New York State Bill Could Double Annuity Income Tax Exemption for Older Residents

By Allison Bell

News January 03, 2025 at 02:35 PM

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A New York legislator is continuing his fight to protect more of residents' annuity income from state income taxes.

Assemblyman William Magnarelli, D-Syracuse, has introduced a new version of a bill that would phase in an increase in the state's exemption for private pension and annuity income to $40,000 per year by 2030, from $20,000 per year today.

The exemption is available to state residents ages 59 1⁄2 and older.

What it means: The tax status of annuity income and retirement income is fluid. Some lawmakers would like to find ways to exempt more of it from taxable income.

The history: Magnarelli has been introducing similar bills since 2015.

Similar bills made it through the state Senate in 2015 and 2016.

Bill details: Magnarelli's bill has six co-sponsors, all Democrats.

The bill will be under the jurisdiction of the Assembly Ways and Means Committee, and Magnarelli is a member of that committee.

The thinking: New York state already exempts Social Security benefits and income from government employer pension plans from state income taxes. The current $20,000 private pension and annuity income exemption was set in 1981.

The 1981 exemption law was enacted "in part, to treat the recipients of private pensions more fairly in comparison to those receiving state or local government pensions," according to Magnarelli's justification memo.

Some legislators had hoped to eliminate personal income taxes on private pension and annuity income altogether, Magnarelli noted.

If the original $20,000 exemption had been adjusted for inflation, it would now be worth more than $40,000, he added.

The New York State Capitol in Albany, New York. Photo: Ryland West/ALM

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