An act of January 10, 1996 (H.R. 394) limits state income
taxation of pension income. The following applies to
amounts received after December 31, 1995.
Sec. 114. *Limitation on state income taxation of certain
(a) No state may impose an income tax of any retirement
income of an individual who is not a resident or
domiciliary of such state (as determined under the laws of
(b) For purposes of this section-
(1) The term 'retirement income' means any income from-
(A) a qualified trust under section 401(a) of the Internal
Revenue Code of 1986 that is exempt under section 501(a)
(B) a simplified employee pension as defined in section
408(k) of such Code;
(C) an annuity plan described in section 403(a) of such
(D) an annuity contract described in section 403(b) of such
(E) an individual retirement plan described in section
7701(a)(37) of such Code;
(F) an eligible deferred compensation plan (as defined in
section 457 of such Code);
(G) a governmental plan (as defined in section 414(d) of
(H) a trust described in section 501(c)(18) of such Code;
(I) any plan, program, or arrangement described in section
3121(v)(2)(C) of such Code. If such income-
(i) is part of a series of substantially equal periodic
payments (not less frequently than annually) made for
(I) The life or life expectancy of the recipient (or the
joint lives or joint life expectancies of the recipient and
the designated beneficiary of the recipient), or
(II) a period of not less than 10 years, or
(ii) is a payment received after termination of employment
and under a plan, program or arrangement (to which such
employment relates) maintained solely for the purpose of
providing retirement benefits for employees in excess of
the limitations imposed by 1 or more sections 401(a)(17),
401(k), 401(m), 402(g), 403(b), 408(k), or 415 of such Code
or any other limitation on contributions or benefits in
such code on plans to any of such sections apply.
Such term includes any retired or retainer pay of a member
or former member of a uniform service computed under
chapter 71 of title 10, United States Code.
(2) The term 'income tax' has the meaning given such term
by section 110(c).
(3) The term 'state' includes any political subdivision of
a state, the District of Columbia, and the possessions of
the United States.
(c) Nothing in this section shall be construed as having
any effect on the application of section 514 of the
Employee Retirement Income Security Act of 1974.
* Title 4 of the United States Code.