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April 15, 2025
Question

Illinois police pension taxable on Alabama state income?

  • April 15, 2025
  • 1 reply
  • 0 views

Last year I moved from Illinois to Alabama and now receive a pension from my former Illinois police department's plan. Prior to moving, I researched and saw multiple articles showing that police pensions are not taxed in Alabama. While completing Turbotax I checked the box that the police pension was received while an Alabama resident, but was not from the Retirement System of Alabama (RSA). My form then shows that I owe income tax on the pension received. The Alabama Department of Revenue website lists, 

  • "All retirement compensation received by an eligible peace officer or a designated beneficiary from any Alabama police retirement system."

To clarify, did I miss this and I actually owe income tax to Alabama because my pension is not administered via the RSA? Thanks for any help in clearing this up.

    1 reply

    April 15, 2025

    Correct, Alabama only exempt pension from the Alabama police retirement system.  See Income Exempt from Alabama Income Taxation