Current through Register Vol. 42, No. 11, August 30, 2024
(1) Income received from retirement systems
that is totally exempt from Alabama income tax is as follows:
(a) Retirement allowances, pensions,
annuities, or optional allowances paid by the Alabama Teachers' Retirement
System, the Alabama Judicial Retirement System, and the Alabama Employees'
Retirement System; and
(b)
retirement annuities paid under the United States Retirement System to civil
service employees from the United States government civil service retirement
and disability fund including income received from the Tennessee Valley
Authority's pension system, income received as annuities under the United
States foreign service retirement and disability fund or income received from
any other United States government retirement and disability fund.
(c) amounts received under the Federal Social
Security Acts.
(d) retirement
annuities paid under the provisions of the Federal Railroad Retirement Act of
1935, 1937, and 1974.
1. The exclusion for
Railroad Retirement Act benefits includes both tier one and tier two
benefits.
(e) military
retirement (see §
40-18-20).
(f) For tax years beginning
after December 31, 1990, any retirement compensation, retirement allowances,
pensions and annuities, or optional allowances received by any eligible peace
officer, as defined in §
36-21-60(10),
or his/her designated beneficiary, from any police retirement system
established in the State of Alabama, but only if such retirement compensation,
retirement allowances, pensions and annuities, or optional allowances are
awarded as a result of police services rendered.
1. An eligible peace officer as defined in
§
36-21-60(10) is:
"A person duly sworn as a peace officer of the State of Alabama
possessing powers of arrest and employed by the state, any political
subdivision thereof or any municipal corporation therein who is required by the
terms of his employment, whether such employment exists by virtue of election
or appointment, to give his full time to the preservation of public order and
the protection of life or property or the detection of crime in the state. Such
terms shall include enforcement officers for conservation laws and full-time
coroners, but shall not include any pardon, parole or probation officer,
district attorney, assistant district attorney, assistant attorney general,
commissioner, deputy commissioner or any municipal inspector, county inspector
or state inspector."
(g) For tax years beginning after December
31, 1990, any retirement compensation, retirement allowances, pensions and
annuities, or optional allowances received by any eligible firefighter (as
defined in §§
36-32-1 and
36-32-2), or his/her designated beneficiary, from any firefighting agency established
in the State of Alabama, but only if such retirement compensation, retirement
allowances, pensions and annuities, or optional allowances are awarded as a
result of fire protection services rendered.
(2) Income from retirement systems that is
partially exempt from Alabama income tax is as follows:
(a) For tax years beginning after December
31, 1983, and before January 1, 1991, the first $8,000.00 of retirement
compensation, retirement allowances, pensions and annuities, or optional
allowances received by any eligible peace officer, or his/her designated
beneficiary, from any police retirement system established in the State of
Alabama, but only if such retirement income was awarded as the result of police
services as defined in §§
36-21-60(10) and
40-18-19 and Regulation 810-3-19-.01(1)(f).
(b) For tax years beginning after December
31, 1986, and before January 1, 1991, the first $8,000.00 of retirement
compensation, allowances, pensions and annuities, or optional allowances
received by an eligible firefighter (as defined in §§
36-32-1 and
36-32-2), or his/her designated beneficiary, from any firefighting agency established
in this state, but only if such amounts are awarded as a result of fire
protection services rendered.
(3) Retirement pay annuities received by a
retired employee from any retirement system not listed in the preceding
paragraphs are subject to tax after recovery of the taxpayer's investment in
the system. The taxpayer's investment in the system is the taxpayer's
contributions, excluding those allowed as a deduction in determination of
Alabama taxable income. Computations, for Alabama purposes, of taxable amount
and the recovery of the taxpayer's investments will be determined in the same
manner as used for determining these amounts for federal purposes. Alabama
totals will be substituted for federal totals.
Authors: Mary L. Gifford, Ann F. Winborne, and Roy
Wiggins.
Statutory Authority:
Code of Ala.
1975, §
40-18-19.
