Massachusetts General Laws chapter 62, section 3(B)(a)(4) provides a deduction from Massachusetts adjusted gross income of:
any income from a contributory annuity, pension, endowment or retirement fund of any other state or any political subdivision thereof, provided that income from any such similar fund established under the laws of the commonwealth is not subject to taxation in such other state or political subdivision.
Id. Thus, in general, a deduction is available to a Massachusetts resident who receives a contributory public pension from another state if the other state grants reciprocal treatment to retirees from Massachusetts. Before Pariser, the Department concluded that unless another state provides a blanket exemption for all Massachusetts contributory public employee pension income, there is no reciprocity, and income from a contributory public employee retirement plan of that state received by a Massachusetts resident may not be deducted from Massachusetts adjusted gross income. See Letter Rulings 81-91 and 85-12 which discussed income received from a New York State contributory public employee pension fund.
Section 617(c)(3-a) of the New York State Personal Income Tax Law permits New York residents to deduct from gross income:
Pensions and annuities received by an individual who has attained the age of fifty-nine and one-half, . . . to the extent includable in gross income for federal income tax purposes, but not in excess of twenty thousand dollars.
Id. Under this provision, New York still taxes income from Massachusetts contributory public employee retirement plans when the taxpayer is younger than 59 and one-half years old or to the extent pension income exceeds $20,000. In Letter Rulings 81-91 and 85-12 the Department held that because section 617(c)(3-a) of the New York State Personal Income Tax Law did not provide a blanket exemption for all Massachusetts contributory public employee pension income, a Massachusetts resident who receives income from a New York State contributory public employee pension fund was not entitled to a deduction pursuant to M.G.L. c. 62, § 3(B)(a)(4) for that income.