The Foreign Service Journal, February 2009

56 F O R E I G N S E R V I C E J O U R N A L / F E B R U A R Y 2 0 0 9 over $100,000. Residents over 65 may be eligible for an additional $1,000 personal exemption. NEWMEXICO: All pensions and annu- ities are taxed as part of Federal Adjusted Gross Income. Taxpayers 65 and older may exempt up to $8,000 (single) or $16,000 (joint) from any income source if their income is under $28,500 (individ- ual filers) or $51,000 (married filing jointly). The exemption is reduced as in- come increases, disappearing altogether at $51,000. NEW YORK: U.S. government pen- sions 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 Pub- lication 36 for details. NORTH CAROLINA: Pursuant to the “Bailey”decision, government retirement benefits received by federal retirees who had five years of creditable service in a federal retirement system on Aug. 12, 1989, are exempt fromNorth Carolina in- come tax. Those who do not have five years of creditable service on Aug. 12, 1989, must pay North Carolina tax on their federal annuities. In this case, up to $4,000 ($8,000 if filing jointly) of any fed- eral annuity income is exempt. For those over 65, an extra $750 (single) or $1,200 (couple) may be deducted. NORTH DAKOTA: All pensions and an- nuities are fully taxed, except for the first $5,000, which is exempt minus any Social Security payments if the individual chooses to use Form ND-2 (optional method). OHIO: Taxpayers 65 and over may take a $50 credit per return. In addition, Ohio gives a tax credit based on the amount of the retirement income included in the Ohio Adjusted Gross Income, reaching a maximum of $200 for any retirement in- come over $8,000. Social Security is ex- empt. OKLAHOMA: Up to $10,000 is exempt on qualified private pensions if the Fed- eral Adjusted Gross Income is under $37,500 for single filers or $75,000 for married filing jointly. In addition, 20 per- cent of any federal pension may be ex- empt. Social Security is exempt. OREGON: Generally, all retirement in- come is subject to Oregon tax when re- ceived by an Oregon resident. However, federal retirees who retired on or before Oct. 1, 1991, may exempt their entire fed- eral pension; those who worked both be- fore and after Oct. 1, 1991, must prorate their exemption using the instructions in the tax booklet. A tax credit of up to 9 percent of taxable pension income is available to recipients of pension income, including most private pension income, whose income was less than $22,500 (sin- gle) and $45,000 (joint), and who re- ceived less than $7,500/$15,000 in Social Security benefits. The credit is the lesser of the tax liability or 9 percent of taxable pension income. Oregon does not tax So- cial Security benefits. PENNSYLVANIA: Government pen- sions and Social Security are not subject to personal income tax. PUERTO RICO: For 2007, the first $10,000 of income received from a federal pension could be excluded for individuals under 60. For those over 60 the exclusion was $14,000. Figures for 2008 were not yet available at press time. If the individ- ual receives more than one federal pen- sion, the exclusion applies to each pension or annuity separately. Social Se- curity is not taxed. RHODE ISLAND: U.S. government pensions and annuities are fully taxable. SOUTH CAROLINA: Individuals under age 65 can claim a $3,000 deduction on qualified retirement income; those 65 years of age or over can claim a $10,000 deduction on qualified retirement in- come. A resident of South Carolina who is 65 years or older may claim a $15,000 deduction against any type of income ($30,000 if both spouses are over 65), but must reduce this figure by any retirement deduction claimed. Social Security is not taxed. SOUTH DAKOTA: No personal income tax or inheritance tax. TENNESSEE: Social Security and an- nuities (e.g., Thrift Savings Plan) are not subject to personal income tax. Certain interest/dividend income is taxed at 6 per- cent if over $2,500 (married filing jointly). However, those over 65 have $16,200 ex- empted for a single filer and $27,000 for joint filers. TEXAS: No personal income tax. UTAH: The new flat tax rate of 5 per- cent of Modified Adjusted Gross Income can be reduced by the Taxpayer Tax Credit and, for taxpayers over 65, by the Retirement Tax Credit. This latter starts to phase out for incomes over $25,000 for single filers, $32,000 for married or head of household. See the state Web site for details. 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 on Jan. 1, 2004, can take a $6,000 deduction. Those who reached 62 after Jan. 1, 2004, cannot claim any deduction until they reach 65. For those who reached 65 after Jan. 1, 2004, the $12,000 deduction is reduced by one dollar for each dollar their Adjusted Gross Income exceeds $50,000 for single, and $75,000 for married, taxpayers. All taxpayers over 65 receive an additional personal exemption of $800. Social Secu- rity income is exempt. The estate tax has been repealed for all deaths after July 1, 2007. WASHINGTON: No personal income tax. WEST VIRGINIA: If under 65, there is a $2,000 pension exclusion. If 65 years or older, youmay apply for an additional ex- clusion of up to $8,000 of income re- ceived from any source. WISCONSIN: Pensions and annuities are fully taxable. Those age 65 or over may take two personal deductions total- ing $950. However, benefits received from a federal retirement system account established before Dec. 31, 1963, are not taxable. For tax years starting after Jan. 1, 2008, Wisconsin no longer taxes Social Security benefits included in Federal Ad- justed Gross Income. WYOMING: No personal income tax. The AFSA Tax Guide is also available at www.afsa.org/news. A F S A N E W S