Sample Articles from this site
Here are a few sample articles to give you an idea of the kinds of things
you'll find in the Subscribers Area of this site. These articles are reprinted
as they originally appeared in the members only section of this site.
Tax on Federal & Other Retirements
(Only) Sales Tax by Percent
New Hampshire 0%
New Jersey 6%
New Mexico 5%
N. Dakota 5%
N. Carolina 4.5%
Rhode Island 7%
S. Carolina 5%
W. Virginia 5%-6%*
January 1, 2006, the Sales Tax and Use Tax is reduced to 5% on the sales,
purchases and uses of food and food ingredients intended for human consumption.
The reduced rate of tax does not apply to sales, purchases and uses by consumers
of prepared food.
**4%-6% depending on the county in which the taxable sale
or service occurs.
with No Personal Income Taxes:
Exempting all Federal Civil Service Income:
(1) FL: Value of stocks, bonds,
mutual funds, etc., taxed. See below for details.
(2) NH: 5% tax on
interest/dividend income that exceeds $2,400 (single) or $4,800 (couple).
TN: Certain interest/dividend income taxed at 6% if it exceeds $1,250 (single)
or $2,500 (couple).
(4) KY: Total amount is exempt only if retired before
January 1, 1998. See below for retirements after December 31, 1997.
Tax rate on ordinary income including interest and dividends is 5.3%.
Annuities not taxed beginning with 1998 if individual had five years of
government service as of August 12, 1989.
(7) OR: Annuities of those who
retired before October 1, 1991, are not taxed. Those who retired after October
1, 1991, are taxed only on that portion of the annuity attributable to
government service after October 1, 1991.
(8) WI: Full exemption if benefits
received from a retirement account established before
Security; RR= Railroad Retirement; AGI= Adjusted Gross Income
$2,500 exclusion for federal & AZ state and local pensions. All residents
receive a $2,100 personal exemption. In addition, all residents 65+ receive a
Arkansas: In addition to the $6,000 exemption provided
for distributions received from employment-related pension plans, the cost
recovery adjustment calculated pursuant to IRC 72, using the simplified
worksheet found in the federal return, is applicable to Arkansas returns filed
for 2003 and subsequent years. The total exemption allowable for
employer-sponsored pension plans and/or IRAs is $6,000 per taxpayer. All
residents 65+ receive an additional $21 exemption. Special Note: If your
original cost of contribution was fully recovered as part of the McFadden v.
Weiss lawsuit, you are not eligible to claim IRC 72 recovery.
provides that the first $6,000 of benefits received from public or private
employment-related retirement systems, plans or programs, regardless of the
method of funding, shall be exempt from income tax. This exemption also applies
to distributions from IRA's when the taxpayer qualifies either by age, death, or
California: Personal and age 65+ exemption of $87
Colorado: $20,000 exemption for all taxpayers 55-64. $24,000
exemption for all taxpayers 65+. Colorado follows federal rules, exempts U.S.
government interest, and taxes municipal interest earned from states other than
Connecticut: Personal exemptions of up to $12,000 (married
filing separately) $12,625 (single), $19,000 (head of household), and $24,000
(married filing jointly). Tax credits up to 75% depending on income level. SS
benefits are tax-exempt if federal AGI is less than $50,000 (single or married
filing separately) or less than $60,000 (married filing jointly or head of
household). The amount of taxable benefits is reduced for those with AGI above
Delaware: $2,000 pension exclusion ($12,500 for those 60+).
Additional personal credit of $110 for those 60+. In addition, all residents 60+
or totally disabled get a $2,000 exemption if earned income is less than $2,500
and AGI is under $10,000 (Figures double if married). Delaware exempts SS and RR
District of Columbia: Two provisions: (1) $3,000 pension
exclusion if 62+; and (2) an additional exemption of $1,370 for all residents
(not just pension recipients) 65+. SS income is excluded from taxable
Florida: The exemption for individual and joint filers for
Florida Intangible Tax is, respectively, $250,000 and $500,000. Every natural
person is entitled each year to an exemption of the first $250,000 of the value
of property otherwise subject to the annual tax. In addition, a husband and wife
filing their Intangible Tax return jointly, shall have an exemption of $500,000.
For 2005, intangible assets are still taxed at $1 per thousand dollars of
taxable value. Florida does not tax unearned income such as interests,
Georgia: SS benefits exempt from state tax. $25,000
retirement income exclusion if 62+ or totally disabled. (Effective January 2007,
this exclusion will increase to $30,000 and then to $35,000 in January
Hawaii: SS benefits and First Tier Railroad Retirement Act
benefits are not taxable. Residents are allowed a personal exemption of $1,040
per person plus an additional $1,040 per person for those 65+. This applies only
to the taxpayer or the taxpayer’s spouse.
Idaho: Exclusions (minus SS
received) for those 65+ or 62+ and disabled; $23,268 (single); $34,902 (married
couple). Exclusion changes for military pension each year.
$2,000 pension exclusion if 62+ (minus SS and RR). No pension exclusion allowed
for survivor annuitants of civil service annuities. In addition, all residents
65+ receive a $1,000 personal exemption or $1,500 if federal AGI is less than
Iowa: Exemptions are $6,000 (single), $12,000 (joint) for
disabled and those 55+. There is also a $20 personal exemption credit for
Kentucky: With retirements after January 1, 1998, some of
the civil service annuity will be taxed. The percentage will be based on number
of years of government service before 1/1/98 and total years worked. All
residents receive an exclusion of up to $41,110 of taxable pension
Maine: A pension income deduction can be taken on line 15 of
the long tax form or line 14 or the short form, but you must also fill out the
Worksheet for Pension Income Deduction to determine the eligibility amount.
There is an additional standard deduction for 65+ of $1,250 (single), $1,000
(married) and $2,000 (couple).
Maryland: Pension exclusion up to $21,500
for those 65+ or totally disabled, reduced by SS or RR benefits. In addition,
all residents 65+ receive a personal exemption of $1,000.
An exemption of $700 is available for individuals who have reached the age of 65
by 1/1/05. This exemption is in addition to the personal exemption of $3,300
(single), $5,100 (head of household) and $6,600 (married/joint
Michigan: Private retirement income included in AGI is
deductible up to $39,570 (single) and $79,140 (joint). The allowable private
pension deduction amount is reduced by the amount of exempt public pension
income. Retirement income does not include payments made before the individual
was eligible to retire under the provisions of the plan. Such payments are
taxable. Seniors (65+) are allowed an additional exemption of $2,000 for tax
year 2005. A deduction for taxpayers ages 65 and over is allowed for income from
dividends, interest and capital gains included in AGI up to $8,828 (single) and
$17,655 (joint). The allowable deduction is reduced by all pension deductions
from AGI, public and private.
Minnesota: Single 65+ or disabled have some
income excluded if federal AGI is under $33,700 and non-taxable SS is under
$9,600. For a couple, the limits are $42,000 AGI and $12,000 non-taxable
Mississippi: $12,000 exemption for married filing jointly. All
residents 65+ receive an additional $1,500 exemption.
Missouri: Up to
$6,000 exemption for each filer falling below the AGI limitation of $25,000
(single) $16,000 (married filing separate), and $32,000 (married filing
jointly). The $6,000 must be decreased dollar for dollar by the amount the
income exceeds the income limitation. For example, a single filer would be
completely phased out at $31,000 (individual), a married couple filing
separately at $22,000. For a married couple filing jointly, if both had pensions
of $6,000 or greater, the exemption phases out completely at $44,000. If only
one had a $6,000 pension, the phase out is $38,000.
pension exclusion for those with AGI below $30,000, reduced $2 for every $1 over
$30,000. All residents 65+ receive an additional personal exemption of $1,900;
indexed annually for inflation. Tier I and II RR benefits are fully
Nebraska: Tier I and II RR benefits are fully exempt.
Jersey: Exclusion is $15,000 (single), $10,000 (married filing separately), or
$20,000 (married filing jointly), for annuitants 62+ or disabled according to SS
guidelines. These exclusions are eliminated for taxpayers with NJ gross income
over $100,000. An additional $3,000 ($6,000 joint) can be deducted if ineligible
for SS and RR. All residents 65+ receive a $1,000 personal exemption. Under NJ’s
3-Year Rule, annuities are not taxed until total employee contributions to civil
service retirement have been recovered.
New York: In addition to the
exemption for pensions of New York State, local governments, and the federal
government, there is an additional pension and annuity income exclusion of up to
$20,000 available to persons 59 ½ or more. Also, SS benefits are exempt from New
York State and local tax. For additional information, see Publication 36,
“General Information for Senior Citizens and Retired Persons,” available at
New Mexico: Exemptions for all residents 65+. $8,000 for
those with AGI less than $18,000; exemption reduces as income increases—no
exemptions above $51,000.
North Carolina: Exclusion of up to $4,000
retirement income from a government source, if you did not have 5 years of
creditable service as of 8/12/89; 65+ receive an addition of $750 (single) or
$1,200 ($600 each for a couple if both 65+) to the regular standard
North Dakota: Pension exclusion up to $5,000, reduced by any
SS benefits. It is available only on the state’s ND-2 individual form; no
exclusion offered on the ND-1 individual form.
Ohio: Graduated retirement
income credit ranging from $0 for annuities less than $500, to $200 for
annuities exceeding $8,000. $50 tax credit per return for residents
Oklahoma: Federal, military and OK government retiree exclusion of
$7,500. $7,500 other pension exclusion with modified AGI limit $37,500 (single)
or $75,000 (joint). Additional $1,000 exemption for legally blind or 65+ under
certain income limits.
Oregon: Additional standard deduction for 65+
$1,200 (single), $1,000 each spouse 65+ (joint). Some retirement income credit
for 62+ with income under $22,500 (single), $45,000 (joint).
Carolina: $3,000 retirement deduction at any age, $10,000 for 65+. $15,000
deduction for each taxpayer 65+ by end of tax year against any South Carolina
taxable income (reduced by $10,000 retirement deduction above). SS and RR
benefits are not taxed by South Carolina. Income from retirement due to total
and permanent disability is deductible. South Carolina has no property tax on
South Dakota: No tax on unearned income such as interest,
Tennessee: Persons 65+ are tax-exempt, if total annual
income, from any and all sources, is $16,200 or less (single), or $27,000 or
less (joint—no matter which spouse is 65+). An income tax return must be filed,
each year, to claim this exemption. Annuities and other retirement funds, i.e.
401(k) and the federal Thrift Savings Plan, all are not taxable. Only certain
types of interest and dividend income are taxable. For more details go to
Texas: No tax on
unearned income such as interest, dividends.
Utah: $7,500 retirement
income exemption per retiree if 65+, $4,800 if under 65. Reduced $0.50 for every
$1 of federal AGI, plus any lump-sum distribution reported on federal form 4972,
plus any interest on line 8b of the federal forms 1040A or 1040 that exceed
$25,000 (single), $16,000 (married filing separately), $32,000 (married filing
jointly, head of household, or qualifying widow (er)).
subtraction on income tax return for residents age 64 by midnight January 1,
2006. $12,000 for residents age 65+; additional $800 personal exemption if 65+.
VA law exempts SS and Tier I RR benefits from taxation. Individuals may also
deduct long-term health care insurance premiums, provided the premiums have not
been deducted for federal income tax purposes. The premiums must be paid
specifically for a long-term health care policy.
West Virginia: $2,000
pension exclusion. Residents age 65+ may exclude a total of $8,000, including
the $2,000 pension exclusion.
Wisconsin: In addition to the exemption for
benefits from an account established before 1964, for taxable years beginning in
2002 and after, all retirement payments received from the U.S. government that
relate to the Coast Guard, the commissioned corps of the National Oceanic and
Atmospheric Administration, or the commissioned corps of the Public Health
Service are exempt from Wisconsin income tax. An additional personal exemption
of $250, if 65+.
Wyoming: No personal or corporate income tax. No tax on
intangible assets such as bank accounts, stocks, and bonds or on unearned
income, such as interest and dividends. In addition, Wyoming does not assess any
tax on retirement income earned and received from another state.