I am writing in support of hb1351, which would partially redress an inequity in the VA Tax Code, whereby Federal retirees under the Civil Service Retirement System (CSRS) are taxed differently from Federal retirees under the Federal Employees' Retirement System (FERS). FERS consists of three parts: (1) a defined benefit; (2) Social Security, and (3) a 401-k type defined contribution. Whereas CSRS, as a uniquely defined benefit, is fully taxable under the Virginia Code, the Social Security component of FERS is exempt. This inequity is particularly acute for lower income persons, since the inclusion of CSRS income in AFAGI for purposes of the Age 65 and Older Deduction (Form 760, Line 4) could well make them ineligible for this deduction. By contrast, a FERS retiree with an identical Federal Adjusted Gross Income could well be eligible, due solely to the exemption
of Social Security benefits. This inequity needs to be corrected.
I am writing in support of hb1351, which would partially redress an inequity in the VA Tax Code, whereby Federal retirees under the Civil Service Retirement System (CSRS) are taxed differently from Federal retirees under the Federal Employees' Retirement System (FERS). FERS consists of three parts: (1) a defined benefit; (2) Social Security, and (3) a 401-k type defined contribution. Whereas CSRS, as a uniquely defined benefit, is fully taxable under the Virginia Code, the Social Security component of FERS is exempt. This inequity is particularly acute for lower income persons, since the inclusion of CSRS income in AFAGI for purposes of the Age 65 and Older Deduction (Form 760, Line 4) could well make them ineligible for this deduction. By contrast, a FERS retiree with an identical Federal Adjusted Gross Income could well be eligible, due solely to the exemption of Social Security benefits. This inequity needs to be corrected.