The Foreign Service Journal, February 2005

FEBRUARY 2005 • AFSA NEWS 11 Service annuities while exempting certain portions of those of the Civil Service. ALABAMA: Social security and federal pensions are not taxable. ALASKA: No personal income tax. ARIZONA: Up to $2,500 of U.S. gov- ernment pension income may be excluded for each taxpayer. There is also a $2,100 exemption for each taxpayer age 65 or over. ARKANSAS: Up to $6,000 exempt. CALIFORNIA: Fully taxable. COLORADO: Up to $24,000 exempt if age 65 or over. Up to $20,000 exempt if age 55 to 64. CONNECTICUT: Fully taxable for resi- dents. DELAWARE: Two exclusions: 1) Up to $2,000 exempt if earned income is less than $2,500 and Adjusted Gross Income is less than$10,000; ifmarriedand filing jointly, up to$4,000exempt if earned income is less than $5,000 and AGI is under $20,000. This is applicable for those 60years or older or total- ly disabled. 2) If under age 60, the amount of the exclusion is $2,000 or the amount of the pension (whichever is less) and for age 60 or older, the amount of the exclusion is $12,500 or the amount of the pension and eligible retirement income (ERI), whichev- er is less. The combined total of pensionand ERImay not exceed $12,500 per person age 60 or older. DISTRICT OF COLUMBIA: Pension or annuity exclusion of $3,000 if 62 years or older. FLORIDA: No personal income, inher- itance, or gift tax, but Florida has an “intan- gibles tax.” GEORGIA: Up to $15,000 exempt for those 62 years or older, or permanently and totally disabled for the 2003 and subsequent tax years HAWAII: Pension and annuity distrib- utions froma government pensionplan are not taxed in Hawaii. IDAHO: Foreign Service retirees whose annuities are paid from the FSPS are fully taxed on their pensions. Those persons retiredunder theCivil ServiceRetirementAct are exempt up to $21,900 for a single return and up to $32,850 if filing jointly. Up to $21,900 is exempt for theunmarriedsurvivor of annuitant. Must be 65 years or older, or 62 years or older and disabled. Amount reduced dollar for dollar by Social Security benefits. ILLINOIS: Full exemption; U.S. govern- ment pensions are not taxed. INDIANA: Up to $2,000 exemption for most 62 or older, reduced dollar for dollar by Social Security benefits. IOWA: Fully taxable. However, there is apension/retirement income exclusionof up to $6,000 for individuals whose filing status is single, headof householdorqualifyingwid- ower, and up to $12,000 for married tax- payerswhose filing status is joint ormarried filing separately. To take this exclusion, the taxpayer (or spouse)must be 55 years of age or older onDec. 31, 2004, or disabled, or be either a surviving spouse or a survivor hav- ing an insurable interest inan individualwho wouldhavequalified for theexclusion in2004 on the basis or age or disability. The same income tax rates apply to annuities as other incomes. KANSAS: Full exemption; U.S. govern- ment pensions are not taxed. KENTUCKY: Government pensions attributable to service before Jan. 1, 1998, are not taxed. The portion of annuity income attributable to service after Dec. 31, 1997, is subject to tax at the appropriate rate, but is eligible for the pension exclusion of up to $40,200 in 2004. LOUISIANA: Exemption of $6,000 of annual retirement income received by any person aged 65 or over. MAINE: Recipients of a government- sponsored pension or annuity may deduct up to $6,000 on income that is included in their federal AGI, reduced by all Social Security and railroad benefits. MARYLAND: For individuals 65 years or older or permanently disabled, or if their spouse is permanently disabled, all pensions may be excluded up to a maximum of $19,900under certain conditions. Eligibility determination is required. Social Security is not taxed. See the worksheet and instruc- tions to Maryland Form 502. MASSACHUSETTS: Full exemption; U.S. government contributory pensions are not taxed. MICHIGAN: Federal government pen- sions may be deducted fromMichigan tax- able income to the extent included in fed- eral AGI. Retirement benefits fromprivate sources included in theAGImay be deduct- ed toamaximumof $38,550 for a single filer or $77,100 for joint filers for the2004 taxyear. Thismaximumis reducedby the deduction taken for the government pension. Those 65or overmaybe able todeduct part of their interest, dividends or capital gains included in AGI up to $8,565 for single filers and $17,190 for joint filers. MINNESOTA: Certain people over 65 with incomes under $42,000 may be eligi- ble for a “subtraction.” Themaximumsub- traction is $12,000 for married filing joint- ly and $6,000 for singles, which is reduced dollar for dollar by untaxed Social Security benefits, andby one dollar for each twodol- lars of income over $18,000 for married fil- ing jointly and$14,500 for singles. Themar- riage credit also applies to annuity andpen- sion recipients. MISSISSIPPI: Social security andqual- ified retirement income from federal, state and private retirement systems are exempt fromMississippi tax. MISSOURI: Up to $6,000 exempt if the pension income is less than $32,000 when married filing jointly, $16,000 ifmarried fil- ing separately, or $25,000 for a singleorhead- of-household filer. MONTANA: $3,600 pension income exclusion if federal adjusted gross income is less than$30,000. Pension income exclusion reduced for income levels above$30,000with noexclusion if federal adjustedgross income is greater than$31,800 for single taxpayer and $33,600 if married filing a joint return and both spouses have pension income. NEBRASKA: Fully taxable. NEVADA: No personal income tax. NEWHAMPSHIRE: Nopersonalincome tax; federal pensions are not taxed. NEW JERSEY: Pensions and annuities fromciviliangovernment service are subject tostate income taxwithexemptions for those who are age 62 or older, or totally and per- manently disabled. Singles and heads of households canexcludeup to$15,000;mar- ried filing jointly up to $20,000; married fil- ing separately up to $10,000 each. NEWMEXICO: All pensions and annu- ities of NewMexico residents, if taxable fed-