Per NYS, pension and annuity income that is not eligible for exclusion for those over age 59 1/2 include:
- Distributions received from a nongovernment pension plan as a nonemployee spouse in accordance with a court-issued qualified domestic relations order (QDRO) or in accordance with a domestic relations order (DRO) issued by a New York court.
- Distributions received as a result of an annuity contract purchased with your own funds from an insurance company or other financial institution. The payments are attributable to premium payments made by you, from your own funds, and are not attributable to personal services performed.
Otherwise, your pension might qualify for full exclusion or a deduction of up to $20,000 per taxpayer.
A pension is eligible for exclusion if it is a distribution received by officers and employees of the United States, New York State, or local governments within New York State. These types of pensions are fully exempt from New York State, New York City, and Yonkers income taxes.
Any other type of pension may qualify for a pension and annuity exclusion of up to $20,000 in NYS, as long as you are or turn 59 ½ during the tax year and your pension is:
- included in federal adjusted gross income (FAGI);
- received in periodic payments (except IRA or Keogh);
- attributable to personal services performed by the individual before their retirement; and
- from an employer-employee relationship or from an employee’s tax-deductible contributions to a retirement plan.
Publication 36
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