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H.64

Introduced by   Representative Jewett of Ripton

Referred to Committee on

Date:

Subject:  Taxation; income tax; retirement income exclusion

Statement of purpose:  This bill proposes to exclude from taxable income a portion of retirement income received.

AN ACT RELATING TO INCOME TAX EXCLUSION FOR RETIREMENT INCOME

It is hereby enacted by the General Assembly of the State of Vermont:

Sec. 1.  32 V.S.A. § 5823(a)(8) is added and (b)(3) is amended to read:

§ 5823.  VERMONT INCOME OF INDIVIDUALS, ESTATES AND

              TRUSTS

(a)  For any taxable year, the Vermont income of a resident individual, estate or trust is the adjusted gross income of the taxpayers for that taxable year less:

* * *

(8)  Up to $10,000.00, or $20,000.00 for married persons filing jointly, of retirement income, to the extent includible in gross income for federal income tax purposes, received by an individual or the individual’s surviving beneficiary who has a federal adjusted gross income for the taxable year without regard to this exemption of $30,000.00 or less, or $60,000.00 or less for married persons filing jointly, if the recipient has attained the age of 65.  “Retirement income” under this subdivision means income received under the federal Social Security Act, federal Railroad Retirement Act, retirement pensions and annuities which are periodic payments attributable to personal services performed by such individual prior to his or her retirement from employment, and which arise from an employer-employee relationship or from contributions to a retirement plan which are deductible for federal income tax purposes.  “Pensions and annuities” shall also include distributions from an Individual Retirement Account or an Individual Retirement Annuity, as defined in Section 408 of the Internal Revenue Code, and distributions from self-employed individual and owner-employee retirement plans which qualify under Section 401 of the Internal Revenue Code, whether the payments are periodic in nature.

(b)  For any taxable year, the Vermont income of a nonresident individual, estate or trust is the sum of the following items of income to the extent they are required to be included in the adjusted gross income of the taxpayer for the taxable year:

* * *

(3)  Wages, salaries, commissions or other income received with respect to services performed within this state  ( excluding:

(A)  military pay for full-time active duty with the armed services and also excluding funds received through the federal armed forces educational loan repayment program under 10 U.S.C. chapters 109 and 1609; and also excluding

(B)  the first $2,000.00 of military pay for unit training in the state to National Guard and United States Reserve personnel for whom the adjutant general or reserve component commander certifies that the taxpayer completed all unit training of his or her unit during the calendar year, and who has a federal adjusted gross income of less than $50,000.00) received with respect to services performed within this state; and also excluding;

(C)  income received for a dramatic performance in a commercial film production to the extent such income would be excluded from personal income taxation in the state of residence;

(D)  up to $10,000.00, or $20,000.00 for married persons filing jointly, of retirement income, to the extent includible in gross income for federal income tax purposes, received by an individual or the individual’s surviving beneficiary who has a federal adjusted gross income for the taxable year without regard to this exemption of $30,000.00 or less, or $60,000.00 or less for married persons filing jointly, if the recipient has attained the age of 65.  “Retirement income” under this subdivision means income received under the federal Social Security Act, federal Railroad Retirement Act, retirement pensions and annuities which are periodic payments attributable to personal services performed by such individual prior to his or her retirement from employment, and which arise from an employer-employee relationship or from contributions to a retirement plan which are deductible for federal income tax purposes.  “Pensions and annuities” shall also include distributions from an Individual Retirement Account or an Individual Retirement Annuity, as defined in Section 408 of the Internal Revenue Code, and distributions from self-employed individual and owner-employee retirement plans which qualify under Section 401 of the Internal Revenue Code, whether the payments are periodic in nature.

Sec. 2.  EFFECTIVE DATE

This act shall apply to taxable years beginning on or after January 1, 2005.



Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont


www.leg.state.vt.us