Updated October 19, 2026. Quick answer: Two lines of the New York IT-201 subtract retirement income. Line 26 is for pensions from New York State, local governments and the federal government, and line 29 is the pension and annuity income exclusion for other pension and annuity income. The amounts come off federal adjusted gross income on the way to New York adjusted gross income.
What this form does
The IT-201 is New York’s full-year resident income tax return, and its instructions (IT-201-I) explain the arithmetic behind it: “Similarly, New York State does not tax certain items of income taxed by the federal government.” “You must subtract these New York subtractions from your federal adjusted gross income.”
Two of those subtractions are for retirement income. Line 26 handles government pensions, and line 29 handles private pension and annuity income that does not come from those plans. For how the state treats retirement income overall, see New York retirement taxes and whether New York taxes pensions.
Who it applies to
Line 26 asks who paid the pension. Line 29 asks the reverse question, and then adds an age test: “If Yes, and you were 59½ before January 1, 2025, enter the qualifying pension and annuity income included in your 2025 federal adjusted gross income, but not more than $20,000.” “If you became 59½ during 2025, enter only the amount you received after you became 59½, but not more than $20,000.”
For married taxpayers the instructions say “If you both qualify, you and your spouse can each subtract up to $20,000 of your own pension and annuity income.” “However, neither of you can claim any unused part of your spouse’s exclusion.”
The instructions also cover a decedent’s pension: “If you received a decedent’s pension and annuity income, you may make this subtraction if the decedent would have been entitled to it, had the decedent continued to live, regardless of your age.”
The lines, one by one
| Line | What the form says |
|---|---|
| Line 26 heading | “Line 26: Pensions of New York State and local governments and the federal government” |
| Line 26 question | “Did you receive a pension or other distribution from a New York State or local government pension plan or federal government pension plan that was included in your federal adjusted gross income?” |
| Line 26, employers listed | “Local governments within the state.” “The United States, its territories, possessions (or political subdivisions thereof), or any agency or instrumentality of the United States” |
| Line 26, not allowed | “Periodic distributions from government (IRC § 457) deferred compensation plans.” “However, these payments and distributions may qualify for the pension and annuity income exclusion described in the instructions for line 29.” |
| Line 29 heading | “Line 29: Pension and annuity income exclusion” |
| Line 29 question | “Did you enter an amount of pension income or annuity income, or both (generally reported on line 9 or 10) that was not from a New York State or local government pension plan or federal government pension plan?” |
| Line 29, age and cap | “If Yes, and you were 59½ before January 1, 2025, enter the qualifying pension and annuity income included in your 2025 federal adjusted gross income, but not more than $20,000.” |
| Line 29, turned 59½ during the year | “If you became 59½ during 2025, enter only the amount you received after you became 59½, but not more than $20,000.” |
| Line 29, qualifying income | “periodic payments for services you performed as an employee before you retired”; “periodic and lump-sum payments from an IRA, but not payments derived from contributions made after you retired”; “periodic distributions from government (IRC § 457) deferred compensation plans” |
| Line 29, not qualifying | “Distributions you received as a result of an annuity contract purchased with your own funds from an insurance company or other financial institution.” “Employer nonelective and matching contributions that you designated to a Roth account under the SECURE 2.0 Act of 2022.” |
| Line 29, married taxpayers | “If you both qualify, you and your spouse can each subtract up to $20,000 of your own pension and annuity income.” “However, neither of you can claim any unused part of your spouse’s exclusion.” |
| Line 29, with the disability exclusion | “the total of your pension and annuity income exclusion and disability income exclusion cannot exceed $20,000” |
The IT-201 form itself is not reproduced here, so the lines above are the instruction text for lines 26 and 29. Pension and annuity income on line 29 is “generally reported on line 9 or 10”, the same income reported on Form 1040 lines 5a and 5b and Form 1040 lines 4a and 4b of the federal return; the 1099-R boxes explained guide shows which 1099-R box is which, and New York treatment of 403(b) and 457(b) withdrawals covers one common source.
The figures the form prints
The cap for line 29 sits in one sentence: “$20,000 limit: You may not take a pension and annuity income exclusion that exceeds $20,000, regardless of the source of the income.”
The same limit is shared with a related exclusion: “If you are also claiming the disability income exclusion (Form IT-225, S-124), the total of your pension and annuity income exclusion and disability income exclusion cannot exceed $20,000.”
Where the result goes next
Line 26 and line 29 are in the New York subtractions group. The instructions for the next lines say what the total feeds: “Line 33: New York adjusted gross income”. Subtractions that are not specifically listed go on line 31, which sends you to another form: “Enter on line 31 the amount from Form IT-225, line 18.”
A worked example
Illustration, not a state example. Suppose both spouses qualify by age. Spouse A has qualifying pension income of $26,000 (invented, for the computation) and spouse B has $8,000 (invented, for the computation). Each spouse is capped on their own income at the $20,000 limit printed above: spouse A’s exclusion is the smaller of $26,000 (invented, for the computation) and $20,000, which is $20,000, and spouse B’s is $8,000 (computed). The total is $20,000 plus $8,000 (computed), or $28,000 (computed). Unused room in spouse B’s cap is not available to spouse A, as the married-taxpayer rule quoted above says.
Edition and line numbers
This page reads the Instructions for Form IT-201, Full-Year Resident Income Tax Return (2025) for tax year 2025, the current file the New York State Department of Taxation and Finance served on 2026-10-19. Check the edition printed on your own form and use that edition’s line numbers.
Common mistakes
- Claiming a spouse’s unused room. The instructions say “neither of you can claim any unused part of your spouse’s exclusion”.
- Putting an annuity bought with personal funds on line 29. The instructions list it as not qualifying: “Distributions you received as a result of an annuity contract purchased with your own funds from an insurance company or other financial institution.”
- Using line 26 for a deferred compensation plan. The instructions say “However, these payments and distributions may qualify for the pension and annuity income exclusion described in the instructions for line 29.”
Related: New York retirement taxes, whether New York taxes pensions, New York treatment of 403(b) and 457(b) withdrawals, Form 1040 lines 5a and 5b, and 1099-R boxes explained.
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Answer againSources
- Instructions for Form IT-201, Full-Year Resident Income Tax Return (2025), New York State Department of Taxation and Finance: www.tax.ny.gov
- Related official page (not quoted): 2025 Form IT-201-I Instructions, HTML version, New York State Department of Taxation and Finance: www.tax.ny.gov
Read from the state revenue documents linked above on October 19, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer or the state revenue department is the right place to confirm anything consequential.