Indiana allows you to deduct your disability retirement income as long as you meet all of the following:
- You were permanently and totally disabled at the time you retired
- Retired on disability before the end of the tax year, AND
- Received disability retirement income during the tax year.
This deduction is limited to a maximum of $5,200 per qualifying individual. Social Security benefits does not qualify for this deduction as Indiana does not tax it at all.
Where to enter deduction within program?
To make this manual entry, go to:
- State Section
- Subtractions from Income
- Other deductions
- Choose Disability retirement deduction from the drop down