New Statute Prohibits States from Taxing Nonresident Partners' Retirement Income

Signed into law August 3, H.R. 4019 prohibits states from taxing the retirement income of partners who are not residents of that state. The AICPA Tax Division supported this legislation in comments to Congress.

This legislation will reduce the tax burden for retirees residing in low or no-tax states, who may be entitled to refunds retroactive back to 1996. Other retirees may have taken a credit for taxes paid to other states on their home state returns, so filing for refunds may not be worthwhile; but going forward all retired partners will benefit from simpler compliance.

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