[pjxii]

I am currently living in FL, retired and receiving a federal pension, almost 59 years old and am considering moving to Alabama. I see that an exemption is now in effect for Alabama residents age 65 years and older, allowing for IRA withdrawals of up to $6000 annually (to be increased eventually to $24,000) to be exempt from state income tax. That would help me down the road. I have also read that the amount of federal taxes paid by an individual can be deducted from Alabama taxable income.

My question is this: as my only current source of income right now is my federal pension (which is tax exempt in AL) and I am paying about $2800 a year in federal taxes on it, would I be able to deduct that amount from my AL income tax if I were to make Traditional IRA withdrawals, when I reach 59 -1/2, which I must pay state (and federal) income taxes on?


The FIT deduction is new to me and unique to Alabama. Hope that question makes sense, and thanks for any help!

[recycled]

Alabama exempts all retirement pension income (federal, state, local government plus corporate defined pensions) from income tax. I am a former resident of AL. So you won't pay Alabama state income tax on your federal gov't retirement pension. I don't have an answer on your IRA withdrawals for AL state taxes.

[RocketDawg]

Pretty sure you'd have to withdraw some really large sums from your IRAs in order to have to pay state tax. I too am a federal employee so no state tax on that, but because of my age I am required to withdraw a minimum from my IRA/401K accounts and have never met the threshold to have to pay any income tax at all. I always file a state return anyway, but probably don't really need to.

But to your question about the $2800 in federal tax - as I understand it, your federal tax payment is a deduction for Alabama, not a credit. So you can't just subtract the $2800 from your Alabama tax bill.

[johnsonkk]

That rebate or refund promised in June, that was reduced again and again, is finally close to arriving.

It’s now at $150 and should be mailed sometime now in December. Long time coming. In the end, it might just turn into a tax credit on future taxes.

https://www.demopolistimes.com/2023/...n-in-december/

[johnsonkk]

Originally Posted by johnsonkk

That rebate or refund promised in June, that was reduced again and again, is finally close to arriving.

It’s now at $150 and should be mailed sometime now in December. Long time coming. In the end, it might just turn into a tax credit on future taxes.

https://www.demopolistimes.com/2023/...n-in-december/

Next week!!! Watch your mailbox.

https://1819news.com/news/item/state...ming-next-week

[johnsonkk]

Checks arriving this week. Not trying to bump thread but tough crowd. Enjoy your earned income, albeit small.

[Rick In Madison]

Got it; however, I would have rather seen it used on road projects up here in N. Al.

[johnsonkk]

Originally Posted by Rick In Madison

Got it; however, I would have rather seen it used on road projects up here in N. Al.

Agree. Adding a few turn lanes here and there isn’t going to help much. Rumble strips at all the stops? 45mph speed limit?

Pouring in neighborhoods without roadways is what NOVA tried (northern Virginia) and it didn’t work there.

[lpc123]

This was one of the big reasons we chose to retire in Alabama: federal and military pensions are not subject to state taxation. Yes you still pay on IRA and 401(k) withdrawals, but given the low property taxes, this is a great state for retired feds to live.

[Rick In Madison]

Originally Posted by lpc123

This was one of the big reasons we chose to retire in Alabama: federal and military pensions are not subject to state taxation. Yes you still pay on IRA and 401(k) withdrawals, but given the low property taxes, this is a great state for retired feds to live.

I'll assume your one of the few civilians that actually worked. I know from experience there are not many on the MDA side of your house.