Mass. Pensions And Income Taxes In Other States

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

 

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