 may file for exemption, if at least one spouse or the head of household is 65 years or older on Dec. 31; single persons who are 65 years or older on Dec. 31 may file for an exemption if their income is $25,000 or less. Social Security is excluded from taxable income. Statewide sales tax is 6 percent; local option taxes can add up to another 2 percent. KANSAS U.S. government pensions are not taxed. There is an extra deduction of $850 if over age 65. Other pensions are fully taxed along with income from a 401(k) or IRA. Social Security is exempt if Federal Adjusted Gross Income is under $75,000. State sales tax is 6.5 percent, with additions of between 1 and 4 percent depending on jurisdiction. KENTUCKY Government pension income is exempt if retired before Jan. 1, 1998. If retired after Dec. 31, 1997, pension/annu- ity income up to $31,110 remains excludable depend- ing on date of retirement. Social Security is excluded from taxable income. Sales and use tax is 6 percent statewide, with no local sales or use taxes. LOUISIANA Federal retirement ben- efits are exempt from state income tax. There is an exemption of $6,000 of other annual retirement income received by any person age 65 or over. Married filing jointly may exclude $12,000. Social Security is excluded from taxable income. State sales tax is 4.5 percent with local additions up to a possi- ble total of 9.45 percent. Use tax is 8 percent regardless of the purchaser’s location. MAINE Recipients of a government- sponsored pension or annuity who are filing singly may deduct up to $10,000 ($20,000 for married filing jointly) on income that is included in their Federal Adjusted Gross Income, reduced by all Social Security and railroad benefits. For those age 65 and over, there is an additional standard deduction of $1,600 (filing singly) or $2,600 (married filing jointly). General sales tax is now 5.5 percent; 8 per- cent on meals and liquor. MARYLAND Those over 65 or perma- nently disabled, or who have a spouse who is permanently disabled, may under certain conditions be eligible for Maryland’s maximum pen- sion exclusion of $31,100 in tax year 2020. Also, all individuals 65 years or older are entitled to an extra $1,000 personal exemption in addition to the regular $3,200 personal exemption available to all taxpayers. Social Security is excluded from taxable income. See the worksheet and instructions in the Maryland Resident Tax Booklet. General sales tax is 6 percent; 9 percent on liquor. MASSACHUSETTS Federal pensions and Social Security are excluded from Massachusetts gross income. Each taxpayer over age 65 is allowed an additional $700 exemption on other income. Sales tax is 6.25 percent. MICHIGAN Federal, and state/local government pensions may be partially exempt, based on the year you were born and the source of the pension. (a) If born before 1946, pri- vate pension or IRA benefits included in AGI are partially exempt; public pensions are exempt. (b) If born after 1946 and before 1952, the exemption for public and private pen- sions is limited to $20,000 for singles and $40,000 for married filers. (c) If born after 1952, not eli- gible for any exemption until reaching age 67. Social Security is excluded from taxable income. Full details at: https://bit.ly/ michigan-retirement-guid- ance. Michigan’s state sales tax rate is 6 percent. There are no city, local or county sales taxes. MINNESOTA Social Security income is taxed by Minnesota to the same extent it is on your federal return. If your only income is Social Security, you would not be required to file an income tax return. All federal pensions are taxable, but single taxpayers who are over 65 or disabled may exclude some income if Fed- eral Adjusted Gross Income is under $33,700 and nontax- able Social Security is under $9,600. For a couple who are both over 65, the limits are $42,000 for Adjusted Gross Income and $12,000 for nontaxable Social Security. Statewide sales and use tax is 6.875 percent. A few cities and counties also add a sales tax, which can be as high as 8.375 percent. MISSISSIPPI Social Security, qualified retirement income from federal, state and private retirement systems, and income from IRAs are exempt from Mississippi tax. There is an additional exemption of $1,500 on other income if over age 65. Statewide sales tax is 7 percent.