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THE FOREIGN SERVICE JOURNAL

|

JANUARY-FEBRUARY 2016

87

AFSA NEWS

NORTH CAROL I NA

Pursuant to the “Bailey” deci-

sion (see

www.dornc.com/

taxes/individual/benefits.

html), government retirement

benefits received by federal

retirees who had five years of

creditable service in a federal

retirement system on Aug. 12,

1989, are exempt fromNorth

Carolina income tax. Those

who do not have five years of

creditable service on Aug. 12,

1989, must pay North Carolina

tax on their federal annuities.

As of 2014, the $4,000 deduc-

tion is no longer available.

For those over age 65, an

extra $750 (single) or $1,200

(couple) may be deducted.

Social Security is exempt.

State sales tax is 4.75 percent;

local taxes may increase this

by up to 3 percent.

NORTH DAKOTA

All pensions and annuities are

fully taxed. Social Security is

exempt. General sales tax is 5

percent, 7 percent on liquor.

Local jurisdictions impose up

to 3 percent more.

OH I O

Retirement income is taxed.

Taxpayers 65 and over may

take a $50 credit per return.

In addition, Ohio gives a tax

credit based on the amount

of the retirement income

included in Ohio adjusted

gross income, reaching a

maximum of $200 for any

retirement income over

$8,000. Social Security is

exempt. State sales tax is 5.75

percent. Counties and regional

transit authorities may add

to this, but the total must not

exceed 8.75 percent.

of the tax liability or 9 percent

of taxable pension income.

Oregon does not tax Social

Security benefits. Oregon has

no sales tax.

PENNSYLVAN I A

Government pensions and

Social Security are not subject

to personal income tax. Penn-

sylvania sales tax is 6 percent.

Other taxing entities may add

up to 2 percent.

PUERTO R I CO

The first $11,000 of income

received from a federal

pension can be excluded

for individuals under 60. For

those over 60, the exclusion

is $15,000. If the individual

OKLAHOMA

Individuals receiving Fed-

eral Employees’ Retirement

System, Foreign Service

Pension System or private

pensions may exempt up to

$10,000, but not to exceed the

amount included in the federal

adjusted gross income. Since

2011, 100 percent of a federal

pension paid in lieu of Social

Security (i.e., Civil Service

Retirement System and For-

eign Service Retirement and

Disability System—“old sys-

tem”—including the CSRS/

FSRDS portion of an annuity

paid under both systems)

is exempt. Social Security

included in federal adjusted

gross income is exempt. State

sales tax is 4.5 percent. Local

and other additions may bring

the total up to 9.5 percent.

OREGON

Generally, all retirement

income is subject to Oregon

tax when received by an

Oregon resident. However,

federal retirees who retired

on or before Oct. 1, 1991, may

exempt their entire federal

pension; those who worked

both before and after Oct.

1, 1991, must prorate their

exemption using the instruc-

tions in the tax booklet. If you

are over age 62, a tax credit

of up to 9 percent of taxable

pension income is available to

recipients of pension income,

including most private pen-

sion income, whose house-

hold income was less than

$22,500 (single) and $45,000

(joint),and who received less

than $7,500 (single)/$15,000

(joint) in Social Security ben-

efits. The credit is the lesser

receives more than one federal

pension, the exclusion applies

to each pension or annuity

separately. Social Security is

not taxed.

RHODE I S LAND

U.S. government pensions

and annuities are fully taxable.

Sales tax is 7 percent; meals

and beverages are taxed at 8

percent.

SOUTH CAROL I NA

Individuals under age 65 can

claim a $3,000 deduction on

qualified retirement income;

those 65 years of age or over

can claim a $10,000 deduc-

tion on qualified retirement

income. A resident of South