View other states' tax treatment of out-of-state government pensions

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

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 (e.g. Ohio) for pension income which applies to Massachusetts state or local contributory public employee pension plans.

This list should be used for guideline purposes only when determining the amount of out-of-state employee contributory government pension. This has been compiled from non-DOR sources and DOR does not certify that the information is complete.

Out-of-state government pension treatment

State How out-of-state government pensions are treated
Alabama Tax-exempt if they are defined benefit plans
Alaska No personal income tax
Arizona Fully taxed
Arkansas

All out-of-state government pensions qualify for the $6,000 pension exemption.

Taxpayers age 65 or older who do not qualify for the pension exemption may qualify for the Special Tax Credit.

California Fully taxed
Colorado

All out-of-state government pensions qualify for the pension exemption.

  • Age 55 to 64 qualify for a $20,000 exemption
  • Age 65 or older qualify for a $24,000 exemption
Connecticut Fully taxed
Delaware

All out-of-state government pensions qualify for the pension exemption.

  • Under age 60 receive a $2,000 exemption
  • Age 60 or older receive a $12,500 exemption
District of Columbia Fully taxed
Florida No personal income tax
Georgia All out-of-state government pensions qualify for the pension exclusion. The maximum retirement exclusion for taxpayers age 65 or older is $65,000. The retirement exclusion for taxpayers who are age 62 to 64, or less than 62 and permanently disabled, remains at $35,000.
Hawaii Tax-exempt
Idaho Fully taxed
Illinois Tax-exempt
Indiana Fully taxed
Iowa All out-of-state government pensions qualify for the pension exemption. Those age 55 or older, or disabled, receive an exemption. The exemption for single and head of household filers is $6,000 (and $12,000 for married filing joint filers), but can't exceed the amount included in federal adjusted gross income.
Kansas Fully taxed
Kentucky

All out-of-state government pensions qualify for the pension exemption. The maximum exemption is $41,110. Employees who retired:

  • Before January 1, 1998 - You receive a full exemption of your public pensions.
  • After January 1, 1998 - You receive an exemption based on your service time before January 1, 1998, compared to your total service time.
Louisiana

All out-of-state government pensions qualify for the pension exemption.

Age 65 or older qualifies for an exemption of $6,000. Taxpayers who are married filing jointly and are both age 65 or older may each exclude up to $6,000. If only 1 spouse has retirement income, the exclusion is limited to $6,000.

Maine All out-of-state government pensions qualify for the $10,000 pension exemption. Reduce this exemption by any Social Security and railroad retirement benefits you received (except military pension benefits), taxable or not. The subtraction includes all federally taxable pension income, annuity income and IRA distributions, except for allowed deductions for pickup contributions.
Maryland All out-of-state government pensions qualify for the pension exemption, which is first reduced by taxable and nontaxable Social Security and Railroad Retirement benefits. Those age 65 or older and/or totally disabled qualify for the exemption. The maximum exemption is $29,000.
Michigan

Those who reach the age of 67 during the taxable year may deduct $20,000 for single or married, filing separately, or $40,000 for joint filers against all income. If you qualify, you're not eligible to deduct pension and retirement benefits.

The retirement/pension deduction (or Michigan Standard deduction) is computed as follows:

  • If you were born before 1946, subtract all qualifying pension and retirement benefits you received from public sources.
  • If you were born between 1946 and 1952, you may deduct your qualifying and retirement benefits up to:
    • $20,000 if single or married filing separate, or
    • $40,000 for joint filers if married filing a joint return
      Once you turn 67 years old, the deduction for pension/retirement benefits is replaced by a standard deduction against all income of $20,000 for single filers ($40,000 for joint filers). 
  • If you were born after 1952, you're not entitled to pension subtractions. All pension and retirement benefits are taxable. Once you turn 67 years old, the deduction for pension/retirement benefits is replaced by a standard deduction against all income of $20,000 for single filers ($40,000 for joint filers).

Qualifying pension and retirement benefits include most payments reported on a 1099-R for federal tax purposes, such as:

  • Defined benefit pensions
  • IRA distributions
  • Most payments from defined contribution plans
  • Distributions from:
    • The state of Michigan
    • Michigan local governmental units (e.g., Michigan counties, cities, and school districts)
    • Federal civil service
Minnesota Pensions, including federal pensions, are taxable. Taxpayers 65 and older may subtract some income if their federal adjusted gross income is under certain limits.
Mississippi Tax-exempt
Missouri

All out-of-state government pensions qualify for the public employee pension exemption.

You qualify for a partial exemption, which is limited to either $6,000 or 100% of your taxable public pension (not to exceed your maximum Social Security benefits), if you're a:

  • Married couple with Missouri adjusted gross income greater than $100,000
  • Single individual with Missouri adjusted gross income greater than $85,000
Montana

All out-of-state government pensions qualify for the partial pension exemption. The retirement exemption is limited to the smaller of:

  • Taxable retirement income, or
  • $3,980

As long as federal adjusted gross income (AGI) is $33,200 or less and filing status is either single, married filing jointly if only 1 spouse has taxable retirement income, or head of household. If filing jointly with spouse, and your retirement income and federal AGI is each $33,200 or less, both spouses may exclude the lesser of taxable retirement income personally received, or $3,980 each (for a maximum of $7,960).

When federal AGI exceeds $33,200, the retirement exemption is reduced $2 for every $1 that federal AGI is over $33,200. You can't claim this exemption if your federal AGI is greater than:

  • $35,190 - If filing single, married filing separately, or head of household
  • $37,180 - If married filing jointly and both spouses have retirement income
Nebraska Fully taxed
Nevada No personal income tax
New Hampshire No personal income tax
New Jersey

All out-of-state government pensions qualify for the pension exclusion. 

Residents 62 or older may exclude all or part of their taxable pensions, annuities and IRA withdrawals if their gross income for the entire year before subtracting any pension exclusion does not exceed $100,000. The maximum amount excluded depends on filing status.

  • Married and filing a joint return - $20,000
  • Single, head of household or qualifying widow or widower - $15,000
  • Married filing a separate return - $10,000

Taxpayers whose gross income exceeds $100,000 may still be eligible for a special exclusion up to $6,000.

New Mexico

All out-of-state government pensions qualify for the $8,000 income exemption. You may exempt up to $8,000 from any income source if you're age 65 or older and your income is:

  • Single filers - $28,500 or less
  • Married, filing separate - $25,500 or less
  • Married, filing joint - $51,000 or less
New York All out-of-state government pensions qualify for the pension exemption. Those age 59 and a half, or older, qualify for a $20,000 exemption.
North Carolina For tax years beginning in 2014, previous tax breaks for pensions for both government and private employees have been eliminated.
North Dakota Fully taxed
Ohio

No exclusions, exemptions, or deductions for out-of-state government pensions. However, out-of-state government pensions may be applied toward a retirement income tax credit depending on the amount of qualifying retirement income.

Those age 65 and older may also qualify for the senior citizen credit.

Oklahoma Out-of-state government pensions qualify for the pension exemption of $10,000, and are no longer subject to the modified Oklahoma adjusted gross income limit.
Oregon

No exclusions, exemptions, or deductions for out-of-state government pensions. However, you may apply out-of-state government pensions toward the retirement income tax credit, depending on household income, if you're age 62 or older at the end of the taxable year. The credit is the smaller of:

  • Computed tax liability, or
  • 9% of taxable pension income
Pennsylvania Tax-exempt if you're age 59 and a half, or older
Rhode Island Fully taxed
South Carolina

All out-of-state government pensions qualify for the public employee pension exemption.

  • Under age 65 may deduct up to $3,000
  • Age 65 or older may deduct up to $10,000
South Dakota No personal income tax
Tennessee No personal income tax
Texas No personal income tax
Utah

All out-of-state government pensions qualify for the retirement tax credit (subject to income-eligibility limits). Taxpayers younger than age 65 may claim the retirement tax credit, which is the lesser of:

  • An annual ceiling amount, or
  • A percentage of eligible retirement income
Vermont Fully taxed
Virginia

All out-of-state government pensions qualify for the Virginia Age deduction.

  • Those born on or before January 1, 1939 - The age deduction is $12,000 per filer.
  • Those born on January 2, 1939, or later - The $12,000 deduction is reduced by $1 for every $1 that adjusted federal AGI exceeds $50,000 (or $75,000 for married filers).
Washington No personal income tax
West Virginia

All out-of-state government pensions qualify for the income exemption.

Taxpayers 65 and older may exclude the first $8,000 of any type of retirement income or out-of-state pensions ($16,000 for married couples) from West Virginia taxes. Residents may exempt $2,000 of civil or state pensions.

Wisconsin Fully taxed
Wyoming No personal income tax

Additional Resources for Out-of-state government pension treatment

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