Is a lump sum pension buy out in PA count as taxable for only federal or is it state as well?

[LeeM · Accepted solution]

It would not be counted as taxable income for PA but it would potentially be taxable by the federal.

According to the PA Department of Revenue website: 

PA Department of Revenue Pension Information

As long as you retire and receive distributions from a PA qualified pension plan by either meeting years service or age requirement in the plan, your retirement income is not taxable for state purposes.

Local taxes are not administered by the Pennsylvania Department of Revenue but by local taxing authorities. You will need to contact your local tax authority for assistance. If you do not know who your Local Tax authority is, this information may be obtained by visiting the Department of Community and Economic Development website at http://munstats.pa.gov/Public/FindMunicipality.aspx