Increases the tax exemption for pensions and annuities for persons age fifty-nine and one-half or greater from $20,000 to $25,000 in 2025, $30,000 in 2026, $35,000 in 2027 and $40,000 for each subsequent year.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A208
SPONSOR: Magnarelli TITLE OF BILL:
An act to amend the tax law, in relation to increasing the exemption for
pensions and annuities for certain persons
PURPOSE:
This bill will increase the amount of pension income which is exempt
from the personal income tax.
SUMMARY OF PROVISIONS:
Section 612(c)(3-a) of the Tax Law is amended to increase the amount of
private pension and annuity income that is exempt from New York State
income taxes. The current exemption level of $20,000 would be increased
to $25,000 for the 2025 taxable year, to $30,000 for the 2026 taxable
year, to $35,000 for the 2027 taxable year, and to $40,000 in the 2027
and subsequent taxable years
EXISTING LAW:
Current law provides that up to twenty thousand dollars of pension and
annuity income received by individuals over the age of 59 may be
subtracted from federal adjusted gross income for purposes of calculat-
ing New. York State personal income tax.
JUSTIFICATION:
The current twenty thousand dollar limit was set back in 1981. This bill
provides a much needed increase in this amount. The original law was
enacted, in part, to treat the recipients of private pensions more fair-
ly in comparison to those receiving state or, local government pensions.
In fact, legislation had been proposed to eliminate the personal income
tax on private pensions altogether. Ultimately, the $20,000 limit was
negotiated and enacted as part of the Budget (Chapter 103 of 1981).This
increase is long overdue. Cost of living increases alone would put the
1981 $20,000 figure at well more than $40,000 today.
In addition, with the elimination of the income tax on more of their
pension income, older New Yorkers would be able to keep more of their
income at a time when many find it difficult to supplement their incomes
by returning to the workforce.
Reducing the tax burden on older New Yorkers will also help encourage
them to remain in New York State.
LEGISLATIVE HISTORY:
2021-2022: A.1357, 2019-2020: A.6213, 2017-2018: A.690-A, 2015-2016:
A.6413-B
FISCAL IMPLICATIONS:
To be determined.
EFFECTIVE DATE:
Immediately.
STATE OF NEW YORK
________________________________________________________________________
208
2023-2024 Regular Sessions
IN ASSEMBLY(Prefiled)
January 4, 2023
___________
Introduced by M. of A. MAGNARELLI, STIRPE, COOK, LUPARDO, STECK, BENE-
DETTO, JONES -- read once and referred to the Committee on Ways and
Means
AN ACT to amend the tax law, in relation to increasing the exemption for
pensions and annuities for certain persons
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Paragraph 3-a of subsection (c) of section 612 of the tax
2 law, as amended by section 3 of part I of chapter 59 of the laws of
3 2015, is amended to read as follows:
4 (3-a) Pensions and annuities received by an individual who has
5 attained the age of fifty-nine and one-half, not otherwise excluded
6 pursuant to paragraph three of this subsection, to the extent includible
7 in gross income for federal income tax purposes, but not in excess of
8 [twenty] twenty-five thousand dollars for any taxable year beginning on
9 or after January first, two thousand twenty-five, thirty thousand
10 dollars for any taxable year beginning on or after January first, two
11 thousand twenty-six, thirty-five thousand dollars for any taxable year
12 beginning on or after January first, two thousand twenty-seven, and
13 forty thousand dollars in each subsequent year, which are periodic
14 payments attributable to personal services performed by such individual
15 prior to his retirement from employment, which arise (i) from an employ-
16 er-employee relationship or (ii) from contributions to a retirement plan
17 which are deductible for federal income tax purposes. However, the term
18 "pensions and annuities" shall also include distributions received by an
19 individual who has attained the age of fifty-nine and one-half from an
20 individual retirement account or an individual retirement annuity, as
21 defined in section four hundred eight of the internal revenue code, and
22 distributions received by an individual who has attained the age of
23 fifty-nine and one-half from self-employed individual and owner-employee
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD00304-01-3
A. 208 2
1 retirement plans which qualify under section four hundred one of the
2 internal revenue code, whether or not the payments are periodic in
3 nature. Nevertheless, the term "pensions and annuities" shall not
4 include any lump sum distribution, as defined in subparagraph (D) of
5 paragraph four of subsection (e) of section four hundred two of the
6 internal revenue code and taxed under section six hundred three of this
7 article. Where a husband and wife file a joint state personal income tax
8 return, the modification provided for in this paragraph shall be
9 computed as if they were filing separate state personal income tax
10 returns. Where a payment would otherwise come within the meaning of the
11 term "pensions and annuities" as set forth in this paragraph, except
12 that such individual is deceased, such payment shall, nevertheless, be
13 treated as a pension or annuity for purposes of this paragraph if such
14 payment is received by such individual's beneficiary.
15 § 2. This act shall take effect immediately.
