Taxable
TRS benefits are generally subject to federal income tax when they're paid to you.
Handbook pp. 2, 48
No state income tax
Texas has no state personal income tax. Not from TRS's handbook.
General information
New state may tax it
Your new home state's rules apply. Check its tax agency.
4 U.S.C. §114
Why your pension is taxable
TRS is a qualified governmental retirement plan under Section 401(a) of the Internal Revenue Code. Your employer takes your TRS contribution out of your pay before tax. That money, and the interest on it, isn't taxed until TRS pays it out (Handbook pp. 2, 7, 48).
- Service credit you bought was usually paid with after-tax money, like a check from savings. It counts as pre-tax if you paid with a rollover from another eligible plan, or a direct transfer from a governmental 403(b) or 457(b) (Handbook pp. 18, 48).
- After-tax money you put into TRS is handled the way federal tax law requires. TRS gives you tax information when it first pays a benefit (Handbook p. 48). Ask a tax professional how much of each payment is taxable.
What the handbook says is federally taxable
- Your monthly service or disability retirement annuityHandbook p. 48
- A beneficiary's monthly annuityHandbook p. 48
- PLSO lump sumsHandbook pp. 37, 48
- DROP paymentsHandbook p. 48
- Death and survivor benefits, including the $10,000 retiree survivor benefitHandbook pp. 47-48
- Refunds of your contributionsHandbook pp. 12, 48
Two exceptions the handbook names
- The $160,000 line-of-duty death benefit, paid when a member working in a TRS-covered job dies from a physical assault while doing that job, is not subject to federal income tax (Handbook p. 22).
- Retired public safety officers whose qualified health premiums come out of their TRS annuity may be able to exclude up to $3,000 of those premiums from income. See the IRS Form 1040 instructions or a tax professional (Handbook p. 48).
Withholding from your monthly check
- Fill out a withholding form when you retire. TRS's form for pension and annuity payments is the TRS W4P, on the Forms page of the TRS website (Handbook p. 48).
- Change it any time after you retire by sending a new TRS W4P (Handbook p. 48).
- It comes out of each payment. TRS's presentation shows federal income tax and your health premium as deductions from the monthly payment (slide 43).
- Not a U.S. citizen or resident alien? TRS must withhold 30% unless you qualify for a tax treaty and send IRS Form W-8BEN (Handbook p. 48).
General information, not from TRSPension payers generally report what they paid you, and the tax they withheld, on IRS Form 1099-R, which you use when you file your return. The handbook doesn't name the form. It says only that TRS gives tax information when a benefit is first paid (Handbook p. 48). Check MyTRS or ask TRS how and when you'll get yours.
Not sure how much to withhold? That depends on your other income, your spouse's income and your deductions. A tax professional can help. Working after you retire changes the math too. See working after retirement.
Lump sums and rollovers
A "rollover" moves money from TRS into another eligible retirement plan or a traditional IRA, so it isn't taxed yet. TRS's Special Tax Notice Regarding Rollover Options explains your choices. It comes with your retirement forms, and with the refund form (TRS 6) (Handbook pp. 12, 37).
20% federal tax is withheld unless you roll all eligible amounts into another eligible plan or a traditional IRA.
If you're under 59½, the IRS may also charge a 10% additional tax on early distributions. Refunding also ends your membership and your right to a pension.
Handbook p. 12 · Leaving teaching
The lump sum is taxable income. You can roll over the eligible part into another eligible retirement plan.
TRS's Special Tax Notice Regarding Rollover Options comes with your retirement forms.
Handbook p. 37 · PLSO explained
The $150 monthly benefit can be rolled over. If it isn't, 20% federal tax withholding is mandatory.
This applies to members with less than 10 years of service who qualify for disability retirement.
Handbook p. 38
Naming a trust, your estate or an organization as beneficiary may affect whether a benefit can be rolled over. The handbook says to get legal advice first (Handbook p. 21). See survivor benefits.
Required minimum distributions
Federal rules say you can't leave your TRS money untouched forever. You must start receiving benefits by a "required beginning date" (Handbook p. 9).
April 1 after the year you turn 72 or leave TRS-covered work, whichever is later.
April 1 after the year you turn 70½ or leave TRS-covered work, whichever is later.
You may owe a federal excise tax of 50% of what you should have received that year.
Handbook p. 9. If you've left your job but haven't retired or taken a refund, contact TRS at least three months before your required beginning date. Late forms don't move the date.
Needs validation · general information, not from TRSCongress has changed these rules since the ages above were written. The SECURE 2.0 Act of 2022 raised the starting age for many people born after 1950 and lowered the excise tax. The handbook's ages and its 50% figure may not match current IRS rules. This mostly matters if you leave teaching and wait into your 70s to retire. Confirm with TRS or a tax professional.
Texas, and moving out of Texas
General information, not from TRSTexas has no state personal income tax. While you live in Texas, the state doesn't tax your TRS pension. You still owe federal income tax. TRS's handbook doesn't discuss state taxes.
If you retire somewhere else, the state you move to sets its own rules for its residents. It may tax your TRS pension, in full or in part, or not at all.
- The federal rule. A federal law, 4 U.S.C. §114, bars a state from taxing the retirement income of a person who isn't a resident or domiciliary of that state. It protects you from your former state. It doesn't stop your new state from taxing you as a resident.
- Check your new state. Go to the official tax agency for the state you're moving to, or ask a tax professional there. We don't list state-by-state rules because they change.
- Keep TRS up to date. Tell TRS about an address change, in MyTRS or in writing (slide 52).
- Moving abroad? TRS can't make direct deposits to an account outside the U.S. (Handbook p. 48).
Social Security
Your TRS pension isn't affected by Social Security payments you get (Handbook p. 49). The 2025 Social Security Fairness Act and the end of WEP and GPO are covered on our Social Security page. Whether your Social Security is taxable is a question for the IRS or a tax professional.
Questions to take to a tax professional
- How much federal tax should I have withheld from my monthly check?
- Should I take a PLSO as cash or roll it over? What about a refund?
- Is part of my pension after-tax money, for example from service credit I bought?
- I'm moving. How does my new state tax a Texas public pension?
- If I wait to retire, when is my required beginning date under current IRS rules?
Retiring soon? Your withholding form is one of the steps on our retirement countdown checklist.
Questions
Is my TRS pension taxable?
Yes, for federal income tax. Your contributions went in before tax, so TRS benefits are generally subject to federal income tax when you receive them. That includes your annuity, PLSO, refunds and death and survivor benefits (Handbook pp. 2, 48).
Does Texas tax my TRS pension?
General information, not from TRS: Texas has no state personal income tax, so Texas doesn't tax your pension while you live here. Federal income tax still applies. TRS's handbook doesn't cover state taxes.
If I move out of Texas, can my new state tax my TRS pension?
It may. Each state sets its own rules for residents. A federal law, 4 U.S.C. §114, stops a state from taxing the retirement income of someone who no longer lives there, but your new home state can tax it. Check with that state's tax agency.
How do I change the federal tax withheld from my TRS check?
Fill out a new TRS W4P, TRS's federal withholding form for pension payments. It's on the Forms page of the TRS website. You can change it any time after you retire (Handbook p. 48).
Is the TRS Partial Lump Sum Option taxable?
Yes, it's taxable income. You can roll the eligible part into another eligible retirement plan. TRS's Special Tax Notice comes with your retirement forms (Handbook p. 37).
How much tax is taken out of a TRS refund?
20% federal withholding is mandatory on the pre-tax part unless you roll it all over into an eligible plan or a traditional IRA. A 10% additional tax may apply if you're under 59½ (Handbook p. 12).
Is the TRS survivor benefit taxable?
Yes. TRS survivor and death benefits are not life insurance, so they are subject to federal income tax. One exception the handbook names: the $160,000 line-of-duty death benefit for a member who dies because of a physical assault (Handbook pp. 22, 47).
Source: TRS Benefits Handbook, September 2025, pp. 2, 7, 9, 12, 15, 18, 20-22, 33, 37-38, 47-49. Payroll deductions: TRS K-12 Ready to Retire presentation (FY27), slide 43. Moving out of state: 4 U.S.C. §114. Texas income tax and Form 1099-R notes are general information, not from TRS. Last reviewed .