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Bailey Decision Concerning Federal Retirement Benefits
As a result of the North Carolina Supreme Court's decision in Bailey v. State of North Carolina, North Carolina may not tax certain retirement benefits received by retirees of the United States government (including military) if the retiree has five or more years of creditable service as of August 12, 1989.
States Exempting Total Amount of Federal Civil Service Annuities:
Alabama
Kentucky
Mississippi
Pennsylvania
Hawaii
Louisiana
New York
Wisconsin
Illinois
Massachusetts North Carolina
Kansas
Michigan
Oregon
(1) FL: Value of stocks, bonds, mutual funds, etc., taxed. See below for details.
(2) NH: 5% tax on interest/dividend income that exceeds $2,400 (single) or $4,800 (couple).
(3) TN: Certain interest/dividend income taxed at 6% if it exceeds $1,250 (single) or $2,500 (couple).
(4) KY: Total amount is exempt only if retired before January 1, 1998.
(5) MA: Tax rate on ordinary income including interest and dividends is 5.3%. (6) NC: Annuities not taxed beginning with 1998 if individual had five years of government service as of August 12, 1989.
(7) OR: Annuities of those who retired before October 1, 1991, are not taxed. Those who retired after October 1, 1991, are taxed only on that portion of the annuity attributable to government service after October 1, 1991.
(8) WI: Full exemption if benefits received from a retirement account established before 1964.
Bailey Decision Concerning Federal Retirement Benefits
As a result of the North Carolina Supreme Court's decision in Bailey v. State of North Carolina, North Carolina may not tax certain retirement benefits received by retirees of the United States government (including military) if the retiree has five or more years of creditable service as of August 12, 1989.
Please verifiy my statement....I will retire in 2009 from the Federal Government and want to retire in NC....I started with the Federal Government in 1981....will I pay state taxes on my Federal annuity?
thanks,
Rick
Please verifiy my statement....I will retire in 2009 from the Federal Government and want to retire in NC....I started with the Federal Government in 1981....will I pay state taxes on my Federal annuity?
thanks,
Rick
Please verifiy my statement....I will retire in 2009 from the Federal Government and want to retire in NC....I started with the Federal Government in 1981....will I pay state taxes on my Federal annuity?
thanks,
Rick
mm34b has found some great links and info (he always does!) Just some friendly advice -- this is probably a very big question from a financial perspective for you, so if you have any questions that aren't answered there or aren't positive, you definitely should consult a tax attorney or certified financial planner.
Good luck! My wife worked for the Federal gov't. in the 00's... way too young to be under CSRS, unfortunately (or she'd have probably stayed there instead of going to law school
If you're a member of the National Active & Retired Federal Employees Association (NARFE), the February 2007 issue of their monthly magazine has a current summary of the state tax treatment of federal annuities on pages 16-18.
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Clarification
