Oklahoma Retirement Income Tax Exclusions.

[Jmike42]

I understand that you can get a maximum of $10,000 excluded from some retirement income, but doesn't that have to be from an Oklahoma source?  For instance, an OK local government?

[DawnC · Accepted solution]

It can be from any of the sources below; it does not have to be Oklahoma-sourced.   Each individual taxpayer may deduct up to Ten Thousand Dollars ($10,000.00) of retirement benefits paid by the State of Oklahoma or by the federal government.  This deduction cannot exceed the amount included in the taxpayer's federal adjusted gross income. The total exclusion from all government retirement benefit plans may not exceed Ten Thousand Dollars ($10,000.00)per individual.   

(b) Qualifying Oklahoma or federal government retirement income defined.  For purposes of this Section, "Oklahoma or federal government retirement income" means retirement income received from the following sources:

(1) The Civil Service of the United States;

(2) Any Component of the Armed Forces of the United States; [See special rule (g)]

(3) The Oklahoma Public Employees' Retirement System;

(4) The Oklahoma Teachers' Retirement System;

(5) Oklahoma Law Enforcement Retirement System;

(6) Oklahoma Firefighters' Pension and Retirement System;

(7) Oklahoma Police Pension and Retirement System;

(8) The Employee retirement systems created by counties pursuant to 19 O.S. §§951 et seq.

(9) The Uniform Retirement System for Justices and Judges;

(10) The Oklahoma Wildlife Conservation Department Retirement Fund;

(11) The Oklahoma Employment Security Commission Retirement Plan; or,

(12) The Employee retirement systems created by municipalities pursuant to 11 O.S. §§ 48-101 et seq.

(c) Disability income; state and federal government retirees. Disability retirement benefits received by an individual from sources listed in subsection (b) shall qualify for the retirement income deduction, without regard to the recipient's age.

(d) General provisions for other retirement income. Each individual taxpayer may deduct up to Ten Thousand Dollars ($10,000.00) of other retirement benefits received and included in federal adjusted gross income. This deduction cannot exceed the amount included in the taxpayer's federal adjusted gross income. The total exclusion from all retirement benefit plans may not exceed Ten Thousand Dollars ($10,000.00) per individual.

(e) "Qualifying other retirement income" defined. For purposes of this Section "other retirement income" must be received from the following and satisfy the requirements of the Internal Revenue Code (IRC):

(1) An employee pension benefit plan under IRC Section 401;

(2) An eligible deferred compensation plan under IRC Section 457;

(3) An individual retirement account, annuity, or trust or simplified employee pension under IRC Section 408;

(4) An employee annuity under IRC Section 86; or,

(5) Lump-sum distributions from a retirement plan under IRC Section 402(e).

[LJHMAZ]

Is that $20,000 on Married Filing Jointly or maz $10K per return?

My 2023  TT did NOT give me the exclusion

[AmyC]

It is up to $20,000 for MFJ. It would be less depending on your income. If you did not each get the exclusion, go back and check your income entries. It is easy to have all the income under one spouse. Make sure each spouse is listed with income.

[Ouwxman]

Deduction in Oklahoma for Civil Service (CSRS) should be 100% not $10,000. The workaround I used was to choose Military to get the 100% deduction, print out the 511 form, and then change the lines that the deduction is on (using white-out), and mail it in. 

[DaveF1006]

There is a question in the Oklahoma State interview that says About Your Retirement Benefits.  Here if you chose Civil Service you would have received a 100% deduction. See screenshot 1.

If this screen wasn't available, it may have been because you chose the wrong 1099R when you reported this in your federal return. See screenshot 2. Hopefully all the white-outs is acceptable for filing an acceptable return to the state of oklahoma.