Limitations

In general, the amount of income that can be subtracted is limited to:

$20,000 for a taxpayer under age 55 who received a death benefit;

$20,000 for a taxpayer who is age 55or older, but not more than are 64, at the end of the tax year; or

$24,000 for a taxpayer who is age 65 or older at the end of the tax year.

For tax years 2022 and later, individuals age 65 or older at the end of the tax year can subtract the full amount of Social Security benefits included in their federal taxable income. For tax years 2025 and later, individuals age 55 to 64 at the end of the tax year may also be allowed to subtract the full amount of Social Security benefits included in their federal taxable income, if their adjusted gross income does not exceed certain limits. For additional information, please see the section on Social Security benefits earlier in this publication.

The subtraction applies only to the extent the taxpayer reports, in the same tax year that the subtraction is claimed, the pension or annuity benefit as federal taxable income on their federal income tax return.