What's happening
This bill increases the New York State tax exemption for pensions and annuities from $20,000 to $75,000.
Why it matters
Significantly increases tax relief for retirees. By raising the exemption cap from $20,000 to $75,000, the bill allows seniors and others receiving pensions or annuities to exclude a much larger portion of their retirement income from New York State income tax, potentially resulting in substantial annual savings.
May help retain and attract retirees in New York. The higher exemption could make New York more financially attractive for retirees, who might otherwise consider relocating to states with more favorable tax treatment of retirement income.
Potential state revenue impact. With more retirement income exempt from taxation, the state could see a decrease in personal income tax revenue, which may affect funding for other programs and services unless offset by other sources.
Addresses inflation and rising cost of living. The exemption increase recognizes changes in the value of money and the growing reliance on retirement income, helping retirees better keep pace with expenses without additional state tax burdens.
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Who cares
Headline styles
Increase Pension Tax Exemption
Plain English, a few words. Used as the page title.
Sponsors
1 Co-sponsor
History
- Referred to investigations and government operations
- Referred to investigations and government operations
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
863
2017-2018 Regular Sessions
IN SENATE
January 5, 2017
Introduced by Sen. RITCHIE -- read twice and ordered printed, and when printed to be committed to the Committee on Investigations and Government Operations
AN ACT to amend the tax law, in relation to increasing a pension exemption
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Paragraph 3-a of subsection (c) of section 612 of the tax law, as amended by section 3 of part I of chapter 59 of the laws of 2015, is amended to read as follows:
(3-a) Pensions and annuities received by an individual who has attained the age of fifty-nine and one-half, not otherwise excluded pursuant to paragraph three of this subsection, to the extent includible in gross income for federal income tax purposes, but not in excess of [twenty] seventy-five thousand dollars, which are periodic payments attributable to personal services performed by such individual prior to his retirement from employment, which arise (i) from an employer-employee relationship or (ii) from contributions to a retirement plan which are deductible for federal income tax purposes. However, the term "pensions and annuities" shall also include distributions received by an individual who has attained the age of fifty-nine and one-half from an individual retirement account or an individual retirement annuity, as defined in section four hundred eight of the internal revenue code, and distributions received by an individual who has attained the age of fifty-nine and one-half from self-employed individual and owner-employee retirement plans which qualify under section four hundred one of the internal revenue code, whether or not the payments are periodic in nature. Nevertheless, the term "pensions and annuities" shall not include any lump sum distribution, as defined in subparagraph (D) of paragraph four of subsection (e) of section four hundred two of the internal revenue code and taxed under section six hundred three of this
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD06855-01-7
S. 863 2
article. Where a husband and wife file a joint state personal income tax return, the modification provided for in this paragraph shall be computed as if they were filing separate state personal income tax returns. Where a payment would otherwise come within the meaning of the term "pensions and annuities" as set forth in this paragraph, except that such individual is deceased, such payment shall, nevertheless, be treated as a pension or annuity for purposes of this paragraph if such payment is received by such individual's beneficiary.
§ 2. This act shall take effect on the first of January next succeeding the date on which it shall have become a law.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the tax law, in relation to increasing a pension exemption
Purpose
This bill updates the law regarding pensions and annuities. It increases the amount that private-sector pensions and annuities are exempt from the Personal Income Tax to $75,000.
Summary of provisions
Section 1 amends paragraph 3-a of sub-section (c) of section 612 of the Tax Law. It increases to $75,000 the amount from pensions and annuities received by an individual who has attained the age of fifty-nine and one-half that can be excluded from the calculation of gross income. Specifically, the funds to be excluded must be periodic payments attributable to personal services performed by the individual prior to their retirement. The funds must come from an employer-employee relationship or from contributions to a retirement plan which are deductible for federal income tax purposes.
Section 2 provides the effective date.
Justification
This bill updates the tax ceiling for retirement income derived from pensions and annuities. The current law is out of date and does not reflect the growth in retirement income that has occurred since its enactment in 1982. Since that time the Consumer Price index has increased by 135 percent. This legislation is necessary to ensure that the recipients of income received from private-sector pensions and annuities are treated in a similar fashion as the recipients of income received from public-sector or government pensions.
Currently, only the first $20,000 of income from private-sector pensions and annuities is exempt from the Personal Income Tax, but income from government pensions is completely exempt from the Personal Income Tax. This bill seeks to level that playing field by treating recipients of private-sector pensions and annuities in a more equitable manner.
Under this legislation, up to $75,000 of the income individuals receive from private-sector pensions and annuities for the purposes of personal Income Tax is exempted. By increasing the income ceiling for Personal Income Tax calculations, New Yorkers become more fiscally solvent. Retirement income should be treated equitably and this legislation achieves that objective.
Legislative history
2015-2016: S3310-A 2013-2014: S.6573
Fiscal implications
To be determined.
Effective date
This act shall take effect on the first of January next succeeding.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.