The Foreign Service Journal, February 2009

F E B R U A R Y 2 0 0 9 / F O R E I G N S E R V I C E J O U R N A L 55 come, inheritance or gift tax. Florida re- pealed the “intangibles tax” in 2007. GEORGIA: For Tax Year 2008, $35,000 of retirement income is excluded for those who are 62 years or older, or totally disabled. HAWAII: Pension and annuity distri- butions from a government pension plan are not taxed in Hawaii. Social Security is not taxed. IDAHO: If the individual is age 65 or older, or age 62 and disabled, CSRS and FSRDS pensions qualify for a deduction in 2008 of up to $26,220 for a single re- turn and up to $39,330 for a joint return. Up to $26,220 may be deducted by the unmarried survivor of the annuitant. The deduction is not available if married filing separately; nor do FERS or FSPS pensions qualify for this deduction. The deduction is reduced dollar for dollar by Social Security benefits. Social Security itself is not taxed. ILLINOIS: Illinois does not tax U.S. government pensions or Social Security. INDIANA: If the individual is over age 62, the Adjusted Gross Income may be re- duced by the first $2,000 of any pension, reduced dollar for dollar by (non-taxable) Social Security benefits. There is also a $1,000 exemption if over 65, or $1,500 if Federal Adjusted Gross Income is less than $40,000. There is no pension exclu- sion for survivor annuitants of federal an- nuities. IOWA: Generally taxable. However, for the 2007 and 2008 tax years, a married couple with an income for the year of less than $24,000 may file for exemption, if at least one spouse or the head of household is 65 years or older on Dec. 31. Starting with the 2009 tax year, this amount is in- creased to $32,000. For the 2007 and 2008 tax years, single persons who are 65 years or older on Dec. 31 may file for an exemption if their income is $18,000 or less. Starting with the 2009 tax year, this amount is increased to $24,000. Over age 55, there is a pension/retirement income exclusion of up to $6,000 for single, head of household or qualifying widower filers and up to $12,000 for married filing jointly. The same income tax rates apply to annuities as to other incomes. KANSAS: U.S. government pensions are not taxed. Social Security is exempt if Federal Adjusted Gross Income is under $50,000. KENTUCKY: Government pensions at- tributable to service before Jan. 1, 1998, are not taxed. The portion of annuity in- come attributable to service after Dec. 31, 1997, is subject to tax at the appropriate rate; the pension exclusion of up to $41,110 is unchanged for 2008. Social Se- curity is not taxed. LOUISIANA: Federal retirement bene- fits are exempt from Louisiana state in- come tax. There is an exemption of $6,000 of other annual retirement income received by any person age 65 or over. Married filing jointly may exclude $12,000. MAINE: Recipients of a government- sponsored pension or annuity who are fil- ing singly may deduct up to $6,000 ($12,000 for married filing jointly) on in- come that is included in their Federal Ad- justed Gross Income, reduced by all Social Security and railroad benefits. For those age 65 and over, there is an additional standard deduction of $1,350 (single), $1,050 (married filing singly) or $2,100 (married filing jointly). MARYLAND: Those over 65 or perma- nently disabled, or who have a spouse who is permanently disabled, may under certain conditions be eligible for Mary- land’s maximum pension exclusion of $23,600. Also, all individuals 65 years or older are entitled to an extra $1,000 per- sonal exemption in addition to the regu- lar $2,400 personal exemption available to all taxpayers. Social Security is not taxed. See the worksheet and instructions for Maryland Form 502. MASSACHUSETTS: Distributions made to a retiree from a federal employee contributory plan are excluded from Massachusetts gross income. Social Se- curity is not taxed. MICHIGAN: Federal government pen- sions are exempt from taxation in Michi- gan. Retirement benefits from private sources included in the Adjusted Gross Income are deductible to a maximum of $43,440 on a single return and $86,880 on joint returns for TaxYear 2008. This max- imum is reduced by the deduction taken for the government pension. Those age 65 or over may also be able to deduct part of their interest, dividends or capital gains included in the AGI up to $9,690 for sin- gle filers and to $19,380 for joint filers for 2008. MINNESOTA: Generally all pensions are taxable, but single taxpayers who are over 65 or disabled may exclude some in- come if Federal Adjusted Gross Income is under $33,700 and non-taxable Social Se- curity is under $9,600. For a couple, the limits are $42,000 for Adjusted Gross In- come and $12,000 for non-taxable Social Security. MISSISSIPPI: Social Security and qualified retirement income from federal, state and private retirement systems are exempt fromMississippi tax. MISSOURI: $6,000 or 35 percent for 2008, whichever is greater, is exempt if public pension income is less than $100,000 when married filing jointly or $85,000 for single filers. This $6,000 is re- duced dollar for dollar by the amount the income exceeds these income limitations. In 2008 youmay deduct 35 percent of So- cial Security income if over age 62 and Federal Adjusted Gross Income is less than the limits above. MONTANA: There is a $3,600 pension- income exclusion if Federal Adjusted Gross Income is less than $30,000. This exclusion can be claimed by each spouse if both have retirement income and is re- duced by $2 for every $1 over $30,000. Those over 65 can exempt an additional $800 of interest income for single taxpay- ers and $1,600 for married joint filers. NEBRASKA: U.S. government pen- sions and annuities are fully taxable. NEVADA: No personal income tax. NEW HAMPSHIRE: No personal in- come tax. The inheritance tax was re- pealed in 2003. 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 65 or over. NEW JERSEY: Pensions and annuities from civilian government service are sub- ject to state income tax, with exemptions for those who are age 62 or older or to- tally and permanently disabled. Singles and heads of households can exclude up to $15,000; those married filing jointly up to $20,000; those married filing separately up to $10,000 each. These exclusions are eliminated for New Jersey gross incomes A F S A N E W S