The Foreign Service Journal, January-February 2022

AFSA NEWS 80 JANUARY-FEBRUARY 2022 | THE FOREIGN SERVICE JOURNAL One hundred 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. County and local tax rates vary for a total sales tax of up to 11 percent. The average Oklahoma sales tax is around 9 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. (The portion of that pension for the years before Oct. 1, 1991, is not taxed.) 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 private 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 subject to personal income tax. Penn- sylvania sales tax is 6 percent. Other taxing entities may add up to 2 percent. PUERTO RICO The first $11,000 of income received from a federal pension can be excluded for individuals under age 60. For those age 60 and older, the exclusion is $15,000. If the individual receives more than one federal pension, the exclu- sion applies to each pension or annuity separately. Social Security is excluded from tax- able income. RHODE ISLAND U.S. government pensions and annuities are fully tax- able. Social Security is taxed to the extent it is federally taxed. Seniors with a Federal Adjusted Gross Income over $104,450 pay tax on Social Security benefits. Higher- income seniors are not eligible for the Rhode Island income tax exemption on private, government or military retire- ment plan payouts. Out-of- state government pensions are fully taxed. Sales tax is 7 percent; meals and beverages are 8 percent. SOUTH CAROLINA Retirement income is taxed, but individuals under age 65 can claim a $3,000 deduc- tion on qualified retirement income; those age 65 and older may claim a $15,000 deduction on qualified retire- ment income ($30,000 if both spouses are over 65), but must reduce this figure by any other retirement deduc- tion claimed. Social Security is excluded from taxable income. Sales tax is 6 percent plus up to 3 percent in some counties. Residents age 85 and older pay 5 percent. SOUTH DAKOTA No personal income tax or inheritance tax. State sales and use tax is 4.5 percent; municipalities may add up to an additional 2.75 percent. Residents age 66 and older who have an annual income under $12,670 (single) or total household income under $17,200 are eligible for a sales tax refund. TENNESSEE Social Security, pension income and income from IRAs and TSP are not subject to personal income tax. State sales tax is 5 percent on food; it is 7 percent on other goods, with between 1.5 and 2.75 percent added, depending on jurisdiction. TEXAS No personal income tax or inheritance tax. State sales tax is 6.25 percent. Local options can raise the rate to 8.25 percent. UTAH Utah has a flat tax rate of 4.95 percent of all income. For taxpayers over 65, there is a retirement tax credit of $450 for single filers and $900 for joint filers. Qualify- ing modified Adjusted Gross Income levels are under $43,000 for single residents and less than $50,000 for joint filers. Married taxpayers who file separate returns are eligible with a modified AGI under $34,000. See the state website for details. State sales tax ranges from 5.95 percent to 8.60 percent, depending on local jurisdiction. VERMONT U.S. government pensions and annuities are fully taxable. Social Security benefits are taxed for single filer income greater than $45,000 annu- ally or over $60,000 for joint filers. Out-of-state govern- ment pensions and other retirement income are taxed at rates from 3.35 percent to 8.75 percent. State general sales tax is 6 percent; local option taxes may raise the total to 7 percent (higher on some commodities). VIRGINIA Individuals born before Jan. 1, 1939, can claim a $12,000 deduction. If you were born between Jan. 2, 1939, and Jan. 1, 1956, your age deduction is based on your income. The maximum $12,000 deduction is reduced by one dollar for each dollar by which Adjusted Gross Income exceeds $50,000 for single, and $75,000 for married, taxpay- ers. All taxpayers age 65 and older receive an additional personal exemption of $800. Social Security is excluded from taxable income. The estate tax was repealed for all deaths after July 1, 2007. The general sales tax rate is 5.3 percent (4.3 percent state tax