Annuity Taxation
Table of Contents

Annuities are taxed on an accrual basis: as income is earned even if not received (e.g., during the accumulation phase of a deferred annuity)

Taxation depends on the type of annuity.


  • owner = annuitant
  • payments start by the end of the calendar year of purchase
  • guarantee ends by the annuitant’s 91st birthday
  • level annuity payments (except for the reduction in payments to a survivor with joint & last survivor)


  • interest earned on the annuity principal is reported annually
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