Generally, retirement income included in federal adjusted gross income is subject to Ohio income tax. Ohio then provides a credit based on the taxpayer's retirement income. However, some types of retirement income are deductible in determining Ohio adjusted gross income, and thus are not subject to tax.
See the FAQ "What types of retirement income are deductible in determining Ohio adjusted gross income?" for more information.
See. R.C. 5747.01(A) and 5747.055.
Ohio offers two credits based on retirement income and two credits for taxpayers age 65 and older. These credits are claimed on the Ohio Schedule of Credits and are only available to taxpayers whose modified adjusted gross income less exemptions is less than $100,000.
See the FAQ "What is modified adjusted gross income?" in the "Income - General Information" topic for more information.
Credits based on retirement income
Retirement income credit: Taxpayers can claim a credit based on the total amount of retirement income included in their Ohio adjust gross income. The credit is calculated using the following table:
Lump sum retirement credit: Instead of the retirement income credit, a taxpayer who receives a total, lump sum distribution may be able to claim a lump sum retirement credit. If the taxpayer elects to claim the lump sum retirement credit, the taxpayer cannot claim the retirement income credit on the same year's Ohio income tax return or any future return.
For the purposes of the retirement income and lump sum retirement credits, "retirement income" is retirement benefits, annuities, or distributions that are:
- Paid from a pension, retirement, or profit-sharing plan;
- Received because of your retirement; AND
- included in your Ohio adjusted gross income
Credits for taxpayers age 65 and older
Senior citizen credit: Taxpayers who were 65 or older during the tax year can claim a credit of $50 per return. This credit is also available on the Ohio school district income tax return (SD 100).
Lump sum distribution credit: Instead of the senior citizen credit, a taxpayer who receives a total, lump sum distribution may be able to claim a lump sum distribution credit on their Ohio income tax return (IT 1040). If the taxpayer elects to claim the lump sum distribution credit, the taxpayer cannot claim the senior citizen credit on the same year's Ohio income tax return or any future return. Note: Claiming this credit does not affect your ability to claim the senior citizen credit on a school district income tax return.
See R.C. 5747.055.
The following types of retirement income are deductible on Ohio Schedule A:
- Social Security and tier I railroad retirement benefits, to the extent included in federal adjusted gross income;
- Certain additional railroad retirement benefits that are exempt from state taxation under federal law; AND
- "Retired personnel pay" related to a retired military servicemember's service in the uniformed services, the reserve components thereof, or the national guard. For more information, see the "Military retirement pay" section of the Income Taxes and the Military page of the Department's website.
See R.C. 5747.01(A)(5) and (23).
The portion of your railroad retirement benefits that are included on line 6b of your federal 1040 or 1040-SR should be deducted on the "taxable social security benefits" line of Ohio Schedule A.
All other railroad retirement benefits included in federal adjusted gross income that are either exempt from state taxation or deductible in computing Ohio adjusted gross income should be deducted on the "certain railroad retirement benefits" line of Ohio Schedule A.
See. R.C. 5747.01(A)(5).
A state can only tax the retirement income of a resident taxpayer. Thus, if an Ohio resident earns or receives retirement income, it is subject to tax in Ohio even if the taxpayer previously lived or worked in another state. This includes any amount included in the taxpayer's federal adjusted gross income.
Please note, stock option income and non-qualified deferred compensation generally do not qualify as retirement income. For more information, see Information Release IT 1996-01 entitled "Federal Law Preempting State Taxation of Retirement Plan Income."
See R.C. 5747.01(A), 5747.02(A), and 4 U.S.C §114.
Any retirement income that has not been deducted in calculating Ohio adjusted gross income is considered "qualifying income" for purposes of determining eligibility for the joint filing credit. However, amounts deducted on Ohio Schedule A, such as Social Security, railroad retirement or military retirement benefits, are not qualifying income.
See R.C. 5747.05(E).
No. A taxpayer can only claim the retirement income credit for income received "on account of retirement." Early withdraws and distributions do not qualify for this credit.
See R.C. 5747.055(A) and (B).
Ohio only taxes retirement income included in federal adjusted gross income. If your rollover did not result in you recognizing income on your federal return, it will not be taxable to Ohio. However, if your rollover results in recognizing income that is included in your federal adjusted gross income (e.g. converting to a Roth IRA), it will be taxable to Ohio.
See. R.C. 5747.01(A).