The Foreign Service Journal, February 2008

58 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 8 each spouse if both have retirement income and is reduced by $2 for every $1 over $30,000. Those over 65 can exempt a further $800 of interest income for sin- gle taxpayers and $1,600 formarried joint filers. NEBRASKA: U.S. government pen- sions and annuities are fully taxable. NEVADA: No personal income tax. NEW HAMPSHIRE: No personal income tax. The inheritance tax was repealed in 2003. There is a 5-percent tax on interest/dividend income over $4,800 (married filing jointly). A $1,200 exemp- tion is available for those 65 or over. 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 Jersey gross incomes over $100,000. Residents over 65 may be eligible for 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 1 / 2 , up to $20,000 of other annuity income (e.g., Thrift Savings Plan) may be excluded. SeeN.Y. Tax Publication 36 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 as of that datemust payNorth Carolina tax on their federal annuities. In this case, up to$4,000 ($8,000 if filing joint- ly) of any federal annuity income is exempt. For those over age 65, an extra $750 (single) or $1,200 (couple) may be deducted. NORTH DAKOTA: All pensions and annuities are fully taxed, except for the first $5,000, which is exempt minus any Social Security payments if the individual uses FormND-2 (optional method). 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 $10,000 exempt on all federal pensions. Beginning inTaxYear 2007, 20percent of any federal pension may be exempt. 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 whoworkedbothbefore andafter that date must prorate their exemption using the instructions in the tax booklet. Oregon- source retirement income receivedbynon- residentswhoarenot domiciled inOregon is not subject to taxation. Oregondoes not tax Social Security benefits. PENNSYLVANIA: Government pen- sions and Social Security are not subject to personal income tax. PUERTO RICO: ForTaxYear 2007, the first $10,000of income received froma fed- eral pensioncouldbe excluded for individ- uals under age 60. Over 60 the exclusion is $14,000. If the individual receivesmore than one federal pension, the exclusion applies toeachpensionor annuity separate- ly. 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. Aresident of SouthCarolinawho is 65years or older may claim a $15,000 deduction against any type of income ($30,000 if both spouses are over 65), butmust reduce this figurebyany retirement deductionclaimed. Social Security is not taxed. SOUTH DAKOTA: No personal income tax. TENNESSEE: Social Security, annuities and TSP are not subject to personal income tax. Certain interest/dividend income is taxed at 6 percent if over $2,500 (married filing jointly). However, those over 65 have $16,200 exempted for a sin- gle filer and $27,000 for joint filers. TEXAS: No personal income tax. UTAH: Individuals under age 65 may take a $4,800 deduction. However, the deduction is reduced by $.50 for every $1 that Federal Adjusted Gross Income exceeds $41,600 (married filing jointly) or $34,600 (single). Those over age 65 may exempt up to $7,500 for each individual. However, the exemption is reducedby$.50 for every $1 that the total income exceeds $62,000 (married filing jointly and both over 65) or $40,000 (single). VERMONT: U.S. government pensions and annuities are fully taxable. VIRGINIA: Individuals who were over age 65 on Jan. 1, 2004, can take a $12,000 deduction; those age 62 or 63 as of that date can take a $6,000 deduction. Those who reached 62 after Jan. 1, 2004, cannot claimanydeductionuntil they reach 65. For those who reached 65 after Jan. 1, 2004, the $12,000 deduction is reducedby $1 for eachdollar theirAGI exceeds $50,000 for single, and$75,000 formarried, taxpay- ers. All taxpayers over 65 receive an addi- tional personal exemption of $800. Social Security income is exempt. WASHINGTON: No personal income tax. WEST VIRGINIA: Anexemptionof up to $8,000 of income received from any source may be applied for if 65 years or older. Under 65, there is a $2,000 pension exclusion. WISCONSIN: Pensions and annuities are fully taxable. Those age 65or overmay take two personal deductions totaling $1,000. However, benefits received from a federal retirement systemaccount estab- lishedbeforeDec. 31, 1963, arenot taxable. Nomore than50percent of Social Security is taxed for Tax Year 2007. For tax years starting after Jan1, 2008,Wisconsinwill no longer tax Social Security benefits includ- ed in Federal Adjusted Gross Income. WYOMING: Nopersonal income tax. The AFSA Tax Guide is also available at www.afsa.org/news. A F S A N E W S