The Foreign Service Journal, February 2011

A F S A N E W S $13,420 for joint filers, to amaximumof 7.75 percent on income over $221,600 for single filers or $295,550 for joint filers. Write:Wis- consin Department of Revenue, Individual Income TaxAssistance, P.O. Box 8906,Madi- sonWI 53708-8906. Phone: (608) 266-2772. E-mail: income@revenue.wi.gov Web site: www.dor.state.wi.us WYOMING: There is no state income tax and no tax on intangibles such as bank ac- counts, stocks or bonds. Write: Wyoming Department of Revenue,Herschler Building, 122 West 25th St., Cheyenne WY 82002- 0110. Phone: (307) 777-7961. E-mail: DirectorOfRevenue@wy.gov Web site: revenue.state.wy.us State Pension & Annuity Tax The laws regarding the taxation of For- eign Service annuities vary greatly from state to state. In addition to those states that have no income tax or no tax on personal income, there are several states that do not tax income derived from pensions and annuities. Idaho taxes Foreign Service annuities while ex- empting certain categories of Civil Service employees. Several Web sites provide more information on individual state taxes for re- tirees, but the Retirement Living Information Center at www.retirementliving.com/RL- taxes.html is one of themore comprehensive. ALABAMA: Social Security and federal pensions are not taxable. The combined state, county and city sales tax rates average from 7 to 11 percent. ALASKA: No personal income tax. Some municipalities levy sales, property and/or use taxes. ARIZONA: Up to $2,500 of U.S. govern- ment pension income may be excluded for each taxpayer. There is also a $2,100 exemp- tion for each taxpayer age 65 or over. Arizona does not tax Social Security. Arizona state sales and use tax is 5.6 percent with additions depending on county and/or city. ARKANSAS: The first $6,000 of income from any retirement plan or IRA is exempt. Social Security is not taxed. There is no estate or inheritance tax. State sales tax is 6 percent; the local addition may be up to 2 percent. CALIFORNIA: Fully taxable. The sales and use tax rate varies from7.25 percent (the statewide rate) to 9.75 percent in some areas. COLORADO: Up to $24,000 of pension income is exempt if individual is age 65 or over. Up to $20,000 is exempt if age 55 to 64. State sales tax is 2.9 percent with additions up to 5 percent in some jurisdictions. CONNECTICUT: Fully taxable for resi- dents. Social Security is exempt if Federal Adjusted Gross Income is less than $50,000 for singles or $60,000 for joint filers. Statewide sales tax is 6 percent. No local ad- ditions. DELAWARE: Pension exclusions per person: $2,000 is exempt under age 60; $12,500 if age 60 or over. There is an addi- tional standard deduction of $2,500 if age 65 or over if you do not itemize. Social Security income is excluded from taxable income. Delaware does not impose a sales tax. DISTRICT OF COLUMBIA: Pension or annuity exclusion of $3,000 is applicable if 62 years or older. Social Security is excluded from taxable income. Sales tax is 6 percent, with higher rates for some commodities. FLORIDA: There is no personal income, inheritance or gift tax. Florida repealed the “intangibles tax” in 2007. Florida imposes a state sales tax and a use tax of 6 percent. Counties impose further taxes from0.5 to 2.5 percent. GEORGIA: $35,000 of retirement in- come is excluded for those who are 62 years or older, or totally disabled. Social Security is excluded from taxable income. Sales tax is 4 percent statewide, with additions of up to 5 percent depending on jurisdiction. HAWAII: Pension and annuity distribu- tions from a government pension plan are not taxed in Hawaii. Social Security is not taxed. Hawaii charges a general excise tax of 4 percent instead of sales tax. IDAHO: If the individual is age 65 or older, or age 62 and disabled, Civil Service Retirement System and Foreign Service Re- tirement andDisability Systempensions only qualify for a deduction in 2010 of up to $27,876 for a single return and up to $41,814 for a joint return. Up to $27,876 may be de- ducted by the unmarried survivor of the an- nuitant. The deduction is not available if married filing separately; nor do Federal Em- ployees’ Retirement System or Foreign Serv- ice Pension System pensions qualify for this deduction. The deduction is reduced dollar for dollar by Social Security benefits. Social Security itself is not taxed. Idaho state sales tax is 6 percent. ILLINOIS: Illinois does not tax U.S. gov- ernment pensions or Social Security. Sales tax is 6.25 percent to 8 percent depending on local jurisdiction. INDIANA: If the individual is over age 62, the Adjusted Gross Income may be re- duced by the first $2,000 of any pension, re- duced dollar for dollar by 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 pen- sion exclusion for survivor annuitants of fed- eral annuities. Social Security is not taxed in Indiana. Both sales tax and use tax in Indiana are 7 percent. IOWA: Generally taxable. For 2009 and later tax years, however, a married couple with an income for the year of less than $32,000may file for exemption, if at least one spouse or the head of household is 65 years or older on Dec. 31, and single persons 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/retire- ment income exclusion of up to $6,000 for single, head of household or qualifying wid- ower filers and up to $12,000 for married fil- ing jointly. The same income tax rates apply to annuities as to other incomes. Iowa is phasing out taxation of Social Security ben- efits, but a portion is still subject to tax in 2010. Statewide sales tax is 6 percent, with no more than 1 percent added in local jurisdic- tions. 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 between 1 and 3 percent depending on ju- risdiction. KENTUCKY: Government pension in- come is exempt if retired before Jan. 1, 1998. If retired after Dec. 31, 1997, pension/annu- ity income up to $41,110 remains fully ex- cludable for 2010. 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 income tax. There is an exemption of $6,000 of other 68 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 1