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These plans areexcluded from tax on your federal return, but not onyour state income tax return. Once you retire and beginto receive pension benefits, you will pay federal tax onyour retirement payments, but you will not pay PA taxon those benefits.
You must include the stock's fair market value as dividend income as of the date paid. PA-taxable dividend income does not include: Dividends distributed by a corporation to its stockholders as stock, if the distribution is not personal income for federal purposes. Distributions designated as return of capital by utility companies and other corporations that reduce the basis of your stock in the corporation.