Tax Treatment of Out-of-State Government Pensions for MA Residents

When it comes to taxes, different states may treat your pension payments from out-of-state employee government pensions differently.

Updated: May 31, 2024

Overview

If you move to Massachusetts and receive pension payments from your former states' public employee retirement plans, you can deduct those from your Massachusetts gross income if the former state doesn't tax income its residents receive from Massachusetts.

When you're reporting your income on your personal income tax return:

1. Include the income you received in your Massachusetts gross income as pension income on Form 1, Line 4.
2. If the amount is deductible from Massachusetts gross income, claim it as a deduction on Schedule Y, Line 13.

As a Massachusetts resident, you may deduct income you received from a contributory annuity, pension, endowment or retirement fund of another state or its political subdivisions if:

• The other state has a specific income exclusion for pension income which applies to Massachusetts state or local contributory public employee pension plans, or
• The other state has a specific deduction or exemption for pension income which applies to Massachusetts state or local contributory public employee pension plans, or
• The other state has no income tax

You may not deduct income you received from a contributory annuity, pension, endowment or retirement fund of another state or its political subdivisions if the other state has a specific credit for pension income which applies to Massachusetts state or local contributory public employee pension plans.