What's happening
This bill increases the maximum amount of pension and annuity income excluded from New York State personal income tax from $20,000 to $35,000.
Why it matters
Expanding the pension and annuity exclusion from $20,000 to $35,000 could provide significant tax relief to retirees. , especially those on fixed incomes, potentially improving their financial security and quality of life in New York State.
This increase may help make New York more attractive or competitive for retirees. , encouraging them to remain residents rather than relocating to states with more favorable tax treatment of retirement income.
By allowing a higher exclusion, the bill could reduce taxable income for many older adults. , possibly lowering their overall tax liability and freeing up resources for other expenses, including health care and housing.
The change applies to a wide range of retirement income sources—including IRAs and retirement plans for the self-employed—broadening the benefit's reach. and acknowledging the diversity in how New Yorkers save for retirement.
Albany, before your first meeting.
Every bill that moved yesterday, summarized in a sentence and ranked by impact. The Albany Scorecard follows on Sundays.
Free. Unsubscribe in one click. Want alerts on specific bills? Create an account.
Who cares
Headline styles
Raise Pension Tax Exemption
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Referred to budget and revenue
- Referred to budget and revenue
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
3943
2019-2020 Regular Sessions
IN SENATE
February 21, 2019
Introduced by Sen. GOUNARDES -- read twice and ordered printed, and when printed to be committed to the Committee on Budget and Revenue
AN ACT to amend the tax law, in relation to personal income taxation of pensions and annuities
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] thirty-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 article. Where a husband and wife file a joint state personal income tax
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD09932-01-9
S. 3943 2
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 January 1, 2020 and shall apply to taxable years beginning on and after such date.
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 personal income taxation of pensions and annuities
Purpose
This bill increases the amount of the New York State Personal Income Tax subtraction for pensions and annuities.
Summary of provisions
Section one of this bill amends Tax Law section 612(c)(3-a) to increase the Personal Income Tax ("PIT") pensions and annuities subtraction from $20,000 to $35,000, to the extent that the income is included in the taxpayer's gross income for Federal income tax purposes and not subtracted pursuant to 612(c)(3).
Section two of this bill provides that this act shall take effect Janu- ary 1, 2020 and shall apply to taxable years beginning on and after such date.
Current law
Tax Law section 612(c)(3-a) provides a $20,000 PIT subtraction for pension and annuity income received by the taxpayer, to the extent that the income is included in the taxpayer's gross income for Federal income tax purposes and not subtracted pursuant to 612(c)(3).
Justification
The current subtraction for pension and annuity income was enacted in 1981 (Chapters 183 and 1043). That was 37 years ago. Since that time, this subtraction has not increased even though we have undergone inflation every year.
According to the Federal Bureau of Labor Statistics, $20,000 in January 1981 has the same buying power as $57,864.83 in January 2019. Unfortu- nately, the Tax Law has not kept up with inflation.
This bill provides our retired taxpayers with more complete relief by raising the amount of the pension and annuities subtraction to $35,000. This amount is approximately the buying power that $20,000 1981 dollars would have in 1991, which was the last time this subtraction was amended by the Legislature.
In its' 2018 Annual Report, the Federal Pension Benefit Guarantee Corpo- ration ("PBGC") stated "(s)ince 1974, PBGC has taken responsibility for paying the benefits of about 1.5 million people in over 5,000 failed single-employer and multi-employer plans. PBGC made benefit payments of $5.9 billion in FY 2018." PBGC 2018 Annual Report, p. 2, retrieved from https://www.plagc.govisites/default/files/pbgc -annual- report2018.pdf. In 2018, the PBGC assumed responsibility for 58 terminated single-em- ployer plans in which more than 28,000 people were members. By assuming responsibility for these plans, the PBGC is guaranteeing that these members will receive retirement benefits. Unfortunately, due to maximum payment limitations, members may not receive their full retirement bene- fit.
Retirement plan underfunding and failures are no limited to single-em- ployer plans. On December 31, 2016, the New York Times reported that the New York State Teamsters Conference Pension and Retirement Fund had enough money to fund 44.8% of its obligations. Morgenson, Gretchen, New York's Teamsters May Have Their Pensions Cut. What Went Wrong?, New York Times, December 31, 2016, retrieved from https://www.nytimes.com/2016/12/30/busines s/O1 cret-morgenson- pensionsteamsters.html, on February 14, 2019. As CNN reported on May 7, 2018, retired members of the New York State Teamsters Conference Pension and Retirement Fund had their pension benefits reduced by 29%. CNN Money at https://money.cnn.com/2018/05/07/retirement/pension -fund-cuts- teamsters/index.html, retrieved on February 14, 2019.
This legislation would help our retirees who are trying to make ends meet.
Legislative history
New bill
Fiscal implications
To be determined
Effective date
This act shall take effect January 1, 2020 and shall apply to taxable years beginning on and after such date.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.