The Foreign Service Journal, February 2010

F E B R U A R Y 2 0 1 0 / F O R E I G N S E R V I C E J O U R N A L 71 with an annual income of less than $32,000 may file for exemption, if at least one spouse or the head of household is 65 years or older onDec. 31, and single per- sons who are 65 years or older on Dec. 31 may file for an exemption if their income is $24,000 or less. 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. Iowa is phasing out taxation of Social Security benefits. Statewide sales tax is 6 percent, with no more than 1 percent added in local juris- dictions. KANSAS: U.S. government pensions are not taxed. Social Security is exempt if Federal Adjusted Gross Income is under $75,000. State sales tax is 5.3 percent, with additions of up to 4.5 percent depending on jurisdiction. KENTUCKY: Government pensions at- tributable to service before Jan. 1, 1998, are not taxed. The portion of annuity income attributable to service after Dec. 31, 1997, is subject to taxation at the appropriate rate; pension/annuity income up to $41,110 remains fully excludable for 2009. Social Security is exempt. Sales tax is 6 percent statewide, with no local sales or use taxes. 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. State sales tax is 4 percent with local additions. Use tax is 8 percent re- gardless of the purchaser’s location. 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- justedGross 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). General sales tax is 5 percent. MARYLAND: Those over 65 or perma- nently disabled, or who have a spouse who is permanently disabled, may under cer- tain conditions be eligible for Maryland’s maximum pension exclusion of $24,500. Also, all individuals 65 years or older are entitled to an extra $1,000 personal ex- emption in addition to the regular $2,400 personal exemption available to all tax- payers. Social Security is exempt. See the worksheet and instructions for Maryland Form502. Maryland sales tax is 6 percent. MASSACHUSETTS: Distributions made to a retiree from a federal employee contributory plan are excluded fromMas- sachusetts gross income. Social Security is not included inMassachusetts gross in- come. Each taxpayer over age 65 is al- lowed a $700 exemption on other income. Sales tax is 6.5 percent. MICHIGAN: Federal government pen- sions are exempt from taxation in Michi- gan. For Tax Year 2009, pension benefits included in Adjusted Gross Income from a private pension systemor an IRA are de- ductible to a maximum of $45,120 for a single filer, or $90,240 for joint filers. This maximum 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 $10,058 for single filers and to $20,115 for joint fil- ers for 2009. Michigan has no city, local or county sales tax. The state sales tax rate is 6 percent. 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. Statewide sales and use tax is 6.875 percent with additions of up to 1 percent in local areas—more for lodging. MISSISSIPPI: Social Security and qualified retirement income from federal, state and private retirement systems are exempt fromMississippi tax. There is an additional exemption of $1,500 on other income if over age 65. Statewide sales tax is 7 percent. MISSOURI: $6,000 or 50 percent for 2009, whichever is greater, of public pen- sion income may be deducted if Missouri Adjusted Gross Income is less than $100,000 when married filing jointly or $85,000 for single filers, up to a limit of the maximum Social Security benefit of each spouse. This $6,000 is reduced dollar for dollar by the amount the income exceeds these income limitations. In 2009 you may also deduct 50 percent of Social Se- curity income if over age 62 and Federal Adjusted Gross Income is less than the limits above. Sales tax ranges from 5.1 to 8.8 percent depending on location. 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. Social Security is subject to tax. Montana has no general sales tax, but tax is levied on the sale of various commodities. NEBRASKA: U.S. government pen- sions and annuities are fully taxable. Sales tax ranges from 5.5 to 7 percent. NEVADA: No personal income tax. Sales and use tax is 6.85 percent until 2011. Counties may impose additional taxes up to 0.875 percent. 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. No general sales tax. NEW JERSEY: Pensions and annuities fromcivilian government service are sub- ject to state income tax, with exemptions for those who are age 62 or older or totally and permanently disabled. Singles and heads of households can exclude up to $15,000; those married filing jointly can exclude up to $20,000, while those mar- ried filing separately can exclude up to $10,000 each. These exclusions are elim- inated for New Jersey gross incomes over $100,000. Residents over age 65 may be eligible for an additional $1,000 personal exemption. Social Security is not taxed. State sales tax is 7 percent. NEW MEXICO: All pensions and an- A F S A N E W S