S 408 Session 109 (1991-1992)
S 0408 General Bill, By J.M. Waddell and Giese
A Bill to amend Section 12-7-435, as amended, Code of Laws of South Carolina,
1976, relating to deductions from South Carolina taxable income for purposes
of the State income tax, so as to consolidate into one item the deductions
allowed for various types of retirement income, to define retirement income,
to provide that a taxpayer may deduct up to three thousand dollars of
retirement income beginning at age sixty-two or elect to defer his deduction
until age sixty-five at which time the taxpayer may deduct up to ten thousand
dollars, to provide transition provisions, to provide that the ages at which
taxpayers may deduct retirement income must rise in tandem with eligibility
for social security old age benefits and to provide that the South Carolina
Tax Commission shall prescribe the method of making the election; and to
repeal Section 12-7-436 relating to an obsolete limitation on the retirement
income deduction.
01/09/91 Senate Introduced and read first time SJ-15
01/09/91 Senate Referred to Committee on Finance SJ-15
A BILL
TO AMEND SECTION 12-7-435, AS AMENDED, CODE OF LAWS
OF SOUTH CAROLINA, 1976, RELATING TO DEDUCTIONS
FROM SOUTH CAROLINA TAXABLE INCOME FOR PURPOSES
OF THE STATE INCOME TAX, SO AS TO CONSOLIDATE INTO
ONE ITEM THE DEDUCTIONS ALLOWED FOR VARIOUS TYPES
OF RETIREMENT INCOME, TO DEFINE RETIREMENT INCOME,
TO PROVIDE THAT A TAXPAYER MAY DEDUCT UP TO THREE
THOUSAND DOLLARS OF RETIREMENT INCOME BEGINNING
AT AGE SIXTY-TWO OR ELECT TO DEFER HIS DEDUCTION
UNTIL AGE SIXTY-FIVE, AT WHICH TIME THE TAXPAYER
MAY DEDUCT UP TO TEN THOUSAND DOLLARS, TO PROVIDE
TRANSITION PROVISIONS, TO PROVIDE THAT THE AGES AT
WHICH TAXPAYERS MAY DEDUCT RETIREMENT INCOME
MUST RISE IN TANDEM WITH ELIGIBILITY FOR SOCIAL
SECURITY OLD AGE BENEFITS AND TO PROVIDE THAT THE
SOUTH CAROLINA TAX COMMISSION SHALL PRESCRIBE THE
METHOD OF MAKING THE ELECTION; AND TO REPEAL
SECTION 12-7-436 RELATING TO AN OBSOLETE LIMITATION
ON THE RETIREMENT INCOME DEDUCTION.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 12-7-435 of the 1976 Code, as last amended by
Act 189 of 1989, is further amended by adding an appropriately lettered
item to read:
"( )(1) Beginning with the taxable year in which a taxpayer at
least sixty-two years of age first receives retirement income, the taxpayer
may:
(A) deduct his retirement income in an amount not to
exceed three thousand dollars annually; or
(B) elect irrevocably to defer claiming a retirement
income deduction until the taxable year the taxpayer attains the age of
sixty-five years, at which time the taxpayer may deduct his retirement
income in an amount not to exceed ten thousand dollars annually.
(2) A taxpayer who does not claim a retirement income
deduction before the taxable year in which he attains the age of sixty-five years and every taxpayer who attains the age of sixty-five years
before 1992 is considered to have made the election allowed pursuant to
subitem (1)(B) of this item.
(3) A taxpayer who attains the age of sixty-three or sixty-four
years in 1991 and who receives retirement income in 1991 may:
(a)deduct his retirement income in an amount not to exceed
three thousand dollars annually; or
(b) elect irrevocably to defer claiming a retirement income
deduction until the taxable year the taxpayer attains the age of sixty-five
years, at which time the taxpayer may deduct his retirement income in
an amount not to exceed ten thousand dollars annually.
(4) The deduction allowed by this item extends to the
taxpayer's surviving spouse and, to the extent the surviving spouse
receives retirement income attributable to the deceased spouse, applies
in the same manner that the deduction applied to the deceased spouse.
(5) For purposes of this item, `retirement income' means the
total of all otherwise taxable income received by the taxpayer or his
surviving spouse in a taxable year from qualified retirement plans. A
qualified retirement plan, for purposes of this item, means those plans
defined in Internal Revenue Code Sections 401, 403, 408, and 457, and
all public employee retirement plans of the federal, state, and local
governments, including military retirement for persons with twenty or
more years active military duty.
(6) The commission shall prescribe the method of making the
election provided in this item and may require the taxpayer to provide
information necessary for proper administration of this election.
(7) Notwithstanding the reference to the age of sixty-two years
and sixty-five years in subitems (1) and (2) of this item, no taxpayer first
receiving retirement income after 1992 may make the election allowed
pursuant to subitem (1) of this item or deduct retirement income before
the taxable year in which he attains the age at which taxpayers are first
eligible to receive reduced social security old age benefits and no
taxpayer electing to defer claiming a deduction in order to deduct a
larger amount may deduct that larger amount in a taxable year before the
taxpayer attains the age at which the taxpayers are first eligible to
receive unreduced social security old age benefits."
SECTION 2. Section 12-7-435(a), (b), and (c) of the 1976 Code are
amended to read:
"(a) Any retired person, or his surviving spouse, who
receives a federal civil service retirement annuity is allowed to deduct
from taxable income three thousand dollars of the annuity received each
taxable year exclusive of any other exemption. The provisions of this
item do not apply to retired persons who are now exempt from payment
of taxes on federal civil service retirement
annuities.Reserved
(b) Any person retired from the uniformed services of the United
States with twenty or more years active duty service, or his surviving
spouse, is allowed to deduct from taxable income three thousand dollars
of his uniformed services retirement pay received each taxable
year.Reserved
(c) Any retired person, or his surviving spouse, who attains the
age of sixty-five before the close of the taxable year and who receives
income under one or more qualified pension programs is allowed to
deduct from taxable income three thousand dollars of the pension
income received in each taxable year. If the pension income also
qualifies for a deduction from taxable income under the provisions of
items (a) or (b) of this section, no deduction from taxable income is
permitted under the provisions of this item.Reserved"
SECTION 3. Section 12-7-435(d) and (e) of the 1976 Code, as last
amended by Section 39, Part II, Act 189 of 1989, are further amended
to read:
"(d) The first three thousand dollars of the total amount
received by a taxpayer from the various state retirement systems as
provided in Title 9 and from the retirement systems of other states.
Reserved
(e) The first three thousand dollars of retirement pay received by
police officers or firemen from a South Carolina municipality or county
group retirement plan.Reserved"
SECTION 4. Section 12-7-436 of the 1976 Code is repealed.
SECTION 5. Upon approval by the Governor, this act is effective for
taxable years beginning after 1990.
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