Does Pennsylvania tax the income from an annuity?

by David S. Markle, CPA | Mar 14, 2016
askacpaiconMy husband is retired and receives income from an annuity. Does Pennsylvania tax income from an annuity?

If you invest in a retirement annuity that is not part of an employer-sponsored program or a commonly recognized retirement program, you may have Pennsylvania taxable income when you begin receiving annuity payments. You must report the amount reported as taxable for federal income tax purposes as taxable interest on a Pennsylvania Schedule A. 

Annuity income that is part of a qualified retirement plan, and the recipient has reached age 59 1/2, is not subject to Pennsylvania income tax. For nonqualified annuities, the earnings are taxable but the return of contributions would not be taxable to Pennsylvania.

Answered by: David S. Markle, CPA, owner of Markle Wealth Management in Danielsville.
The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
Financial FAQs

Search the most frequently asked finance and accounting questions and read the responses from PICPA members. Always consult a CPA before taking action.