Mass. Pensions And Income Taxes In Other States

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SEPTEMBER 2005 - When considering a move outside the Commonwealth, there are naturally several factors that a member weighs before making a decision. Among them is whether their contributory pension, which is not subject to tax here, will be taxed by the prospective new home state.

Currently fifteen states do not tax Mass. pensions. They are listed in the chart below. In addition, several states provide tax exemptions or exclusions, for which Mass. pensions may qualify. For example, Maine offers a $6,000 pension exemption, while pensioners, 59 1/2 or over, may qualify for a $20,000 exemption in New York. Unfortunately, there are states that tax Mass. pensions in full. Connecticut, Rhode Island and Vermont are included in that group.

Since such a disparity exists among the states and tax laws may contain details which could disqualify a retiree, it's strongly suggested you check with the tax officials in the particular state to which you are interested in moving.

States: No Tax on Mass Pensions

Alabama
Alaska*
Florida*
Hawaii
Illinois
Michigan
Mississippi
Nevada*

New Hampshire*
Pennsylvania
South Dakota*
Tennessee*
Texas*
Washington*
Wyoming*

*No state income tax

WEB UPDATE:
How The Other Forty-Nine States Tax Mass. Pensions

The following table provides a brief outline as to how the other forty-nine states treat Mass. pensions for income tax purposes. It compares the major features of each state as they relate specifically to Mass. pensions, and is not intended to be an exhaustive review of state income tax laws.

If you're interested in a particular state, you should contact the tax officials in that state to obtain any details and/or recent developments.

State	Tax Treatment of Mass.Pensions
Alabama	MA pensions are tax exempt
Alaska	No personal income tax
Arizona	MA pensions are taxed and do not qualify for a $2,500 pension exemption
Arkansas	MA pensions qualify for a $6,000 pension exemption
California	MA pensions are taxed
Colorado	MA pensions qualify for a pension exemption: age 55 to 64 qualify for a $20,000 exemption; age 65 or older qualify for a $24,000 exemption
Connecticut	MA pensions are taxed
Delaware	MA pensions qualify for a pension exemption: under age 60 receive a $2,000 exemption; age 60 or older receive a $12,500 exemption
District of Columbia	MA pensions are taxed
Florida	No personal income tax
Georgia	MA pensions qualify for a pension exemption: for tax year 2004, age 62 or older or totally disabled receive a maximum exemption of $15,000
Hawaii	MA pensions are tax-exempt
Idaho	MA pensions are taxed
Illinois	MA pensions are tax-exempt
Indiana	MA pensions are taxed
Iowa	MA pensions qualify for the pension exemption: age 55 or older receives an exemption: for tax year 2004, the exemption is $6,000 for single filers and $12,000 for married, filing jointly
Kansas	MA pensions are taxed
Kentucky	MA pensions qualify for a pension exemption: for tax year 2004, the maximum exemption is $40,200
Louisiana	MA pensions qualify for the pension exemption: age 65 or older qualify for an exemption of $6,000 for single filers and $12,000 for married, if filing joint and both are receiving a pension
Maine	MA pensions qualify for the $6,000 pension exemption which is reduced by Social Security benefits
Maryland	MA pensions qualify for the pension exemption, which is first reduced by Social Security benefits. Pensioners must be age 65 or older and/or totally disabled to qualify for the exemption and for tax year 2004, the maximum exemption is $20,700
Michigan	MA pensions are tax-exempt
Minnesota	MA pensions are taxed
Mississippi	MA pensions are tax-exempt
Missouri	All out-of-state government pensions qualify for the public employee pension exemption of $6,000, w hich is phased out for taxpayers, whose income is greater than $31,000 for single filers or $44,000 for married, filing jointly when both are receiving pensions.
Montana	MA pensions qualify for the $3,600 pension exemption, which is reduced by $2 for every $1 that the federal AGI exceeds $30,000
Nebraska	MA pensions are taxed
Nevada	No personal income tax
New Hampshire	No personal income tax
New Jersey	All out-of-state government pensions qualify for the pension exemption: age 62 or older or disabled qualifies for the exemption, for tax year 2004, the maximum exemption is $15,000 for single filers and $20,000 for married, filing jointly
New Mexico	MA pensions are taxed
New York	MA pensions qualify for the pension exemption; age 59 1/2 or older qualify for a $20,000 exemption
North Carolina	MA pensions qualify for the public pension exemption of $4,000
North Dakota	MA pensions are taxed
Ohio	MA pensions can be applied toward a retirement income tax credit, currently up to $200
Oklahoma	MA pensions qualify for the pension exemption: age 65 or older whose adjusted gross income is $25,000 or less for single filers, or $50,000 or less for married, filing jointly qualifies for the exemption; for tax year 2004, the exemption is $5,500
Oregon	All MA pensions can be applied toward a retirement income tax credit
Pennsylvania	MA pensions are tax-exempt provided taxpayer is age 59 1/2 or older
Rhode Island	MA pensions are taxed
South Carolina	MA pensions qualify for the public employee pension exemption: for tax year 2004, under age 65 can deduct up to $3,000; age 65 or older can deduct up to $10,000
South Dakota	No personal income tax
Tennessee	No personal income tax
Texas	No personal income tax
Utah	MA pensions for those under the age of 65 qualify for the $4,800 pension exemption; and those age 65 or older qualify for a $7,500 exemption from all income sources, subject to a $1 reduction for every $2 of federal AGI in excess of $25,000 for single filers or $32,000 for married, filing jointly
Vermont	MA pensions are taxed
Virginia	MA pensions are taxed
Washington	No personal income tax
West Virginia	MA pensions qualify for $2,000 exemption
Wisconsin	MA pensions are taxed
Wyoming	No personal income tax

Posted: Aug 31, 2005Tags:

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