- If all your months of federal service or points were before October 1, 1991, subtract 100 percent of the taxable amount of federal pension income you reported on your federal return.
- If you have no months of service or points before October 1, 1991, you cannot subtract any federal pension.
- If your service or points occurred both before and after October 1, 1991, subtract a percentage of the taxable federal pension income you reported on your federal return. To determine your percentage, divide the months of service or points before October 1, 1991, by the total months of service or points earned. Round to three places (example: .4576 = 45.8 percent). Once you've determined the percentage, it will remain the same each year. Write the percentage on line 17a of Oregon Form-40. If you have two federal pensions, write the second percentage on line 17b, and enter your total subtraction amount on line 17. Figure the percentage for each pension separately.
Federal pension subtraction formula:
Months of service or points before 10/1/91 X Federal pension amount included in federal income = Oregon Subtraction Total months of service or points
Example: Ann worked for the U.S. Forest Service from March 31, 1977, until January 7, 2012. She worked a total of 417 months; 174 months were worked before October 1, 1991. In 2013, she received taxable federal pension income of $35,000. Using the formula, her federal pension subtraction is:
174 X $35,000 = $14,595 417
She can subtract 41.7 percent--or $14,595 ($35,000 * 0.417)--of her taxable federal pension. She will continue to subtract 41.7 percent from Oregon income in future years.
You may be able to subtract some or all of your taxable federal pension included in your 2013 federal income. This includes benefits paid to the retiree or the beneficiary. It does not include disability payments if you have not reached the minimum retirement age. The subtraction amount is based on the number of months of federal service or points earned before and after October 1, 1991: