With tax season quickly approaching, I want to share some information that I believe you will find helpful.
In 2017, the legislature raised the income thresholds that allow some taxpayers to be able to deduct 100 percent of their federally taxable Social Security income, therefore expanding this deduction to more taxpayers. Effective in 2019, the threshold increases from $50,000 to $75,000 for single filers and married people filing separately, and $60,000 to $100,000 for joint filers and heads of household. As under existing law, taxpayers with incomes at or above these thresholds continue to qualify for a 75 percent deduction.
This legislation also assures a 100-percent exemption from income taxes on Social Security benefits for single filers with adjusted gross incomes of up to $75,000; and up to $100,000 for couples. They will save an additional $24 million when they file their 2019 taxes.
As mentioned above, until this year the threshold for exempting Social Security income was $50,000 for singles and $60,000 for joint filers.
The legislature also authorized a six-year phase-out, from 2019 to 2025, of the state income tax on pension and annuity income for taxpayers with federal adjusted gross income (AGI) below specified thresholds.
On pension and annuity income for people with adjusted gross income (AGI) levels of up to $75,000 for singles and $100,000 for couples, there will be a 14-percent exemption for this 2019 tax year, an overall savings for them of nearly $33 million. It will increase to 28 percent next year, 42 percent in 2021, 56 percent the following year, 70 percent in 2023, 84 percent in 2024 and 100-percent in 2025, after which it ends.
Phase-in of the Pension and Annuity Income Tax Exemption Tax Year Percent of Pension and Annuity Income Exempt from Income
In authorizing the pension and annuity income tax exemption, the legislature also made a conforming change to the existing teacher pension exemption by allowing taxpayers to claim either that exemption or the pension and annuity exemption.
I am proud to have been a part of ensuring some income tax relief for Social Security recipients, and those with pensions and annuity income.
As always, if you have additional questions or concerns, please contact my office at (800) 842-1423, or email me at email@example.com. You can also follow my legislative activity by visiting my website at www.reppavalock.com or on Facebook at www.Facebook.com/repcara.
State Representative 77th District – Bristol