Relates to increasing a pension exemption.
TITLE OF BILL: An act to amend the tax law, in relation to increasing a pension exemption
This bill updates the law regarding pensions and annuities. It increases the amount that private-sector pensions and annuities are exempt from the Personal Income Tax to $75,000.
SUMMARY OF PROVISIONS:
Section 1 amends paragraph 3-a of sub-section (c) of section 612 of the Tax Law. It increases to $75,000 the amount from pensions and annuities received by an individual who has attained the age of fifty-nine and one-half that can be excluded from the calculation of gross income. Specifically, the funds to be excluded must be periodic payments attributable to personal services performed by the individual prior to their retirement. The funds must come from an employer-employee relationship or from contributions to a retirement plan which are deductible for federal income tax purposes.
Section 2 provides that this act shall take effect on the first of January next succeeding.
This bill is necessary to update the tax ceiling for retirement income derived from pensions and annuities. The current law is out of date. It does not reflect the growth in retirement income that has occurred since its enactment in 1982. Since that time the Consumer Price index has increased by 135 percent.
Furthermore, this bill is necessary to ensure that the recipients of income received from private-sector pensions and annuities are treated in a similar fashion as the recipients of income received from public-sector or government pensions. Income from government pensions is exempt from the Personal Income Tax. Whereas, currently, only the first $20,000 of income from private-sector pensions and annuities is exempt from the Personal Income Tax. This bill seeks to level the playing field. It will treat the recipients of private-sector pensions and annuities in a more equitable fashion. This bill will exempt up to $75,000 of income that individuals receive from private-sector pensions and annuities from Personal Income Tax. It will allow those individuals to improve their quality of life and become more fiscally solvent. This bill will treat their retirement income in a more equitable fashion.
To be determined.
This act shall take effect on the first of January next succeeding.
STATE OF NEW YORK ________________________________________________________________________ 6573 IN SENATE February 7, 2014 ___________Introduced by Sen. RITCHIE -- read twice and ordered printed, and when printed to be committed to the Committee on Investigations and Govern- ment Operations AN ACT to amend the tax law, in relation to increasing a pension exemption THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Paragraph 3-a of subsection (c) of section 612 of the tax law, as amended by chapter 760 of the laws of 1992, 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]SEVENTY-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-employ- ee 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 (A) 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 return, the modification provided for in this paragraph shall be computed as if they were filing separate state personal income taxEXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD13952-01-4 S. 6573 2
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. S 2. This act shall take effect on the first of January next succeed- ing the date on which it shall have become a law.