While you can exempt only $2,000 of your retirement income before age 60, older seniors can subtract $12,500 from their pension and other eligible retirement income.
But seniors ages 55 and older are exempt from paying state income tax on their retirement income.
Pennsylvania doesn’t consider that retirement income, and charges state income tax on the feral taxable part of the annuity.
South Carolina also offers a $15,000 income tax deduction to all taxpayers age 65 and older — but you can’t take both the retirement income and income tax deductions.
States with no personal income taxAlaskaFloridaNevadaNew HampshireSouth DakotaTennesseeTexasWashingtonWyomingStates with personal income tax that don’t tax pensionsAlabamaHawaiiStates with personal income tax that don’t tax retirement incomeIllinoisIowaMississippiStates that tax Social SecurityColoradoConnecticutMinnesotaMontanaNew MexicoRhode IslandUtahVermontWest VirginiaHow retirement income is taxed by the IRSYour federal taxable income — also known as the adjustable gross income (AGI) — is the basis for all state income tax...
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