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Oklahoma Administrative Code (Last Updated: March 11, 2021) |
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TITLE 710. Oklahoma Tax Commission |
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Chapter 50. Income |
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Subchapter 15. Oklahoma Taxable Income |
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Part 5. OTHER ADJUSTMENTS TO INCOME |
SECTION 710:50-15-49. Deduction for retirement income
Latest version.
- (a) General provisions applicable to Oklahoma or federal government retirement income. Each individual taxpayer may deduct up to Five Thousand Five Hundred Dollars ($5,500.00) of retirement benefits paid by the State of Oklahoma or by the federal government. Effective for tax years beginning on or after January 1, 2005, and ending before January 1, 2006, this deduction increases to Seven Thousand Five Hundred Dollars ($7,500.00). Effective for tax year 2006 and subsequent tax years the deduction increases to Ten Thousand Dollars ($10,000.00). 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 Five Thousand Five Hundred Dollars ($5,500.00), or for tax years beginning on or after January 1, 2005, Seven Thousand Five Hundred Dollars ($7,500.00); or for tax years beginning on or after January 1, 2006, 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 aged sixty-five (65) and over may deduct up to Five Thousand Five Hundred Dollars ($5,500.00) of other retirement benefits received and included in Federal Adjusted Gross Income through tax year 2004. Effective for tax years beginning on or after January 1, 2005, this deduction increases to Seven Thousand Five Hundred Dollars ($7,500.00) and the taxpayer is no longer required to be sixty-five (65) years of age. Effective for tax year 2006 and subsequent tax years the deduction increases to Ten Thousand Dollars ($10,000.00). 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 Five Thousand Five Hundred Dollars ($5,500.00) or, for tax years beginning on or after January 1, 2005, Seven Thousand Five Hundred Dollars ($7,500.00), or for tax years beginning on or after January 1, 2006, Ten Thousand Dollars ($10,000.00) per individual.(1) Income eligibility levels for tax years through 2004. In order to qualify for this exclusion, Oklahoma Adjusted Gross Income cannot exceed Twenty Five Thousand Dollars ($25,000.00) for individuals using the filing status of "single", "married filing separately", or "head of household". For individuals using "married filing jointly" or "qualifying widow(er)" filing status, Oklahoma Adjusted Gross Income cannot exceed Fifty Thousand Dollars ($50,000.00) in order to qualify for the exclusion.(2) Income eligibility levels for tax years 2005 and 2006. Effective for 89tax years beginning on or after January 1, 2005 and ending prior to January 1, 2007, Oklahoma Adjusted Gross Income cannot exceed Thirty Seven Thousand Five Hundred Dollars ($37,500.00) for individuals using the filing status of "single", "married filing separately", or "head of household". For individuals using "married filing jointly" or "qualifying widow(er)" filing status, Oklahoma Adjusted Gross Income cannot exceed Seventy Five Thousand Dollars ($75,000.00) in order to qualify for the exclusion.(3) Income eligibility levels for tax year 2007. Effective for tax years beginning on or after January 1, 2007 and ending before January 1, 2008, Oklahoma Adjusted Gross Income cannot exceed Fifty Thousand Dollars ($50,00.00) for individuals using the filing status of "single", "married filing separately", or "head of household". For individuals using "married filing jointly" or "qualifying widow(er)" filing status, Oklahoma Adjusted Gross Income cannot exceed One Hundred Thousand Dollars ($100,000.00) in order to qualify for the exclusion.(4) Income eligibility levels for tax year 2008. Effective for tax years beginning on or after January 1, 2008 and ending before January 1, 2009, Oklahoma Adjusted Gross Income cannot exceed Sixty Two Thousand Five Hundred Dollars ($62,500.00) for individuals using the filing status of "single", "married filing separately", or "head of household". For individuals using "married filing jointly" or "qualifying widow(er)" filing status, Oklahoma Adjusted Gross Income cannot exceed One Hundred Twenty Five Thousand Dollars ($125,000.00) in order to qualify for the exclusion.(5) Income eligibility levels for tax year 2009. Effective for tax years beginning on or after January 1, 2009 and ending before January 1, 2010, Oklahoma Adjusted Gross Income cannot exceed One Hundred Thousand Dollars ($100,000.00) for individuals using the filing status of "single", "married filing separately", or "head of household". For individuals using "married filing jointly" or "qualifying widow(er)" filing status, Oklahoma Adjusted Gross Income cannot exceed Two Hundred Thousand Dollars ($200,000.00) in order to qualify for the exclusion.(6) Income eligibility levels for tax year 2010 and subsequent years. Effective for tax years beginning on or after January 1, 2010, there are no longer any income eligibility requirements to qualify for the exclusion.(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).(f) Disability income; private sector retirees. Disability retirement benefits received by an individual shall qualify for the retirement income deduction, without regard to the recipient's age.(g) Special rule for certain retirement income from a component of the Armed Forces of the United States. Effective for tax year 2006, the deduction for retirement income from any component of the Armed Forces of the United States is the greater of Ten Thousand Dollars ($10,000.00) or fifty percent (50%) of the amount included in the taxpayer's Federal Adjusted Gross Income. Effective for tax year 2007 and subsequent tax years, the deduction for retirement income from any component of the Armed Forces of the United States is the greater of Ten Thousand Dollars ($10,000.00) or seventy-five percent (75%) of the amount included in the taxpayer's Federal Adjusted Gross Income.(h) Special rule for Federal civil service retirement income. Beginning withtax year 2007, retirement benefits received by Federal civil service retirees, including survivor annuities paid in lieu of Social Security benefits, are allowed to be excluded from Oklahoma taxable income to the extent such benefits are included in the taxpayer's Federal Adjusted Gross Income, pursuant to the provisions of Section 86 of the Internal Revenue Code. For tax year 2007, twenty percent (20%) of such taxable benefits will be excludable. For tax year 2008, forty percent (40%) of such taxable benefits will be excludable. For tax year 2009, sixty percent (60%) of such taxable benefits will be excludable. For tax year 2010, eighty percent (80%) of such taxable benefits will be excludable. For tax year 2011 and subsequent tax years, one hundred percent (100%) of such taxable benefits will be excludable.