The Foreign Service Journal, January-February 2023

AFSA NEWS 80 JANUARY-FEBRUARY 2023 | THE FOREIGN SERVICE JOURNAL ARKANSAS The first $6,000 of income from any retirement plan or IRA is exempt (to a maximum of $6,000 overall). Social Security is excluded from taxable income. There is no estate or inheritance tax. State sales and use tax is 6.5 percent; city and county taxes may add another 5 percent. CALIFORNIA Pensions and annuities are fully taxable. Social Security is excluded from taxable income. The sales and use tax rate varies from 7.25 percent (the statewide rate) to 11 percent in some areas. COLORADO Up to $24,000 of pension or Social Security income can be excluded if an individual is age 65 or over. Up to $20,000 is exempt if age 55 to 64. State sales tax is 2.9 percent; local additions can increase it to as much as 11.2 percent. CONNECTICUT Pensions and annuities are fully taxable for residents. Social Security is exempt if Federal Adjusted Gross Income is less than $75,000 for singles or $100,000 for joint filers. Connecticut exempts 14 percent of income from pensions and annuities using those same income qualifiers. This phased-in exemption will increase by 14 percent each year until it reaches 100 percent in tax year 2025. Statewide sales tax is 6.35 percent. No local additions. HAWAII Pension and annuity distri- butions from a government pension plan are not taxed in Hawaii. If the employee contributed to the plan, such as a 401(k) with employer matching, only employer contributions are exempt. Social Security is excluded from taxable income. Hawaii charges a general excise tax of 4 percent instead of sales tax. IDAHO If the individual is age 65 or older, or age 62 or older and disabled, Civil Service Retire- ment System and Foreign Service Retirement and Disability System pensions qualify for a deduction. Refer to Form 39R for details. Fed- eral Employees’ Retirement System or Foreign Service Pension System pensions do not qualify for this deduction. The deduction is reduced dol- lar for dollar by Social Secu- rity benefits. Social Security itself is not taxed. Idaho state sales tax is 6 percent; some local jurisdictions add as much as another 3 percent. 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 percent Indiana income tax rate. Sales tax and use tax is 7 percent. IOWA Generally taxable. Taxpayers who are at least 55 years old can exclude up to $6,000 ($12,000 for joint filers) of federally taxed distributions from a pension, annuity, IRA, or other retirement plans. Social Security is excluded from taxable income. State- wide 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 addi- tions of up to 4.1 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 DELAWARE Government pension exclu- sions per person: $2,000 is exempt under age 60; $12,500 if age 60 or over. If over age 65 and you do not itemize, there is an addi- tional standard deduction of $2,500. Social Security is excluded from taxable income. Delaware does not impose a sales tax. DISTRICT OF COLUMBIA Pensions and annuities are fully taxed for residents. Social Security is excluded from taxable income. Sales and use tax is 6 percent, with higher rates for some com- modities (liquor, meals, etc.). FLORIDA There is no personal income, inheritance, gift tax, or tax on intangible property. All prop- erty is taxable at 100 per- cent of its valuation—many exemptions are available. The state sales and use tax is 6 percent. There are additional county sales taxes, which could make the combined rate as high as 9.5 percent. GEORGIA Up to $35,000 of retirement income may be exclud- able for those age 62 or older or totally disabled. Up to $65,000 of retirement income may be excludable for taxpayers who are age 65 or older. Social Security is excluded from taxable income. Sales tax is 4 percent statewide, with additions of up to 4.9 percent depending on jurisdiction.