I have a pension from Lockheed Martin that I started receiving when I was 59. I am now 63, and they are still taking PA taxes out, even though, according to my understanding, the rule is that pension received after "normal retirement age" are not supposed to be taxed. I can't find any specific age that this might mean, and Lockheed hasn't been helpful in clarifying when they're going to stop withholding the state taxes.

Can anyone help me out with pension taxes in PA?


Pennsylvania-qualified pensions (as well as IRA distributions after age 59.5, whether received as lump-sums or in smaller amounts) are not subject to Pennsylvania state income tax. See the Pennsylvania Department of Revenue website for more details including age requirements etc. Note that the Pennsylvania Department of Revenue cannot exempt income from Federal income tax; that is up to the US Congress to decide.

Whether your pension from Lockheed-Martin is qualified in Pennsylvania or not is something that you need to find out. The rules for being qualified are not very onerous, and most pension plans would qualify but you never know. One point to keep in mind is the source of the pension which might make it taxable. For example, if your pension is paid by Lockheed-Martin's Maryland operations where you worked all your life while living in Pennsylvania just north of the Mason-Dixon Line, Pennsylvania might well tax your pension.

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    Thanks very much for your answer! Lockheed wasn't able to tell me whether this pension was qualified or not - is there any other way of finding this out? – user70438 Mar 25 '18 at 19:23
  • You might want to start with What is a qualified pension program?. – chepner Mar 25 '18 at 19:36
  • And does not taxable in Pennsylvania mean exempt from federal tax or just state tax? – Eric Mar 25 '18 at 20:07
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    @Eric it means exempt from state tax. Pennsylvania has no power to exempt any source of income from federal tax. – phoog Mar 25 '18 at 23:16

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