we closed our whole life ins policy that we opened 22 years ago. This was not through our work. Would that distribution amount be eligible for non taxable pensions?

[traymond3]

these payments weren't pre-tax through our employer. they are taxable on federal but can that amount be reduced in Massachusetts?

[DavidD66]

No, it is not "eligible for non taxable pensions". You "surrendered" your insurance policy.  When the cash surrender value exceeds the total premiums paid (the cost basis), the excess amount is considered taxable income.  The proceeds from a surrendered insurance policy are taxable by Massachusetts - they are not exempt.