Friend is retired PSO and income this year of $152998. Why is he being 100% taxed on his state income in Missouri?

[jamesmooneyham72]

Should be atleast a partial state income tax exemption

[BMcCalpin · Accepted solution]

Two items:

1. There is a federal exclusion of up to $3,000 for pension income for a Public Safety Officer (PSO) to pay for health insurance premiums. This will appear on your friend's 1099-R (pension distribution). In the 1099-R interview, TurboTax will ask you about whether this health insurance premium payment is for a PSO.

2. Since Missouri starts with federal ajusted gross income, this reduction of taxable income up to $3,000 will be passed to Missouri. It will not be listed on the Missouri forms, because it is already included in the starting income number. I do not find a special tax benefit for PSOs in Missouri.

However, there may be a general retirement benefit for your friend. Please see https://dor.mo.gov/personal/ptc/pension.php for information on a Pension Exemption & Social Security Disability Deduction.