I'm a PA resident. Why does turbotax calculate pa income tax on pension payments since such payments are not taxable?

[Vanessa · Accepted solution]

If PA is showing that your pension is taxable income and you believe it should not be, please check the following.

Go all the way through the PA state interview.  You will come to a question "What Kind of Retirement income do you have from Pennsylvania"  If this is a PA eligible plan and you are eligible select "I'm Eligible; plans eligible" This will remove the income from your taxable income and you will see your tax due drop or refund increase depending on your situation, however, you will still see it in summary screens.  

"Your retirement is NOT taxable for PA income tax if you retired AFTER meeting the eligibility requirements for separation from service by retirement based on old age, infirmity, long-continued service, or a combination of old age and infirmity and long continued years of service." https://revenue-pa.custhelp.com/app/answers/detail/a_id/364/~/do-i-have-to-pay-pa-income-tax-on-my-r...