HB 655 -- Income Tax on Pensions

Sponsor:  Ransdall

This bill makes changes to the individual income tax deduction
for public and private pension income received.

Under current law, taxpayers are allowed a limited deduction for
public source pension income received of up to $6,000 per
taxpayer per year.  This bill extends the $6,000 to $8,000 for
tax year 2000 and to $10,000 for tax year 2001 and thereafter.

In addition, current law allows only taxpayers with qualified
incomes of $25,000 or less for single taxpayers or $32,000 for
married taxpayers to use the public source pension income
limited deduction.  This bill extends these income levels to
$27,500 and $36,000, respectively, for tax year 2000 and to
$30,000 and $40,000, respectively, for tax year 2001 and
thereafter.

Under current law, $1 of qualified income earned by the taxpayer
in excess of the qualified income levels for both public and
private source pension income result in the loss of the entire
deduction.  This bill phases out the limited deduction for
pension income received by $1 for each $1 of qualified income
that exceeds the maximum income levels.