The Foreign Service Journal, January-February 2023

AFSA NEWS 82 JANUARY-FEBRUARY 2023 | THE FOREIGN SERVICE JOURNAL 6.85 to 8.1 percent, depend- ing 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 exemption is available for those age 65 or over. No general sales tax. Several services (prepared 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 contribu- tory pension plans: https:// bit.ly/new-jersey-taxation. Taxpayers age 62 or older with $100,000 or less in state income can exclude up to $60,000 of pension, annu- ity, IRA, or other retirement plan income; those married filing jointly up to $150,000; those married filing sepa- rately up to $50,000 each; and $75,000 for single filers. These exclusions are elimi- nated 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 6.63 percent. NEW MEXICO All pensions and annuities are taxed as part of Federal Adjusted Gross Income. Tax- payers 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, disappear- ing altogether at $51,000. State tax rate is 5.13 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 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:// 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” decision (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 retire- ment 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. 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 jurisdictions impose up to 3.5 percent more. OHIO Retirement income is taxed. Taxpayers age 65 and over may take a credit of up to $200 per return. Social Security is excluded from taxable income. State sales tax is 5.75 percent. Counties and regional transit authori- ties may add to this, 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 Fed- eral Adjusted Gross Income. 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 4.5 percent. County and local tax rates vary for a total sales tax of up to 11 percent. The aver- age 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.) Oregon Retire- ment Income Credit allows for a credit of up to $6,250, depending on household income. Social Security is excluded from taxable income. Oregon has no sales tax. PENNSYLVANIA All retirement income is tax exempt for Pennsylvania resi- dents age 60 and older. This includes public and private pensions, Social Security income, and civil service annuities. Pennsylvania sales tax is 6 percent. Other tax- ing 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 exclusion applies to each pension or annuity