The Foreign Service Journal, February 2010

72 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 1 0 nuities are taxed as part of Federal Ad- justed Gross Income. Taxpayers age 65 and older may exempt up to $8,000 (sin- gle) or $16,000 (joint) from any income source if their income is under $28,500 (individual filers) or $51,000 (married fil- ing jointly). The exemption is reduced as income increases, disappearing altogether at $51,000. New Mexico has a gross re- ceipts tax, instead of a sales tax, of 5.375 percent; county and city taxes may add another 2.68 percent. 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 Publica- tion 36 for details. Sales tax is 4 percent statewide. Other local taxes may add up to 5 percent. NORTH CAROLINA: Pursuant to the “Bailey”decision, government retirement benefits received by federal retirees who had five years of creditable service in a fed- eral retirement system on Aug. 12, 1989, are exempt from North Carolina income tax. Those who did not have five years of creditable service as of 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 federal an- nuity income is exempt. For those over 65, an extra $750 (single) or $1,200 (cou- ple) may be deducted. Social Security is exempt. State sales tax is 5.75 percent (from October 2009); local taxes may in- crease this by up to 2.5 percent. 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). Sales tax is 5 percent. Local ju- risdictions may impose up to 2 percent more. 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. State sales tax is 5.5 percent. Counties and regional transit authorities may add to this, but the total must not ex- ceed 8.5 percent. OKLAHOMA: Up to $10,000 is exempt on qualified private pensions if the Fed- eral Adjusted Gross Income is under $100,000 for single filers or $200,000 for married filing jointly. In 2009, 60 percent of any federal pension paid in lieu of So- cial Security (i.e., CSRS and FSRDS “old system” only) is exempt. This figure will rise to 80 percent in 2010 and 100 percent in 2011. Social Security is exempt. State sales tax is 4.5 percent. Local and other additions may bring the total up to 9.5 percent. 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 household income was less than $22,500 (single) and $45,000 (joint), and who received less than $7,500 (sin- gle)/$15,000 (joint) in Social Security benefits. The credit is the lesser of the tax liability or 9 percent of taxable pension in- come. Oregon does not tax Social Secu- rity benefits. Oregon has no sales tax. PENNSYLVANIA: Government pen- sions and Social Security are not subject to personal income tax. Pennsylvania sales tax is 6 percent. Other taxing enti- ties may add up to 2 percent. PUERTO RICO: The first $10,000 of income received from a federal pension can be excluded for individuals under age 60. For those over 60 the exclusion is $14,000. If the individual receives more than one federal pension, the exclusion applies to each pension or annuity sepa- rately. Social Security is not taxed. RHODE ISLAND: U.S. government pensions and annuities are fully taxable. Sales tax is 7 percent. 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. Sales tax is 6 percent, plus 2 percent in some counties. Seniors 85 and over pay 4 percent. SOUTH DAKOTA: No personal income tax or inheritance tax. State sales and use tax is 4 percent; municipalities may add up to an additional 2 percent. TENNESSEE: Social Security, pension income and income from IRAs 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 age 65 with total income of less than $16,200 for a sin- gle filer and $27,000 for joint filers are ex- empt. State sales tax is 7 percent with between 1.5 and 2.75 percent added, de- pending on jurisdiction. TEXAS: No personal income tax or in- heritance tax. State sales tax is 6.25 per- cent. Local options can raise the rate to 8.25 percent. UTAH: The new flat tax rate of 5 per- cent of all income can be reduced, for tax- payers over age 65, by a retirement tax credit of $7,500 for single filers and $15,000 for joint filers. This is reduced by 2.5 percent of income exceeding $25,000 for single filers and $32,000 for joint filers. See the state Web site for details. State sales tax is 4.7 percent; local option taxes may raise the total to 7.95 percent. VERMONT: U.S. government pensions and annuities are fully taxable. State gen- eral sales tax is 6 percent; local option taxes may raise the total to 7 percent. VIRGINIA: Individuals over age 65 can take a $12,000 deduction. The $12,000 deduction is reduced by one dollar for each dollar by which Adjusted Gross In- come exceeds $50,000 for single, and $75,000 for married, taxpayers. All tax- payers over 65 receive an additional per- sonal exemption of $800. Social Security income is exempt. The estate tax has been repealed for all deaths after July 1, 2007. The general sales tax rate is 5 percent (4 percent state tax and 1 percent local tax). WASHINGTON: No personal income A F S A N E W S