The Foreign Service Journal, February 2012

48 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 2 sion income exclusion if Federal Ad- justedGross Income is less than $31,370. 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 exempt 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 pen- sions and annuities are fully taxable. So- cial Security is 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 re- pealed in 2003. There is a 5-percent tax on interest/dividend income over $2,400 for singles ($4,800married filing jointly). A $1,200 exemption is available for those 65 or over. No general sales tax. NEW JERSEY: Pensions and annu- ities from civilian government service are subject to state income tax, with ex- emptions for those who are age 62 or older or totally and permanently dis- abled. Singles and heads of households can exclude up to $15,000; those mar- ried filing jointly up to $20,000; those married filing separately up to $10,000 each. These exclusions are eliminated for New Jersey gross incomes over $100,000. Residents over 65 may be eli- gible for an additional $1,000 personal exemption. Social Security is not taxed. State sales tax is 7 percent. NEW MEXICO: All pensions and an- nuities are taxed as part of Federal Ad- justed 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 (individual filers) or $51,000 (married filing jointly). The exemption is reduced as income increases, disappearing alto- gether 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 jurisdictions. NEW YORK: Social Security, U.S. government 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 Publication 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 retire- ment benefits received by federal retirees who had five years of creditable service in a federal retirement systemonAug.12, 1989, are exempt from North Carolina 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. So- cial Security is exempt. State sales tax is 4.5 percent; local taxes may increase this by up to 2.5 percent. NORTH DAKOTA: All pensions and annuities are fully taxed, except for the first $5,000, which is exempt minus any Social Security payments. Sales tax is 5 percent. Local jurisdictions impose up to 2.5 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 in- cluded in Ohio Adjusted Gross Income, reaching amaximumof $200 for any re- tirement income over $8,000. Social Se- curity is exempt. State sales tax is 5.5 percent. Counties and regional transit authorities may add to this, but the total must not exceed 8.5 percent. OKLAHOMA: Individuals receiving FERS/FSPS or private pensions may ex- empt up to $10,000 if the Federal Ad- justed Gross Income is under $100,000 for single filers or $200,000 for married filing jointly. Alternatively, in 2011 and later years, 100 percent of a federal pen- sion paid in lieu of Social Security (i.e., CSRS and FSRDS—“old system”— in- cluding the CSRS/FSRDS portion of an annuity paid under both systems) is ex- empt. Social Security included in FAGI 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 income is subject to Oregon tax when received by an Oregon resident. How- ever, federal retirees who retired on or before Oct. 1, 1991, may exempt their entire federal pension; those who worked both before 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 pri- vate pension income, whose household income was less than $22,500 (single) and $45,000 (joint), and who received less than $7,500 (single)/ $15,000 (joint) in Social Security benefits. The credit is the lesser of the tax liability or 9 percent of taxable pension income. Oregon does not tax Social Security 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 $11,000 of income received from a federal pension can be excluded for individuals under 60. For those over 60 the exclusion is $15,000. If the individual receives more A F S A N E W S