State of Indiana: Stop the fiscal abuse toward retirees
New Albany, Ind.
The Indiana State Income Tax code continues to tax the total amount of all federal, state and local civil service retirees' pensions. Indiana's taxation of pension benefits includes such groups as teachers, firemen, policemen, etc.
Indiana is one of only five remaining states that has not amended state income tax codes to eliminate this gross inequity, essentially a form of double taxation.
For example, Kentucky allows $41,110 pension exemption on state income taxes for all civil service retirees.
Three bordering states — Illinois, Wisconsin and Michigan — have adjusted their tax laws to eliminate or greatly reduce taxation of subject pensions.
Social Security and Railroad Retirement benefits are exempt from Indiana state taxes.
How can you exempt these retirement benefits and tax the total amount of civil service retirees? To compound the issue, civil service retirees have little or no Social Security left after a federal law — Windfall Elimination Provision — reduces by 60 percent their Social Security benefits.
When will Indiana stop the fiscal abuse and follow the lead of 45 states and make respective tax codes equitable and just? Wake up, Indiana. The rooster is crowing!
If you are affected by this gross inequity, please call and write to your state senator and representative. You can identify your Indiana representative at 1-800-382-9842 or Indiana senator at 1-800-382-9467.
Sylvia Savage, Legislative chair, National Active and Retired Federal Employees Chapter 1777
April 08, 2009