The Foreign Service Journal, January-February 2022

THE FOREIGN SERVICE JOURNAL | JANUARY-FEBRUARY 2022 79 MISSOURI Missouri taxes all retirement income, including Social Security. Up to 65 percent of public pension income may be deducted if Missouri Adjusted Gross Income is less than $100,000 when married filing jointly or $85,000 for single filers, up to a limit of $39,014 for each spouse. The maximum private pension deduction is $6,000. You may also deduct 100 percent of Social Security income if over age 62 and Federal Adjusted Gross Income is less than the limits above. Sales tax is 4.225 percent; local sales and use tax additions may raise the total to 10.1 percent. MONTANA Montana taxes all pension and retirement income received while residing in Montana. Those over 65 can exempt an additional $800 of interest income for single taxpayers and $1,600 for married joint filers. For taxpayers with an AGI income under $25,000 (single filers) or $32,000 (joint filers), all Social Security retirement income is deductible. For taxpayers above those limits but below $34,000 (single filers) or $44,000 (joint filers), half of Social Security retirement income is deductible. Above those second-level limits, 15 percent is deductible. Mon- tana has no general sales tax, but tax is levied on the sale of various commodities. NEBRASKA U.S. government pensions and annuities are fully taxable. Social Security is taxable. State sales tax is 5.5 percent; local taxes may add another 2.5 percent. NEVADA No personal income tax. Sales and use tax varies from 6.85 to 8.1 percent, depending on local jurisdiction. NEW HAMPSHIRE No personal income tax. There is no inheritance tax. There is a 5-percent tax on interest/ dividend income over $2,400 for singles ($4,800 married filing jointly). A $1,200 exemp- tion is available for those age 65 or over. No general sales tax. Several services (pre- pared food, hotel rooms, etc.) are taxed at 9 percent. NEW JERSEY Pensions and annuities from civilian government service are subject to state income tax, with exemptions for those age 62 or older or totally and permanently disabled. See this link, however, for the distinction between the “Three-Year Rule Method” and the “General Rule Method” for contributory pension plans: https://bit.ly/new-jersey-tax- ation. Qualifying singles and heads of households may be able to exclude up to $75,000 of retirement income; those married filing jointly up to $100,000; those married fil- ing separately up to $50,000 each. These exclusions are eliminated for New Jersey gross incomes over $100,000. Residents over age 65 may be eligible for an additional $1,000 personal exemption. Social Security is excluded from taxable income. State sales tax is 6.625 percent. NEW MEXICO All pensions and annuities are taxed as part of Federal Adjusted Gross Income. Taxpayers age 65 or 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 filing jointly). The exemption is reduced as income increases, disappearing altogether at $51,000. State tax rate is 5.125 percent. Local taxes combined with state sales tax can be as high as just over 9 percent. NEW YORK Social Security, U.S. govern- ment pensions and annui- ties are not taxed. For those over age 59 and a half, up to $20,000 of other annuity income (e.g., Thrift Sav- ings Plan) may be excluded. See N.Y. Tax Publication 36 at https://bit.ly/income- taxation for details. Sales tax is 4 percent statewide. Other local taxes may add up to an additional 4.875 percent. NORTH CAROLINA Pursuant to the “Bailey” deci- sion (see http://dornc.com/ taxes/individual/benefits. html), government retirement benefits received by federal retirees who had five years of creditable service in a federal retirement system on Aug. 12, 1989, are exempt fromNorth 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 annui- ties. For those over age 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 2.75 percent. NORTH DAKOTA All pensions and annuities are taxed. Taxpayers can exclude $5,000 of pension income from civil service, and some other qualified, plans. Social Security is excluded from taxable income. General sales tax is 5 percent; local jurisdic- tions impose up to 3.5 percent more. OHIO Retirement income is taxed. Taxpayers age 65 and older may take a $50 credit per return. In addition, Ohio gives a tax credit based on the amount of the retire- ment 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 amount, but the total must 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.