Taxes change in retirement. While this is normally due to how you are receiving your income (i.e. Social Security, IRA distributions, etc.), it can also be due to your state’s taxes, which can significantly affect how long your savings last.
Cardinal works in all 50 states and the District of Columbia, so we have to be familiar with the differences and can help you sort out what your state’s rules and regulations mean for you.
Income Taxes: State Taxes in Retirement
Taxes change in retirement. While this is normally due to how you are receiving your income (i.e. Social Security, IRA distributions, etc.), it can also be due to your state’s taxes, which can significantly affect how long your savings last.
How can my state’s taxes affect my income?
While initially, it seems like you might only need to look at state income tax, states have many different rules that can change how much retirement income you get to keep.
Within state income tax, states differ on if they tax Social Security at all, and if so, how much. They also differ in if they tax pension income, IRA distributions, and 401(k) distributions.
Some states charge a flat rate income tax, some charge no state income tax, and some have multiple income tax brackets. Some states have tax brackets that are different based on if you are filing single or as a couple.
There are differences in every state’s sales tax. While sales tax does not seem to make a huge difference, it can affect how much money you get to keep in your pocket on a daily basis.
Sales tax is going to vary by state, and within most states, it is going to vary by the city or town you are in. We have statewide averages below, but some cities, especially tourist cities, can charge significantly more than other areas in the same state.
There are differences in property tax, which is going to affect how much of your income is going towards your home. Almost all states have some type of program for seniors to reduce their property tax, but many of these are dependent on being under a certain income level, usually pretty low.
There are differences in estate and inheritance tax. This can affect how much your heirs eventually end up getting. While most states do not have either of these, with the ones that do, it can be very significant.
All of these differences are why some states are known to be better to retire in and others are labeled “bad for retirees”.
While we are never going to advise moving to another state only to lower your taxes, if you are looking into relocating in retirement, or just curious about how your state differs from others, we have a short summary of every state below to give you a starting point!
Make sure to talk to a qualified professional before making any tax decisions. Percentages, rules, and regulations are subject to change by every state’s government.
Listen to learn about state taxes in retirement:
Retirement taxes in Alabama
- Alabama fully exempts Social Security retirement benefits and payments from traditional pension plans from income taxes.
- Alabama has pretty high sales taxes, averaging at 9.22% in 2020.
- Alabama has some of the lowest property taxes in the county, 0.40% in 2018. Homeowners aged 65 or older are exempt from state property taxes. Seniors under a certain income level are exempt from all property taxes on their principal residence.
- Alabama has no estate or inheritance taxes.
Retirement taxes in Alaska
- Alaska does not tax Social Security retirement benefits or pension payments.
- Alaska has no state income tax.
- Alaska has no state sales tax, though some municipalities have a local sales tax, making the average across the state 1.76%
- Alaska has no property tax, but larger municipalities do, bringing the average for the state to 1.02%. Homeowners 65 or older are exempt from these taxes on the first $150,000 of property value. Veterans and younger surviving spouses also get some exemption to these taxes.
- Alaska has no estate or inheritance tax.
- Alaska sends all permanent residents an annual dividend check from its oil wealth savings account, giving residents an additional source of income.
Retirement taxes in Arizona
- Arizona does not tax Social Security retirement benefits, but it does tax other retirement income, such as distributions from an IRA. It does exempt up to $2,500 of income from federal and Arizona government retirement plans. Up to $3,500 of military retirement is also exempt.
- Arizona has a state income tax of 4.5% for the highest tax bracket.
- Arizona has a sales tax that averages 8.40%.
- Arizona has a property tax that averages 0.67%. They have a special program called Senior Property Valuation Protection option, which gives low income seniors some exemptions to paying property taxes.
- Arizona has no estate or inheritance tax.
Retirement taxes in Arkansas
- Arkansas does not tax Social Security retirement benefits. It exampts up to $6,000 of retirement income from state income tax. Military pension income is tax-exempt.
- Arkansas has a state income tax of 6.60% on any income more than $79,301. It is lower for income below this amount.
- Arkansas has a sales tax that averages to 9.47%, which is higher.
- Arkansas has a property tax of 0.64%. All households in Arkansas are eligible for the Arkansas Homestead Tax Credit, regardless of income or age. The Age 65 or Disabled Property Tax Relief program can keep property tax lower for seniors and the disabled.
- Arkansas has no estate or inheritance tax.
Retirement taxes in California
- California does not tax Social Security or Railroad Retirement benefits, but does tax all other retirement income such as pensions and IRA distributions.
- California has a state income tax of 13.30% if you make over $1 million. This rate drops to as low as 1% if you make under $8,809. There are 10 different tax tiers for California’s state income tax.
- California has an average sales tax of 8.6%.
- California has a property tax of 0.74%. The Property Tax Postponement Program is available to homeowners aged 62 and older or have a disability. This gives them a tax break if they meet some requirements.
- California has no estate or inheritance tax.
Retirement taxes in Colorado
- Colorado does not tax Railroad Retirement benefits. Up to $24,00 of federally taxes Social Security benefits and other retirement income are excluded from state income tax for those over age 65. A $20,000 exclusion is given to those aged 55-64.
- Colorado has a state income tax of a flat rate of 4.63%.
- Colorado has a sales tax that averages to 7.65%. Groceries and medicine are tax-exempt.
- Colorado has a property tax of 0.56%. The Colorado Property Tax Exemption Program for Seniors and Disabled Veterans and the Colorado Property Tax/Rent Rebate (PTC) gives some exemptions to property taxes for those over 65 or disabled who meet some requirements.
- Colorado has no estate or inheritance tax.
Retirement taxes in Connecticut
- Connecticut does not tax military pensions or Railroad Retirement payments.
- Connecticut does not tax Social Security benefits for residents with a federal adjusted gross income under $75,000, or $100,000 for joint filers. Residents making more than this are taxed on 25% of their Social Security benefits.
- Connecticut exempts 14% of income from pensions or annuities for those who make less than $75,000, or $100,000 for joint filers. The exemption percentage is planned to reach 100% by the 2025 tax year.
- Connecticut has a state income tax of 6.99% for those who make over $500,000. It is 3% for those who make under $10,000. There are 7 tax tiers for Connecticut state income taxes.
- Connecticut has a sales tax that averages to 6.35%.
- Connecticut has a property tax of 1.7%. There is an annual property tax credit or rent rebate for residents age 65 and older if requirements are met.
- Connecticut has an estate tax on estates valued at $5.1 million or more in 2020. Connecticut does not have an inheritance tax.
- Connecticut has a gift tax if the gift is over $5.1 million.
Retirement taxes in Delaware
- Delaware does not tax Social Security or Railroad Retirement benefits. Delaware taxpayers who are age 60 or older can exclude $12,500 of retirement income.
- Delaware has a state income tax of 6.6% for those making above $60,000.
- Delaware has no sales tax at the state or local level.
- Delaware has no state property tax, but the local municipalities charge an average property tax of 0.58%. The School Property Tax credit can be used by residents age 65 or older to offset 50% of these taxes after meeting some requirements.
- Delaware has no estate or inheritance tax.
Retirement taxes the District of Columbia
- The District of Columbia does not tax Social Security or Tier 1 Railroad Retirement benefits. D.C. taxes all other retirement account distributions at the regular tax rate.
- The District of Columbia has a state income tax 8.5% for income over $60,000. This rises to 8.95% for those making over $1 million.
- The District of Columbia has a sales tax of 6%. Food, prescription and nonprescription drugs, and residential utility services are exempt.
- The District of Columbia has a property tax of 0.59%. Homeowners aged 65 and older who make under $130,550 receive an exemption for some of this property tax.
- The District of Columbia has no inheritance tax. D.C. estate tax exemption is currently $5,762,400 in 2020.
Retirement taxes in Florida
- Florida has no state income tax, which means Social Security, Railroad Retirement benefits, pension income, or income from an IRA or 401(k) are all untaxed.
- Florida has a sales tax averaging 7.05%. Food, prescriptions and over-the-counter drugs are exempt.
- Florida has a property tax of 0.94%. Residents in Florida age 65 and older, who meet certain requirements, can also receive an extra homestead exemption for property taxes.
- Florida has no estate or inheritance tax.
Retirement taxes in Georgia
- Georgia does not tax Social Security or Railroad Retirement benefits. Georgia offers an exemption up to $65,000 for most types of retirement income for those 65 or older.
- Georgia has state income tax of 5.75% for income over $7,000.
- Georgia has a sales tax averaging 7.31%.
- Georgia has a property tax of 0.92%. Low income seniors can qualify for an exemption from some of these property taxes.
- Georgia has no estate or inheritance tax.
Retirement taxes in Hawaii
- Hawaii does not tax Social Security or Tier 1 Railroad Retirement benefits. Government, military, and private pension and employer-sponsored plans are exempt if the employee made no contributions. If employee made contributions, only employer contributions are exempt.
- Hawaii has a state income tax of 11% for its highest bracket, for those making over $200,000 for a single filer and $400,000 for a married couple.
- Hawaii has no sales tax but changes a general excise tax, which averages to 4.44%.
- Hawaii has a property tax of 0.30%. Personal property, such as cars and boats, are not subject to this property tax. Seniors can qualify for a homestead exemption to reduce the property tax owed.
- Hawaii has no inheritance tax. Hawaii’s estate tax allows residents to exclude $5,490,000 from the estate before it is taxed.
Retirement taxes in Idaho
- Idaho does not tax Social Security or Railroad Retirement benefits, but does tax all other retirement income.
- Idaho has a state income tax of 6.93% for all income over $11,554. Those with qualifying public pensions who are 65 or older might be eligible to deduct all or a potion of the distributions from these accounts.
- Idaho has a sales tax averaging 6.03%. Since groceries are taxable, the state offers a tax credit, which increases from $100 to $120 if you are over 65.
- Idaho has a property tax of 0.75%. Homeowners 65 or older, who make under a certain amount, are eligible for a property tax reduction. Others in this age bracket can defer property tax payments.
- Idaho has no estate or inheritance tax.
Retirement taxes in Illinois
- Illinois does not tax almost all retirement income, including Social Security benefits, Railroad retirement income, pension income, and income from retirement accounts.
- Illinois has a state income tax that is a flat rate of 4.95%.
- Illinois has a sales tax that averages to 9.08%.
- Illinois has a property tax of 2.05%. This is high, but there are several programs for seniors in the form of a homestead exemption, the ability to freeze a home’s assessed value, and a tax deferral program. You must be a certain age and meet certain requirements in order to take advantage of these programs.
- Illinois has no inheritance tax. Illinois has an estate tax that applies to estate worth more than $4 million.
Retirement taxes in Indiana
- Indiana does not tax Social Security or Railroad Retirement benefits, but does tax all other retirement income at state income tax rate.
- Indiana has a state income tax that is a flat rate of 3.23%.
- Indiana has a sales tax of 7.00%. Food, perception drugs, and durable medical equipment are exempt.
- Indiana has a property tax that averages to 0.87%. Seniors can get a homestead credit and property tax breaks after meeting some requirements.
- Indiana has no estate or inheritance tax.
Retirement taxes in Iowa
- Iowa does not tax Social Security, military pensions, or Railroad Retirement benefits. Residents older than 55 can exclude $6,000 of federally taxed distributions from a pension, annuity, or retirement plan.
- Iowa has a state income tax of 8.53% for those who make over $73,710. There are 8 lower tiers for Iowa’s state income tax for any amounts below this.
- Iowa has a sales tax averaging 6.94%. Food and prescription drugs are exempt.
- Iowa has a property tax of 1.50%. Iowa offers multiple programs that allow seniors to get reimbursement of some of these expenses, tax credits, or rebate checks for renters.
- Iowa has no estate. Iowa does have an inheritance tax that ranges from 0% – 15% depending on the relationship to the decedent and the amount inherited.
Retirement taxes in Kansas
- Kansas does not tax military, federal, or in-state public pensions. Social Security benefits are taxed for residents who make more than $75,000. Distributions from retirement accounts and out-of-state pensions are fully taxable in Kansas.
- Kansas has a state income tax of 5.70% for any income over $30,000.
- Kansas has a sales tax averaging 8.68%. Prescription drugs and medical devices are exempt.
- Kansas has a property tax of 1.33%. Kansas has programs to give seniors refunds on their property tax. Age, income limits, and home value limits apply to be eligible for this.
- Kansas has no estate or inheritance tax.
Retirement taxes in Kentucky
- Kentucky does not tax Social Security or RailRoad Retirement benefits. Kentucky also excludes up to $31,300 for state, private, and military retirement plans from state income taxes.
- Kentucky has a state income tax that is a flat rate of 5%.
- Kentucky has a sales tax of 6%, local laces taxes are not charged in Kentucky. Food, prescription drugs, and some residential utilities are exempt.
- Kentucky has a property tax of 0.82%. Seniors might be eligible for a Homestead Exemption.
- Kentucky has no estate. Kentucky has an inheritance tax, which ranges from 4%-16% depending on the value inherited. Immediate family, such as spouse, parents, children, grandchildren, and sibliming are exempt from this.
Retirement taxes in Louisiana
- Louisiana does not tax federal, state, or local government retirement income as well as Social Security and Railroad Retirement benefits. Residents older than 65 can exclude up to $6,000 of retirement income from their taxable income annually.
- Louisiana has a state income tax of 6% for income above $50,000.
- Louisiana has a sales tax averaging 9.25%. Groceries and prescription drugs are exempt from state sales tax, but may not be from local state taxes.
- Louisiana has a property tax of 0.52%. Seniors who meet income requirements in Louisiana can apply to have their pretty value frozen. There is also a Homestead Exemption to reduce property taxes paid.
- Louisiana has no estate or inheritance tax.
Retirement taxes in Maine
- Maine does not tax Social Security, Railroad Retirement benefits, and military pensions. Residents can exempt up to $10,000 of other retirement income from state income taxes.
- Maine has a state income tax of 7.15% for income over $52,600.
- Maine has a sales tax of 5.50% since cities and towns cannot impose a local sales tax. Food and prescription drugs are exempt.
- Maine has a property tax of 1.27%. The Property Tax Fairness Credit gives a property tax credit to Maine homeowners and renters, over the age of 65, of up to $1,200. There are income limits to qualify for this.
- Maine has no inheritance tax. Maine’s estate tax has a $5.8 million exemption in 2020. Estates above this amount will be taxed.
Retirement taxes in Maryland
- Maryland does not tax Social Security or Railroad Retirement benefits.Residents over 65 can qualify for an exclusion of up to $30,100 for income from a pension or 401(k). IRA distributions and out-of-state pension do not qualify for this exemption.
- Maryland has 8 tiers for its state income tax. The highest tier is 5.75% for income over $250,000. For income between $3,000 and $100,000, the tax rate is 4.75%.
- Maryland has a sales tax of 6%, as there are no additional local taxes. Food, medical devices, medical services, and prescription drugs are exempt.
- Maryland has a property tax of 1.04%. Maryland has multiple programs, some for seniors and some for everyone, that reduces the amount of property taxes paid if qualified for.
- Maryland is the only state in the country with an estate and an inheritance tax. Estate tax ranges from 0.8%-16% for estates over $5 million. Maylands inheritance tax, which is a flat rate of 10%, has a long list of heirs, which will be most close relatives, who are exempt from paying these taxes.
Retirement taxes in Massachusetts
- Massachusetts does not tax Social Security, Railroad Retirement, and most government pensions. There is a $700 exemption for residents over 65.
- Massachusetts has a flat rate of 5% for its state income tax.
- Massachusetts has a sales tax of 6.25%. Food, prescription drugs, utilities, health fuel, and a small amount of clothing costs are excluded.
- Massachusetts has a property tax of 1.15%. There is a refundable tax credit available to homeowners over age 65.
- Massachusetts has no inheritance tax. Massachusetts estate tax only exempts $1 million. Estates larger than this will be taxed anywhere from 0.8% – 16%.
Retirement taxes in Michigan
- Michigan taxes benefits based on the year the resident is born. Those born before 1946 can exempt more than those born after this time. If you were born after 1952, there is no exemption for retirement income. Residents do have the option when they turn 67 to deduct $20,00 per person from all income or claim personal exemption and deduct Social Security, military, and Railroad retirement income.
- Michigan has a state income tax at a flat rate of 4.25%.
- Michigan has a sales tax averaging 6%. Groceries and prescription drugs are exempt.
- Michigan has a property tax of 1.44%. Michigan has a few programs, for those who qualify with lower income, to reduce the property tax paid. For those with a certain income, over age 62, they can apply for a summer property tax deferment.
- Michigan has no estate or inheritance tax.
Retirement taxes in Minnesota
- Minnesota taxes Social Security as well as all other retirement income. Military pensions and Railroad retirement are not taxed. Some taxpayers can subtract a flat amount of Social Security from their taxable income, but the highest level of this is $4,500.
- Minnesota has a state income tax of 9.85% for income over $164,400. For income between $26,960 and $88,550, the tax rate is 6.80%.
- Minnesota has a sales tax averaging 7.46%. Food, clothing, prescription drugs, and over-the-counter drugs are exempt.
- Minnesota has a property tax of 1.11%. Seniors can qualify for a property tax deferral. There are also 2 property tax refund programs in Minnesota residents can take advantage of.
- Minnesota has no inheritance tax. Minnesota’s estate tax is 13% – 16% if an estate is worth more than $3 million.
Retirement taxes in Mississippi
- Mississippi does not tax any qualified retirement income, including Social Security, IRA and 401(k) income, and pension income.
- Mississippi has a state income tax of 5% for income over $10,000.
- Mississippi has a sales tax averaging 7.07%. Prescribed medications are exempt.
- Mississippi has a property tax of 0.65%. All seniors are eligible to exempt the first $75,000 of taxable value from the property tax.
- Mississippi has no estate or inheritance tax.
Retirement taxes in Missouri
- Missouri does not tax certain eligible taxpayer’s Social Security benefits. Some taxpayers can also qualify for exemptions on public and private pensions. For everyone else, retirement income will be taxed.
- Missouri has a state income tax of 5.40% for income over $8,424.
- Missouri has a sales tax averaging 8.18%. Prescription drugs are exempt.
- Missouri has a property tax of 1.01%. There is a property tax credit for seniors who meet income qualifications.
- Missouri has no estate or inheritance tax.
Retirement taxes in Montana
- Montana taxes almost all retirement come, including Social Security. Some retirees can get an exemption of up to $4,180 of retirement income. Interest income is partially exempt, up to $800, for seniors.
- Montana has a state income tax of 6.90% for income over $18,400.
- Montana has no state sales tax.
- Montana has a property tax of 0.76%. Lower income seniors can apply for a tax credit to offset some of this cost.
- Montana has no estate or inheritance tax.
Retirement taxes in Nebraska
- Nebraska does not tax Railroad Retirement benefits. All other retirement income is taxed. Social Security does have limits for those who make under a certain amount.
- Nebraska has a state income tax of 6.84% for income over $31,750.
- Nebraska has a sales tax of averaging 6.93%. Food and prescription drugs are exempt.
- Nebraska has a property tax of 1.65%. Low income seniors can get an exemption for up to $40,000 of assessed home value.
- Nebraska has no estate tax. Nebraska’s inheritance tax depends on how closely related you are to the deceased, and can range from 1% – 18%.
Retirement taxes in Nevada
- Nevada does not tax retirement income at all.
- Nevada has no state income tax.
- Nevada has a sales tax of averaging 8.32%. Groceries are exempt.
- Nevada has a property tax of 0.66%.
- Nevada has no estate or inheritance tax.
Retirement taxes in New Hampshire
- New Hampshire does not tax retirement income.
- New Hampshire has no state income tax on earned income, but does charge a 5% state income tax for interest and dividends that exceed $2,400.
- New Hampshire has no state sales tax. They do change some sales tax on restaurant meals, hotel rooms, car rentals, telecommunication services, alcohol, and electricity.
- New Hampshire has a property tax of 2.03%. There are multiple programs available to seniors to reduce the property taxes paid.
- New Hampshire has no estate or inheritance tax.
Retirement taxes in New Jersey
- New Jersey does not tax Social Security Railroad Retirement benefits, or military pensions. Taxpayers over age 62 can exclude up to $75,000 for single filers, $100,000 for married couples, of retirement income from state taxes.
- New Jersey has a state income tax made up of 7 tiers. The highest tier is 10.75% for income over $ 5 million. It is 5.53% for income between $40,000 and $75,000.
- New Jersey has a sales tax averaging 6.60%. Food, prescription drugs, over-the-counter drugs, most medical equipment, clothing, and footwars are exempt.
- New Jersey has a property tax of 2.21%. The state has multiple property tax relief programs, especially for seniors, for example, they give a $250 property tax deduction to most senior homeowners.
- New Jersey has no estate tax, but does have an inheritance tax on property transfers.
Retirement taxes in New Mexico
- New Mexico does not tax Railroad Retirement benefits. Social Security, pesions, and retirement accounts are taxed. Depending on income level, taxpayers over 65 may be eligible to deduct $8,000. Taxpayers who are at least 100 years old do not pay income tax.
- New Mexico has a state income tax of 4.90% for income over $16,000, or $24,000 if you are married.
- New Mexico has a sales tax averaging 7.82%. Prescription drugs are exempt.
- New Mexico has a property tax of 0.68%. There is a property tax rebate available for residents over 65 who are low income.
- New Mexico has no estate or inheritance tax.
Retirement taxes in New York
- New York does not tax Social Security, Railroad Retirement benefits, military retirement, or federal and state government pensions. Anything over $20,000 from a private retirement account or out-of-state plan is taxed.
- New York has a state income tax made up of 8 tiers. The highest tier is 8.82% for those making over $1,077,550. For those making between $21,400 and $80,650, the state income tax rate is 6.21%.
- New York has a sales tax averaging 8.52%. Food, prescriptions, and over-the-counter drugs are exempt.
- New York has a property tax of 1.40%. There are some programs to reduce property taxes for low income seniors.
- New York has no inheritance tax. Estate tax ranges from 3.06% – 16% for estates over $5.850 million.
Retirement taxes in North Carolina
- North Carolina does not tax Social Security. All other retirement income is taxed.
- North Carolina has a 5.25% flat state income tax.
- North Carolina has a sales tax averaging 6.97%. Prescription drugs and medical equipment are exempt.
- North Carolina has a property tax of 0.85%. Seniors have multiple property tax relief programs, including the Elderly Exclusions and the Circuit Breaker Tax Deferment Program.
- North Carolina has no estate or inheritance tax.
Retirement taxes in North Dakota
- North Dakota taxes most of Social Security and all other forms of retirement income.
- North Dakota has a state income tax of 2.90% for income over $433,200. It is 2.04% for income between $39,450 and $95,500.
- North Dakota has a sales tax averaging 6.86%. Food and prescription drugs are exempt.
- North Dakota has a property tax of 0.95%. The Homestead Tax Credit is available to seniors who make under a certain amount of income and own under a certain level of assets.
- North Dakota has no estate or inheritance tax.
Retirement taxes in Ohio
- Ohio does not tax Social Security. Seniors can claim a tax credit of up to $200 on other types of retirement income if they make under $100,000.
- Ohio has a state income tax of 3.33% for income between $43,450 and $86,900. It’s highest bracket is 4.80% for income above $217,400.
- Ohio has a sales tax averaging 7.17%. Food,prescription drugs, newspapers, telephone service are exempt.
- Ohio has a property tax of 1.62%. Some seniors, depending on income limits, can exempt up to $25,000 of assessed value to lower their property tax.
- Ohio has no estate or inheritance tax.
Retirement taxes in Oklahoma
- Oklahoma does not usually tax Social Security or Civil Services retirement system benefits, but do partially tax these for those who might still be working. Taxpayers can exclude up to $10,000 per person of other types of retirement income.
- Oklahoma has a state income tax of 5% for income over $7,200, or $12,200 if you are married.
- Oklahoma has a sales tax averaging 8.94%. Prescription drugs are exempt.
- Oklahoma has a property tax of 0.88%. Oklahoma has a homestead exemption as well as a tax credit for low income seniors. Senior citizens who make under a certain amount may also qualify for a valuation freeze on their primary residence.
- Oklahoma has no estate or inheritance tax.
Retirement taxes in Oregon
- Oregon does not tax Social Security or Railroad Retirement income, but does tax all other retirement income. Depending on qualifications, there is a retirement income credit of up to $6, 250.
- Oregon has a state income tax of 9.90% for income over $125,000. It drops to 9% for income under $125,000 but over $8,900.
- Oregon has a sales tax of 0%.
- Oregon has a property tax of 0.98%. There is a Senior Citizen Property Deferral program for seniors under a certain income level.
- Oregon has no inheritance tax. Estate tax is charged on estates over $1 million.
Retirement taxes in Pennsylvania
- Pennsylvania does not tax retirement income for residents age 60 and older.
- Pennsylvania has a state income tax that is a flat rate of 3.07%.
- Pennsylvania has a sales tax averaging 6.34%. Food, prescription drugs, over-the-counter drugs, clothing, textbooks, and heating fuels are exempt.
- Pennsylvania has a property tax of 1.51%. There is a property tax and rent rebate program available for those under certain income limits.
- Pennsylvania has no estate tax. The inheritance tax is based on the relationship to the descendant, the descendent’s date of death, and the value of the assets. The highest rate charged is 15%.
Retirement taxes in Rhode Island
- Rhode Island does not tax Railroad Retirement benefits. Seniors making over $83,550 pay tax on Social Security. These higher income seniors also do not qualify for the state income exemption of up to $15,000 for income from private, government, or military retirement plans.
- Rhode Island has a state income tax made up of 3 tiers. It is 4.75% for income over $65,250 and below $148,350. Once income hits $148,350, it is 5.99%.
- Rhode Island has a sales tax averaging 7%. Food, prescription drugs, over-the-counter drugs are exempt.
- Rhode Island has a property tax of 1.53%. Low income senior homeowners can get a property tax relief credit.
- Rhode Island has no inheritance tax. Estate tax is charged on estate’s over $1,537, 656.
Retirement taxes in South Carolina
- South Carolina does not tax Social Security or Railroad Retirement benefits. There are exemptions and deductions for other retirement income. Residents 65 and older and exclude up to $10,00 of retirement income and can also deduct $15,000 from other taxable income.
- South Carolina has a state income tax of 7% for income over $15,400.
- South Carolina has a sales tax averaging 7.46%. Prescription drugs and most utilities are exempt.
- South Carolina has a property tax of 0.56%. Homeowners over 65 are eligible for a homestead exemption.
- South Carolina has no estate or inheritance tax.
Retirement taxes in South Dakota
- South Dakota does not tax retirement income.
- South Dakota has no state income tax.
- South Dakota has a sales tax averaging 6.40%. Most prescription drugs are exempt.
- South Dakota has a property tax of 1.22%. There are a few programs available to low income seniors to reduce their property tax.
- South Dakota has no estate or inheritance tax.
Retirement taxes in Tennessee
- Tennessee does not tax retirement benefits.
- Tennessee essentially has no state income tax (starting in 2021, when the small tax on bond interest and stock dividends is appealed).
- Tennessee has a sales tax averaging 9.53%. Prescription drugs are exempt.
- Tennessee has a property tax of 0.73%. Homeowners 65 and older who meet income requirements are eligible for some property tax relief.
- Tennessee has no estate or inheritance tax.
Retirement taxes in Texas
- Texas does not tax retirement income.
- Texas has no state income tax.
- Texas has a sales tax averaging 8.19%. Groceries, prescription drugs, and over-the-counter drugs are exempt.
- Texas has a property tax of 1.69%. Texas helps seniors offset the cost of their property taxes with a homestead exemption and other exemptions specially for seniors.
- Texas has no estate or inheritance tax.
Retirement taxes in Utah
- Utah does not tax Railroad Retirement benefits, though all other retirement income, including Social Security, is taxed. Taxpayers age 65 and older are eligible for an income tax credit of up to $450 per person.
- Utah has a 4.95% flat state income tax.
- Utah has a sales tax averaging 7.18%.
- Utah has a property tax of 0.62%. Homeowners over 65 are eligible for a circuit breaker tax credit.
- Utah has no estate tax or inheritance tax.
Retirement taxes in Vermont
- Vermont does not tax Railroad Retirement benefits. They do tax Social Security for those making more than $45,000 annually. Other retirement income is taxed.
- Vermont has a state income tax made up of 4 tiers. The highest tier is 8.75% for income over $200,200. It is 6.60% for income between $39,600 and $96,000.
- Vermont has a sales tax averaging 6.22%. Medical items, prescription drugs, over-the-counter drugs, food, and clothing are exempt.
- Vermont has a property tax of 1.80%. Homeowners over 65 can qualify for a tax credit if they meet certain requirements.
- Vermont has no inheritance tax. A flat rate of 16% is charged on estates exceeding $2.75 million.
Retirement taxes in Virginia
- Virginia does not tax Social Security or Tier 1 Railroad Retirement benefits. The Virginia Age Deduction is available for those 65 or older, providing up to a $12,000 deduction.
- Virginia has a state income tax of 5.75% for income over $17,000.
- Virginia has a sales tax averaging 5.65%. Food and personal hygiene items have a reduced sales tax.
- Virginia has a property tax of 0.86%. Many cities, counties, and towns have exemption and deferral programs available to seniors to lower their property taxes.
- Virginia has no estate or inheritance tax.
Retirement taxes in Washington
- Washington does not tax retirement income.
- Washington has no state income tax.
- Washington has a sales tax averaging 9.21%. Food and prescription drugs are exempt.
- Washington has a property tax of 0.92%. There is a property tax exemption for those 61 or older, which is based on income level.
- Washington has no inheritance tax. The estate tax is charged if the estate is worth more than $2.193 million.
Retirement taxes in West Virginia
- West Virginia is in the process of phasing out their tax on Social Security benefits and will be fully eliminated by 2022. State and local government retirement plans, military pensions, and Railroad Retirement benefits are exempt. Taxpayers older than 65 can deduct up to $8,000 of other income.
- West Virginia has a state income tax of 6.50% for income over $60,000. It is 6% for income between $40,000 and $60,000.
- West Virginia has a sales tax averaging 6.41%. Prescription drugs and groceries are exempt.
- West Virginia has a property tax of 0.55%. There is a $20,000 exemption available to seniors who meet some requirements.
- West Virginia has no estate or inheritance tax.
Retirement taxes in Wisconsin
- Wisconsin does not tax Social Security or Railroad Retirement benefits. Taxpayers over 65, who take income from a retirement plan, like an IRA, may be able to subtract up to $5,000 from the state income tax.
- Wisconsin has a state income tax of 7.65% for income over $263,480. This drops to 6.27% for income between $23,930 and $263,480.
- Wisconsin has a sales tax averaging 5.46%. Food and prescription drugs are exempt.
- Wisconsin has a property tax of 1.73%. Homeowners 62 or older, dependent on meeting certain criteria, can qualify for a homestead credit.
- Wisconsin has no estate or inheritance tax.
Retirement taxes in Wyoming
- Wyoming does not tax retirement income.
- Wyoming has no state income tax.
- Wyoming has a sales tax averaging 5.34%. Prescriptions and food are exempt.
- Wyoming has a property tax of 0.55%. Seniors can qualify for multiple property tax relief programs if they meet some requirements.
- Wyoming has no estate or inheritance tax.
