Massachusetts Qualified Contributory Pension Exclusion
The Massachusetts Qualified Contributory Pension Exclusion allows certain pension income to be exempt from state income tax. This exclusion applies to pension income received from contributory annuity, pension, endowment, or retirement funds of the U.S. government or the Commonwealth of Massachusetts and its political subdivisions.
Eligible Pension Income
- Pension income from the U.S. government or the Commonwealth of Massachusetts and its political subdivisions.
- Contributory annуity, pension, endowment, or retirement funds.
Exclusion Details
According to Massachusetts Form 1-NR/PY instructions, pension income from these sources is exempt from Massachusetts state income tax. Taxpayers should ensure they correctly identify and report exempt pension income on their return.
Reporting Requirements
- Nonresident filers must complete Form 1-NR/PY and indicate if they are filing as a nonresident or part-year resident.
- For taxable pension income not covered by the exclusion, taxpayers should report the amount as shown on their federal Form 1040, line 5b.
- Adjustments may be required for distributions from plans under IRC §§ 403(b) and 404 if contributions were previously taxed by Massachusetts.
Important Notes
Massachusetts does not exempt all pension income. Only pensions from qualified contributory plans of the U.S. government or Massachusetts are exempt. Other pension income must be reported as taxable income on Form 1-NR/PY, line 6.
Source:
Form 1-NR/PY Instructions
Form 1 Instructions
Disclaimer: Always verify with the official Federal or State Department of Revenue Forms and Instructions for the most accurate and up-to-date tax guidance.