Oregon taxes most retirement income received by residents. However, if you received income from a qualifying federal pension, you may be able to subtract all or part of that income from your Oregon return. The amount you can subtract depends on your federal service history, specifically the portion of your service performed before October 1, 1991.
Who Qualifies?
You may qualify for the Federal Pension Income Subtraction if you received taxable retirement benefits from a qualifying federal retirement plan and those benefits were included in your federal adjusted gross income (AGI). Examples include certain federal civilian and military retirement benefits.
In general:
- If all qualifying federal service occurred before October 1, 1991, you may subtract 100% of the taxable federal pension income.
- If none of your qualifying service occurred before October 1, 1991, you don't qualify for the subtraction.
- If your service occurred both before and after October 1, 1991, you may subtract a percentage of the taxable pension income based on your qualifying service dates or retirement points.
Where Do I Enter the Subtraction?
To enter the Federal Pension Income Subtraction the program:
- Go to State.
- Select Subtractions from Income.
- Select Federal Pension Income Subtraction.
- Complete the worksheet using your qualifying federal service information and taxable pension income.
The program will calculate the allowable Oregon subtraction and transfer it to the Oregon return.