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Pension and Annuity Income›2025 Returns›! ended and you are figuring the tax-free part of›Taxation of Periodic Payments

Fully Taxable Payments

Publication 575 — Pension and Annuity Income · 2026-10-03 edition · updated 2026-10-04 · United States

The pension or annuity payments that you receive are fully taxable if you have no cost in the contract because any of the following situations apply to you. However, see Insur- ance Premiums for Retired Public Safety Officers, earlier.

  • You didn’t pay anything or aren’t considered to have paid anything for your pension or annuity. Amounts withheld from your pay on a tax-deferred basis aren’t considered part of the cost of the pension or annuity payment.

  • Your employer didn’t withhold contributions from your salary.

  • You got back all of your contributions tax free in prior years. However, see Exclusion not limited to cost under Partly Taxable Payments , later.

Report the total amount you received on Form 1040, 1040-SR, or 1040-NR, line 5b. You should make no entry on Form 1040, 1040-SR, or 1040-NR, line 5a.

Deductible voluntary employee contributions. Distributions you receive that are based on your accumulated deductible voluntary employee contributions are generally fully taxable in the year distributed to you. Accumulated deductible voluntary employee contributions include net earnings on the contributions. If distributed as part of a lump sum, they don’t qualify for the 10-year tax option or capital gain treatment, explained later.

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▸Contents — Publication 575 — Pension and Annuity Income
Publication 575 — Pension and Annuity Income

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