Pensions and annuities

Pensions and annuities are periodic payments made to an individual that are attributable to personal services the individual performed prior to retirement, arising from one of the following:

an employee-employer relationship;

service in the uniformed services of the United States; or

contributions previously made to a retirement plan that were deductible for federal income tax purposes in the year the contributions were made.

Pensions and annuities are made in a series of payments at regular intervals (such as weekly, monthly, or yearly) over a period greater than one year.

The amount on line 5b of the taxpayer’s federal return, which is the amount included in federal taxable income, is the amount that is eligible for the subtraction, not the amount on line 5a.

Amounts received from privately purchased annuities that have fully matured also qualify for the pension and annuity subtraction.