The Foreign Service Journal, February 2011

F E B R U A R Y 2 0 1 1 / F O R E I G N S E R V I C E J O U R N A L 69 annual retirement income received by any person age 65 or over. Married filing jointly may exclude $12,000. State sales tax is 4 per- cent with local additions. Use tax is 8 percent regardless of the purchaser’s location. MAINE: Recipients of a government- sponsored pension or annuity who are filing singly may deduct up to $6,000 ($12,000 for married filing jointly) on income that is in- cluded in their Federal Adjusted Gross In- come, reduced by all Social Security and railroad benefits. For those age 65 and over, there is an additional standard deduction of $1,400 (single), $1,100 (married filing singly) or $2,200 (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 certain conditions be eligible for Maryland’s maxi- mumpension exclusion of $24,500. Also, all individuals 65 years or older are entitled to an extra $1,000 personal exemption in addi- tion to the regular $3,200 personal exemp- tion available to all taxpayers. Social Security is exempt. See the worksheet and instruc- tions for Maryland Form 502. Maryland sales tax is 6 percent. MASSACHUSETTS: Distributions made to a retiree from a federal employee con- tributory plan are excluded fromMassachu- setts gross income. Social Security is not included in Massachusetts gross income. Each taxpayer over age 65 is allowed a $700 exemption on other income. Sales tax is 6.5 percent. MICHIGAN: Federal government pen- sions are exempt from taxation inMichigan. For TaxYear 2010, pension benefits included in Adjusted Gross Income from a private pension systemor an IRA are deductible to a maximum of $45,120 for a single filer, or $90,240 for joint filers. This maximum is re- duced by the deduction taken for the gov- ernment 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 filers for 2010. 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 disabledmay exclude some income if Fed- eral AdjustedGross Income is under $33,700 and non-taxable Social Security is under $9,600. For a couple, the limits are $42,000 for Adjusted Gross Income 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 ex- empt fromMississippi tax. There is an addi- tional exemption of $1,500 on other income if over 65. Statewide sales tax is 7 percent. MISSOURI: $6,000 or 65 percent for 2010, whichever is greater, of public pension income may be deducted if Missouri Ad- justed 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 2010 you may also deduct 65 percent of Social Security income if over age 62 and Federal Adjusted Gross Income is less than the limits above. Sales tax is from5.1 to 8.8 percent, depending on location. MONTANA: There is a $3,640 pension- income exclusion if Federal Adjusted Gross Income is less than $30,320. This exclusion can be claimed by each spouse if both have retirement income, and it is reduced by $2 for every $1 over $30,320. Those over 65 can ex- empt an additional $800 of interest income for single taxpayers 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 pensions and annuities are fully taxable. State sales tax is 5.5 percent, with local additions of up to 1.5 percent. NEVADA: No personal income tax. Sales and use tax varies from 6.85 to 8.1 percent, depending on local jurisdiction. NEW HAMPSHIRE: No personal in- come tax. The inheritance tax was repealed in 2003. There is a 5-percent tax on inter- est/dividend income over $2,400 for singles ($4,800 married filing jointly). A $1,200 ex- emption is available for those 65 or over. No general sales tax. NEW JERSEY: Pensions and annuities from civilian government service are subject 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 up to $20,000; those married filing separately up to $10,000 each. These exclusions are eliminated for New Jer- sey gross incomes over $100,000. Residents over 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 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 in- come is under $28,500 (individual filers) or $51,000 (married filing jointly). The exemp- tion is reduced as income increases, disap- pearing altogether at $51,000. New Mexico has a gross receipts tax, instead of a sales tax, of 5.375 percent; county and city taxes may raise this to 8.6875 percent in some jurisdic- tions. NEW YORK: Social Security, U.S. gov- ernment pensions 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 Publi- cation 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 federal re- tirement systemonAug. 12, 1989, are exempt fromNorthCarolina income 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 federal annuity income is exempt. For those over 65, an extra $750 (single) or $1,200 (couple)may be deducted. Social Security is exempt. State sales tax is 5.75 percent; 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 Se- curity payments. Sales tax is 5 percent. Local jurisdictions 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 re- tirement income included in Ohio Adjusted A F S A N E W S