This bill exempts from taxation all retirement payments received by an
individual from the U.S. Civil Service Retirement System (CSRS) or the Federal
Employees Retirement System (FERS), or both, to the extent that such payments are
not currently subject to an exemption.

Under current law, the pension benefits of certain public employees are exempt
from state taxation. The pensions that are exempt include payments received from
the CSRS, the U.S. Military Employee Retirement System, the Milwaukee City and
County Retirement Systems, the police officer's and fire fighter's annuity and benefit
fund of Milwaukee, the Milwaukee public school teachers' retirement fund, the
Wisconsin state teachers' retirement fund, and the sheriff's annuity and benefit fund
of Milwaukee County. For most of these pension plans, the exemption applies only
to persons who were members of or retired from the plans as of December 31, 1963,
although this limitation does not apply to retirement payments received from the
U.S. Military Employee Retirement System or from payments received from the U.S.
government that relate to service with the U.S. Coast Guard, the commissioned corps
of the National Oceanic and Atmospheric Administration, or the commissioned corps
of the U.S. Public Health Service.

Also under current law, up to $5,000 of payments or distributions received by
certain individuals from a qualified retirement plan under the Internal Revenue

---

Code, or from certain individual retirement accounts, are exempt from taxation. To
be eligible, the individual must be at least 65 years old and have federal adjusted
gross income under $15,000, or under $30,000 if married.

Under federal law, until 1984, employment by the federal government was
covered entirely under CSRS and not by social security. Federal employees who
began working for the federal government in 1984 or later are covered by CSRS and
Social Security, or by FERS, instead of entirely by the CSRS. In 1986, the federal
government created FERS. Some federal employees who had been covered by CSRS
switched to FERS, and some stayed in CSRS. Work under FERS is covered by social
security. Federal employees who remained in CSRS after 1983 are still not covered
by social security.

This bill exempts from taxation all payments received from CSRS or FERS, or
both, to the extent that such payments are not already exempt, and without regard
to whether the former employee was a member of or retired from CSRS as of
December 31, 1963.