AB 221

This bill exempts from taxation up to $8,000 in payments received by an

individual from the U.S. Civil Service Retirement System, for taxable year 2019, and

up to $16,000 of such payments received in 2020 and beyond, to the extent that such

payments are not currently subject to an exemption.

Under current law, the pension benefits of certain public employees are exempt

from state taxation. The pensions that are exempt include payments received from

the CSRS, the U.S. Military Employee Retirement System, the Milwaukee City and

County Retirement Systems, the police officer's annuity and benefit fund of

Milwaukee, the Milwaukee public school teachers' retirement fund, the Wisconsin

state teachers' retirement fund, and the sheriff's annuity and benefit fund of

Milwaukee County. For most of these pension plans, the exemption applies only to

persons who were members of or retired from the plans as of December 31, 1963,

although this limitation does not apply to retirement payments received from the

U.S. Military Employee Retirement System or from payments received from the U.S.

government that relate to service with the U.S. Coast Guard, the commissioned corps

of the National Oceanic and Atmospheric Administration, or the commissioned corps

of the U.S. Public Health Service. Also under current law, up to $5,000 of payments

or distributions received by certain individuals from a qualified retirement plan

under the Internal Revenue Code, or from certain individual retirement accounts,

are exempt from taxation. To be eligible, the individual must be at least 65 years old

and have federal adjusted gross income under $15,000, or under $30,000 if married.

Under federal law, until 1984, employment by the federal government was

covered under CSRS and not by social security. In 1984, the federal government

created the Federal Employees Retirement System. Federal employees who began

working for the federal government in 1984 or later are covered by FERS instead of

CSRS. Some federal employees who had been covered by CSRS switched to FERS,

and some stayed in CSRS. Work under FERS is covered by social security. Federal

employees who remained in CSRS after 1983 are still not covered by social security.

This bill exempts from taxation $8,000 for 2019, or $16,000 for 2020 and

thereafter, of payments received from CSRS, to the extent that such payments are

not already exempt, and without regard to whether the former employee was a

member of or retired from CSRS as of December 31, 1963.

Because this bill relates to an exemption from state or local taxes, it may be

referred to the Joint Survey Committee on Tax Exemptions for a report to be printed

as an appendix to the bill.