Updated October 29, 2026. Quick answer: No. The 2025 PA-40 instructions list a “Civil Service Annuity” under income not taxable for Pennsylvania personal income tax purposes, with no dollar cap and no age test printed for it.
What Pennsylvania does with a FERS or CSRS annuity
| Question | What the Pennsylvania documents say |
|---|---|
| What the source says | The 2025 PA-40 instructions list a Civil Service Annuity among income not taxable for Pennsylvania personal income tax purposes. |
| Amount or limit | Full exclusion, no dollar cap printed. Retirement benefits paid after becoming eligible to retire, and retiring, are not taxable, and the Civil Service Annuity is named separately in the not-taxable list. |
| Age or other test | No age test is printed for the Civil Service Annuity. The general retirement-plan test is that payments are received after you qualify for retirement and retire. |
| State rate printed | The instructions print a state income tax rate of 3.07 percent for 2025. |
| Change for 2026 | No 2026 change is printed in the state documents cited here. |
In the Pennsylvania documents’ own words
- “INCOME NOT TAXABLE FOR PA PIT PURPOSES:” (2025 Pennsylvania Personal Income Tax Return Instructions (PA-40))
- “benefits paid after becoming eligible to retire, and retiring” (2025 Pennsylvania Personal Income Tax Return Instructions (PA-40))
- “Payments you receive after you qualify for retirement and retire.” (2025 Pennsylvania Personal Income Tax Return Instructions (PA-40))
- “The state income tax rate for 2025 is 3.07 percent” (2025 Pennsylvania Personal Income Tax Return Instructions (PA-40))
- “Received, including lump sum distributions, on or after reaching” (2025 Pennsylvania Personal Income Tax Return Instructions (PA-40))
- “Distributions made upon or after his retirement from service” (61 Pa. Code 101.6 Compensation)
How this differs from other pensions in Pennsylvania
The federal annuity is exempt, as are other commonly recognized retirement benefits paid after the recipient is eligible to retire and retires. Payments received before qualifying for retirement and retiring can be taxable, so the retire-first test is the general rule. See also Does Pennsylvania tax pensions? and military retirement pay.
FERS, CSRS and your TSP
The instructions name thrift savings plans as a possible eligible employer-sponsored plan, whose payments received after you qualify for retirement and retire are not taxed, and IRA withdrawals are not taxable if received on or after reaching age 591/2. For the Thrift Savings Plan itself, see Does Pennsylvania tax TSP withdrawals? and the TSP calculator.
What the Pennsylvania documents leave open
The instructions use the term Civil Service Annuity and never separate FERS from CSRS. The Pennsylvania guide chapter and the statute text were not read, and the instructions tell filers to ask the plan administrator whether a thrift savings plan qualifies.
Common mistakes
- Treating a withdrawal taken before you qualify for retirement and retire as exempt. The instructions exempt payments received after you qualify for retirement and retire, so an early lump sum can be taxable.
- Assuming the Civil Service Annuity line settles TSP withdrawals. The instructions send that question to the plan administrator.
Related: Does Pennsylvania tax pensions?, Pennsylvania military retirement pay, and FERS, TSP and Social Security sequencing.
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Answer againSources
- 2025 Pennsylvania Personal Income Tax Return Instructions (PA-40): https://www.pa.gov/content/dam/copapwp-pagov/en/revenue/documents/formsandpublications/formsforindividuals/pit/documents/2025/2025_pa-40in.pdf
- 61 Pa. Code 101.6 Compensation: https://www.pacodeandbulletin.gov/Display/pacode?file=/secure/pacode/data/061/chapter101/s101.6.html
Read from the state documents linked above on October 29, 2026. General information, not tax advice.