Under Oklahoma state tax law, individuals may exclude a portion of their retirement benefits from Oklahoma Government or Federal Civil Service Retirement. Specifically, each individual may exclude up to $10,000 of such retirement benefits, but this exclusion cannot exceed the amount of retirement income included in the taxpayer’s Federal Adjusted Gross Income (AGI). To qualify, the retirement income must be received in the taxpayer’s name.
Note: Qualifying Federal Civil Service Retirement System (CSRS) benefits paid in lieu of Social Security, which may generally be excluded 100% from Oklahoma income, is a separate subtraction.
Eligible Retirement Sources
Oklahoma Government or Federal Civil Service Retirement Each individual may exclude their retirement benefits up to $10,000, but not to exceed the amount included in the Federal AGI. (To be eligible, you must have retirement income in your name.)
The retirement benefits must be received from the following:
- The Civil Service of the United States;
- The Oklahoma Public Employees Retirement System of Oklahoma;
- The Oklahoma Teacher’s Retirement System;
- The Oklahoma Law Enforcement Retirement System;
- The Oklahoma Firefighters Pension and Retirement System;
- The Oklahoma Police Pension and Retirement System;
- The employee retirement systems created by counties pursuant to 19 OS Sec. 951;
- The Uniform Retirement System for Justices and Judges;
- The Oklahoma Wildlife Conservation Department Retirement Fund;
- The Oklahoma Employment Security Commission Retirement Plan; or
The employee retirement systems created by municipalities pursuant to 11 OS Sec. 48-101
Important Notes
- The applicable Oklahoma retirement exclusion depends on the type of retirement benefit received. Taxpayers should not automatically apply the $10,000 exclusion to all federal civil service retirement benefits.
- Qualifying CSRS benefits paid in lieu of Social Security are subject to the separate 100% exclusion and should not also be included in the $10,000 exclusion.
- For qualifying Oklahoma government retirement benefits that are subject to the $10,000 exclusion, each individual may exclude up to $10,000, but the exclusion cannot exceed the amount of qualifying retirement income included in Federal AGI.
- Military retirement benefits are subject to a separate Oklahoma exclusion and should not be treated as part of the $10,000 Oklahoma government retirement exclusion.
- An early distribution resulting from termination of employment before retirement or disability does not qualify for this particular $10,000 government-retirement exclusion
Source:
Form 511 - Oklahoma Individual Income Tax Return
Disclaimer: Always verify details with the official forms and instructions from the Oklahoma Department of Revenue or the Internal Revenue Service. Tax laws and eligibility criteria may change, and individual circumstances may require professional advice from a CPA or tax attorney.