Taxation of Retirement Income
Tax & AccountingMarch 09, 2021

State Taxation of Retirement, Pension, and Social Security Income

The following chart provides an overview of how states treat retirement, pension, and Social Security Income. It also shows the starting point for computing state income tax liability. You can find additional details on these topics and more in the CCH® State Tax Smart Charts on CCH® AnswerConnect.

 

JURISDICTION ECONOMIC NEXUS SOCIAL SECURITY BENEFITS RETIREMENT OR PENSION INCOME
Alabama Gross income.

Exclusion from gross income allowed for all benefits.

Exclusion from state taxable income for:
  • employee retirement income from defined benefit plans under IRC 414(j)

  • government retirement income from the U.S. and the state

  • teacher retirement income from the state

  • military retirement income

  • law enforcement officer and firefighter retirement income from the state; and

  • railroad retirement income

Arizona Federal adjusted gross income. Subtraction allowed for federal taxable benefits.

Subtraction from federal AGI for:

  • $2,500 of government retirement income from the U.S., the state and its localities

  • $3,500 of military retirement income; and

  • railroad retirement income

Arkansas Gross income. Subtraction allowed for federal taxable benefits. 

Exclusion from state taxable income for:

  • $6,000 of private or public employee retirement income

  • military retirement income; and

  • railroad retirement income

California Federal adjusted gross income. Subtraction allowed for federal taxable U.S. benefits.
Subtraction for railroad retirement income.
Colorado Federal taxable income.

Subtraction allowed for federal taxable benefits up to maximum of:

  • $24,000 for taxpayers who are 65 and older; and

  • $20,000 for taxpayers who are 55 and older or those who are second party beneficiaries to such taxpayers.

 
Subtraction from federal AGI for:
  • $24,000 or amount of retirement income, whichever is smaller, for taxpayers 65 and older

  • $20,000 or amount of retirement income, whichever is smaller, for taxpayers 55 through 64 years old

  • $4,500 of military retirement income for taxpayers under 55 of age; and

  • railroad retirement income

Connecticut Federal adjusted gross income.

Subtraction allowed equal to:

  • 100% of federal taxable benefits if federal AGI is less than $100,000 and filing status is filing jointly, qualifying widow(er), or head of household;

  • 100% of federal taxable benefits if federal AGI is less than $75,000 and filing status is single or filing separately; or

  • 75% of federal taxable benefits as computed on state Social Security benefit adjustment worksheet. 

Subtraction from federal AGI for:
  • 28%(42% for 2021 tax year)of employee retirement income for single filers with federal AGI less than $75,000 and joint filers with federal AGI less than $100,000

  • 25%(50% for tax years after 2020)of teachers' retirement income

  • military retirement income; and

  • railroad retirement income

Delaware Federal adjusted gross income. Subtraction allowed for federal taxable benefits.  

Subtraction from federal AGI for:

  • $2,000 or amount of retirement income, whichever is smaller, for taxpayers under 60

  • $12,500 or amount of retirement income, whichever is smaller, for taxpayers age 60 or older; and

  • railroad retirement income

District of Columbia Federal gross income. Subtraction allowed for federal taxable benefits. Subtraction for railroad retirement income.
Georgia Federal adjusted gross income. Subtraction allowed for federal taxable benefits.  

Subtraction from federal AGI for:

  • $35,000 for taxpayers age 62 to 64

  • $65,000 for taxpayers 65 or older; and

  • railroad retirement income

Hawaii Federal adjusted gross income. Subtraction allowed for federal taxable benefits. Subtraction from federal AGI for all:
  • income from employer-funded pension, defined contribution, or defined benefit plans

  • government retirement income

  • military retirement income; and

  • railroad retirement income

Idaho Federal adjusted gross income. Subtraction allowed for federal taxable benefits.  

Subtraction from federal AGI for:

  • federal government retirement income

  • firefighter and police officer retirement income from the state

  • military retirement income; and

  • railroad retirement income

 

Subtraction, other than railroad retirement income, limited to:

  • $51,498 for joint filers 65 or older; or

  • $34,332 for all other filers 65 or older

Illinois Federal adjusted gross income. Subtraction allowed for federal taxable benefits. Subtraction from federal AGI for retirement and pension income, including:
  • income from employee defined benefit plans

  • income from IRAs and SEPs

  • government retirement income

  • military retirement income; and

  • railroad retirement income

Indiana Federal adjusted gross income. Subtraction allowed for federal taxable benefits. 

Subtraction from federal AGI for:

  • $6,250 of military retirement income, plus 25% of excess over that amount for 2019 tax year

  • $16,000 of federal service annuity income for taxpayers 62 or older; and

  • railroad retirement income

Iowa “Net income” defined by statute as federal adjusted gross income, but each item of income from federal return must reported on a line-by-line basis incorporating state adjustments where required to determine gross income. Subtraction allowed for federal taxable benefits. 

Exclusion from federal AGI for retirement and pension income, including:

  • income from defined retirement benefit and annuity plans

  • annuity income

  • income from IRAs and SEPs; and

  • railroad retirement income

 

Exclusion, other than railroad income, limited to:

  • $12,000 for joint filers 55 or older; or

  • $6,000 for all other filers 55 or older

Kansas Federal adjusted gross income. Subtraction allowed for federal taxable benefits if federal AGI is $75,000 or less.

Subtraction from federal AGI for:

  • government retirement income

  • military retirement income

  • railroad retirement income

  • law enforcement officer and firefighter retirement income from the state; and

  • retirement income from the state university system and Washburn University

Kentucky Federal adjusted gross income. Subtraction allowed for federal taxable benefits.

Subtraction from federal AGI for retirement and pension income, including:

  • IRA retirement income

  • retirement income from 401(k) and similar deferred compensation plans

  • all federal government retirement income; and

  • retirement income from the state and its local governments

 

Subtraction, other than government and military retirement income, limited to smaller of:

  • amount of retirement income; or

  • $31,110

Louisiana Federal adjusted gross income. Subtraction allowed for federal taxable benefits.

Subtraction from federal AGI for:

  • $6,000 of retirement income for unmarried taxpayers 65 or older

  • $12,000 of retirement income for married taxpayers 55 or older filing jointly

  • federal government retirement income;

  • military retirement income

  • retirement income from the state government, teacher, and university retirement systems

  • law enforcement officer and firefighter retirement income from the state; and

  • railroad retirement income

Maine Federal adjusted gross income. Subtraction allowed for federal taxable benefits.

Subtraction from federal AGI for:

  • $10,000 or amount of retirement income, whichever is smaller, from employee benefit plans

  • military retirement income; and

  • railroad retirement income

Maryland Federal adjusted gross income. Subtraction allowed for federal taxable benefits.   

Subtraction from federal AGI for:

  • $31,000 of retirement income from employee IRC Sec. 401(a), 403 or 457(b)for taxpayers 65 or older

  • $12,000 for married taxpayers age 55 or older filing jointly

  • $5,000 of military retirement income for taxpayers up to 55 and$15,000 for taxpayers 55 or older

  • $15,000 or taxable amount of retirement income, whichever is less, from the U.S., the state, or localities of the state of for law enforcement officer, firefighter, or rescue and emergency service employees 55 or older; and

  • railroad retirement income

Massachusetts Federal gross income Exclusion from gross income allowed for all benefits.  

Exclusion from state taxable income for:

  • government retirement income from the U.S., the state, or its localities; and

  • military retirement income

Michigan Federal adjusted gross income. Subtraction allowed for federal taxable benefits. 
 

Subtraction from federal AGI for retirement and pension income, including:

  • income from defined retirement plans

  • income from IRC Sec. 401(k)or 403(b) employee contribution plans

  • income from IRAs and SEPs

  • government retirement income from the U.S., the state, or its localities; and

  • railroad retirement income

 

Subtraction for private and public retirement income limited to:

  • $52,808 of private retirement and pension income for single filers or $105,615 for joint filers born before 1946

  • $15,000 of government pension income exempt from SSA benefits for single filers or $30,000 for joint filers 62-66 of age born after 1952; and

  • $35,000 of government pension income exempt from SSA benefits for single filers or $55,000 for joint filers ($70,000 if both joint filers qualify) born after 1952 and retired as January 1, 2013

Minnesota Federal adjusted gross income. No adjustment allowed for federal taxable benefits.  

Subtraction from federal AGI for:

  • military pensions; and

  • railroad retirement income

Mississippi Gross income Exclusion from gross income allowed for all benefits.  

Subtraction from state taxable income for:

  • IRA, SEP, and SIMPLE contributions

  • private retirement and pension income

  • government retirement income; and

  • railroad retirement income

Missouri Federal adjusted gross income. Subtraction allowed for amount included in federal tax base if state AGI is $100,000 or less for married taxpayers filing jointly or $85,000 or less for any other filing status.

Subtraction reduced dollar for dollar on income in excess of threshold amount for taxpayer's filing status.

Subtraction from federal AGI for:

  • public and private retirement income

  • military retirement income; and

  • railroad retirement income

 

Public and private income subtraction limited to:

  • $6,000 of private pension income if AGI less than $32,000 for married taxpayers filing jointly, $25,000 for single filers, or $16,000 for married filers filing separately; and

  • $38,437 of public pension income if AGI is $100,000 or less for married taxpayers or $85,000 or less for unmarried taxpayers

Montana Federal adjusted gross income. Addition to federal tax base required if state taxable benefits exceed federal taxable benefits.

Subtraction allowed for all or part of federal taxable benefits that exceed state taxable benefits.
 

Subtraction from federal AGI for:

  • $4,300 of pension and annuity income reduced by phaseout if AGI exceeds $35,800; and

  • railroad retirement income

Nebraska Federal adjusted gross income. Subtraction allowed for federal taxable benefits if taxpayer's federal adjusted gross income is less than or equal to $58,000 for joint filers or $43,000 for all other filers.  Subtraction from federal AGI for:
  • railroad retirement income

  • 40%(50% for tax years beginning after 2021)of military retirement for taxpayers who elect to exclude that income for 7 tax years beginning with the year in which the election is made; and

  • 15% of military retirement income for all tax years beginning with the year in which taxpayer turns 67 years of age

New Hampshire  Gross income N/A, because tax imposed only on interest and dividend income.  N/A, because tax imposed only on interest and dividend income.
New Jersey Gross income Exclusion from gross income allowed for all benefits.               

Exclusion from state taxable income for:

  • retirement income for taxpayers 62 or older if total income for the tax year is less than $100,000

  • military retirement income; and

  • railroad retirement income

 

Subtraction, other than military and railroad retirement income, limited to:

  • $80,000 for married taxpayers filing jointly

  • $60,000 for single taxpayers, heads of household, or qualifying widows(ers); and

  • $40,000 for married taxpayers filing separately

New Mexico Federal adjusted gross income. No adjustment allowed for federal taxable benefits. Subtraction from federal AGI for railroad retirement income.
New York Federal adjusted gross income. Subtraction allowed for federal taxable benefits.    

Subtraction from federal AGI for:

  • $20,000 of retirement and annuity income for taxpayers 59½ or older; and

  • government retirement income from the U.S., the state, or its localities

North Carolina Federal adjusted gross income. Subtraction allowed for federal taxable benefits.    Subtraction from federal AGI for:
  • vested government retirement income from the U.S., the state, or its localities (Bailey settlement exemption), excluding local government IRC 403(b) and 457 annuity plans; and

  • railroad retirement income

North Dakota Federal adjusted gross income. Subtraction allowed for federal taxable benefits if taxpayer's federal adjusted gross income is less than or equal to $100,000 for joint filers or $50,000 for all other filers.

Subtraction from federal AGI for:

  • railroad retirement income; and

  • military retirement income


Ohio Federal adjusted gross income. Subtraction allowed for federal taxable benefits.   Subtraction from federal AGI for:
  • military retirement income; and

  • railroad retirement income

Oklahoma Federal adjusted gross income.

Subtraction allowed for federal taxable benefits. 

 

Subtraction from federal AGI for retirement and pension income, including:

  • income from IRC 401 employee pension plans

  • income from IRC 457 deferred compensation plans

  • income from IRAs and SEPs

  • income from IRC 403(a) or (b) employee annuities

  • lump-sum distributions from IRC 402 retirement plans

  • government retirement income from the U.S. or the state

  • all U.S. civil service income, instead of social security retirement benefits; and

  • railroad retirement income

 

Private, government, and military retirement income subtraction limited to:

  • $10,000 of private and government retirement income; and

  • 75% or $10,000 of military retirement income

Oregon  Federal adjusted gross income Subtraction allowed for federal taxable benefits.   

Subtraction from federal AGI for:

  • government retirement income from the U.S., including military retirement income, based on time of service before and after 1991

  • income from IRAs, SEPs, IRC 403(b) employee annuities, and IRC 457 deferred compensation plans previously taxed by another state; and

  • railroad retirement income

Pennsylvania Federal adjusted gross income. Subtraction allowed for federal taxable benefits.    Exclusion from state taxable income for:
  • employer-sponsored retirement plans

  • income from IRAs, SEPs, and Keogh plans;

  • government retirement income

  • military retirement income

  • railroad retirement income

Rhode Island Gross income  

Subtraction allowed for federal taxable benefits, if federal AGI is less than:

  • $86,350 for single or head of household filers;

  • $86,375 for married filing separately; and

  • $107,950 for married filing jointly or qualifying widows(ers).

 

AGI limits are adjusted annually for inflation.

 Subtraction from federal AGI for:

 

  • income from IRC 401(k), 403(b), and 457 plans;

  • military retirement income

  • government retirement income from the U.S., state, and local governments

  • private-sector pensions

  • annuities; and

  • railroad retirement income

 

Subtraction for private, government, and military retirement income limited to $15,000 for taxpayers who have reached the age for Social Security retirement benefits if AGI is less than:

  • $84,700 for single, head of household, or married filing separately; and

  • $105,850 for married filing jointly or qualifying widows(ers)

AGI limits are adjusted annually for inflation.

South Carolina Federal taxable income Subtraction allowed for federal taxable benefits. 
 Subtraction from federal AGI for:
  • retirement income from IRC 401, 403, 408, and 457 plans

  • government retirement income from the U.S., state, and local governments, including individual retirement plans, Keogh plans, and military retirement income; and

  • railroad retirement income

 

Subtraction private and public retirement income limited to:

  • $3,000 for taxpayers under 65; and

  • $10,000 for taxpayers age 65 or older

Tennessee Certain dividends and interest income. N/A, because tax imposed only on interest and dividend income. N/A, because tax imposed only on interest and dividend income.
Utah Federal adjusted gross income. No adjustment allowed for federal taxable benefits. Subtraction from federal AGI for railroad retirement income.
Vermont Federal adjusted gross income. Subtraction allowed for amount included in federal tax base if federal AGI is $60,000 or less for joint filers or $45,000 or less for other filers. Subtraction reduced for income in excess of threshold. Subtraction from federal AGI for railroad retirement income.
Virginia Federal adjusted gross income. Subtraction allowed for federal taxable benefits.   Subtraction from federal AGI for:
  • IRC 401, 408, and 457 retirement income and U.S. government retirement income for which contributions were previously taxed by another state

  • military retirement income for taxpayers awarded the Congressional Medal of Honor; and

  • railroad retirement income

West Virginia Federal adjusted gross income.  

Subtraction allowed if federal AGI does not exceed:

  • $50,000 for a single individual or married individual filing separately; or

  • $100,000 for married couple filing jointly.

 

Equal to:

  • 35% of federal taxable benefits for tax years beginning on and after January 1, 2020;

  • 65% of federal taxable benefits for tax years beginning on and after January 1, 2021; and

  • 100% of federal taxable benefits for tax years beginning on and after January 1, 2022.

 

Subtraction from federal AGI for:

  • $2,000 of retirement income from the U.S. government, the state government, and the state teachers' retirement system

  • part of the retirement income under a plan covered by the Pension Benefit Guaranty Corporation (PBGC)

  • law enforcement officer and firefighter retirement income from the state and its localities;

  • military retirement income; and

  • railroad retirement income

Wisconsin Federal adjusted gross income. Subtraction allowed for federal taxable benefits. 
 

Subtraction from federal AGI for:

  • $5,000 of retirement income from qualified retirement plans and IRAs for taxpayers age 65 or older if AGI is less than $15,000 for single filers or $30,000 for married filers

  • retirement income from the U.S. government, the state teachers' retirement system, and Milwaukee city and county law enforcement, firefighter, and teachers' retirement system

  • military and certain other uniformed services retirement income; and

  • railroad retirement income

 
 

Source: Wolters Kluwer CCH® AnswerConnect, 2021
Permission for use granted.

Tim Bjur, PD
Senior Content Management Analyst
Tim Bjur is an attorney and senior content management analyst for Wolters Kluwer Tax & Accounting, who has spent the last 18 years analyzing state income tax legislation, case law, and regulatory developments. He offers a detailed understanding of state personal and corporate income taxation and trends across all states and has been quoted in top media publications, including Forbes and CNBC.