The Foreign Service Journal, February 2007

70 F OR E I GN S E R V I C E J OU R N A L / F E B R U A R Y 2 0 0 7 Maryland Form 502. MASSACHUSETTS: U.S. govern- ment contributory pensions are not taxed. MICHIGAN: Federal government pen- sions are exempt from taxation in Michigan. Retirement benefits from pri- vate sources included in the AGI were deductible to a maximum of $39,570 for a single filer or $79,140 for joint filers in the 2005 tax year. Figures for 2006 are not yet available but will be slightly higher. This maximum is reduced by the deduction taken for the government pension. Those age 65 or over may be able to deduct part of their interest, dividends or capital gains included in the AGI up to $8,828 for sin- gle filers and $17,655 for single filers for 2005. MINNESOTA: Generally all pensions are taxable, but single taxpayers over 65 or disabledmay exclude some income if fed- eral AGI is under $33,700 andnon-taxable Social Security is under $9,600. For a cou- ple the limits are $42,000AGI and$12,000 non-taxable Social Security. MISSISSIPPI: Social Security and qualified retirement income from federal, state and private retirement systems are exempt fromMississippi tax. MISSOURI: Up to $6,000 is exempt if the pension income is less than $32,000 whenmarried filing jointly, $16,000 ifmar- ried filing separately, or $25,000 for a sin- gle or head-of-household filer. This $6,000 is reduced dollar for dollar by the amount the income exceeds these income limitations. MONTANA: There is a $3,600 pen- sion-income exclusion if Federal Adjusted Gross Income is less than $30,000. This exclusion is reduced $2 for every $1 over $30,000. Those over 65 get an additional personal exemption ($1,900 in 2005). NEBRASKA: U.S. government pen- sions and annuities are fully taxable. NEVADA: No personal income tax. NEW HAMPSHIRE: No personal income tax. There is a 5-percent tax on interest/dividend income over $4,800 (married filing jointly). NEW JERSEY: Pensions andannuities from civilian government service are sub- ject to state income taxwithexemptions for thosewhoare age 62or older, or totally and permanently disabled. Singles and heads of households can exclude up to $15,000; married filing jointly up to $20,000; mar- ried filing separately up to $10,000 each. These exclusions are eliminated for New Jerseygross incomes over $100,000. All res- idents over 65 receive an additional $1,000 personal exemption. NEW MEXICO: All pensions andannu- ities are taxed as part of Federal Adjusted Gross Income. Those 65 andoldermaybe eligible toclaimadeductionof up to$8,000 on AGI less than $18,000. Exemption is reduced as income increases, disappearing altogether at $51,000. NEW YORK: U.S. government pensions andannuities arenot taxed. For those over age 59.5, up to $20,000 of other annuity income may be excluded. See N.Y. Tax Publication 39 for details. NORTH CAROLINA: Pursuant to the “Bailey” decision, government retirement benefits receivedby federal retireeswhohad 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 cred- itable service on Aug. 12, 1989, must pay North Carolina tax on their federal annu- ities. In this case, up to $4,000 ($8,000 if filing jointly) of any federal annuity income is exempt. For those over 65, anextra $750 (single) or $1,200 (couple)may be deduct- ed. NORTH DAKOTA: All pensions and annuities are fully taxed, except for the first $5,000, which is exempt,minus any Social Security payments, but only if the individ- ual chooses to use Form ND-2 (optional method). Individuals are cautioned to compare FormND-1 and FormND-2 to ascertainwhichone yields the lower tax for the year. Qualifying for the exclusiondoes not mean that Form ND-2 is the better form to choose. OHIO: Taxpayers 65andovermay take a $50 credit per return. In addition, Ohio gives a tax credit based on the amount of the retirement income included in Ohio Adjusted Gross Income, reaching a max- imum of $200 for any retirement income over $8,000. OKLAHOMA: Taxable, but up to$7,500 exempt on all federal pensions. OREGON: Generally, all retirement income is subject to Oregon tax when received by an Oregon resident. This includes non-Oregon source retirement income. 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 instructions in the taxbooklet. Oregon- source retirement income receivedbynon- residentswhoarenot domiciled inOregon is not subject to taxation by Oregon. PENNSYLVANIA: Government pen- sions and Social Security are not subject to personal income tax. PUERTO RICO: The first $8,000 of income received froma federal pensioncan be excluded for individuals under 60. Over 60 the exclusion is $12,000. If the individ- ual receivesmore thanone federal pension, the exclusion applies to each pension or annuity separately. RHODE ISLAND: U.S. government pensions and annuities are fully taxable. SOUTH CAROLINA: Individualsunder age 65 can claim a $3,000 deduction on qualified retirement income; those 65 years of age or over can claim a $10,000 deductiononqualified retirement income. A F S A N E W S