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States exempting a portion of pension income include: Arkansas, Colorado, Delaware, Georgia, Hawaii, Iowa, Kentucky, Louisiana, Maine, Maryland, Michigan, Missouri, Montana, New Jersey, New Mexico, New York, Oklahoma, South Carolina, Utah, Virginia and Wisconsin.
What is the tax treatment for family pension received by the legal heirs of a deceased employee. It will be taxable under the head âincome from other sourceâ .under section 57(iia) a standard deduction shall be allowed to the legal heir @33.333% of such pension or Rs.15,000, whichever is less.hat is the tax treatment for family pension received by the legal heirs of a deceased employee. It will be taxable under the head âincome from other sourceâ .under section 57(iia) a standard deduction shall be allowed to the legal heir @33.333% of such pension or Rs. 15,000, whichever is less.