States That Don't Tax Social Security Benefits
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37 States That Don’t Tax Social Security Benefits

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Some retirees are surprised to learn that Social Security is taxable. The federal government taxes up to 85% of your benefits, depending on your income. Most states, however, exempt Social Security from state taxes. The list of 37 states that don’t tax Social Security includes the nine states with no state income tax, as well as some states that also rank as the most tax-friendly states for retirees, such as Georgia and Pennsylvania.

But beware: Some states that exempt Social Security benefits take a big bite out of other types of retirement income. Maryland, for example, excludes Social Security benefits from taxation, but distributions from individual retirement accounts are fully taxed. Weigh all state taxes when researching the best places to retire. For each state, we’ve included a link to our full guide to state taxes on retirees.

SEE ALSO: How All 50 States Tax Retirees

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Kiplinger\'s state-by-state guide to taxes on retirees is updated annually based on information from state tax departments, Wolters Kluwer Tax & Accounting and the Tax Foundation. All data are for the 2018 tax year unless otherwise noted.

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Alabama

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Sales Tax: 4% state levy. Localities can add as much as 7.5% to that, and the average combined rate is 9.15%. Alabama is one of the few states that does not exempt food from sales tax.

Income Tax Range: Low: 2% (on up to $1,000 of taxable income for married joint filers and up to $500 for all others). High: 5% (on more than $6,000 of taxable income for married joint filers and more than $3,000 for all others). Alabama also allows residents to deduct all of their federal income tax from state taxable income. Some counties and cities charge an “municipal occupational tax” of 0.5%-2% on income; the average levy across the state is 0.5%, according to the Tax Foundation.

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Property Taxes: The median property tax on Alabama’s median home value of $128,500 is $550

Inheritance and Estate Taxes: There is no inheritance tax or estate tax.

For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in Alabama.

SEE ALSO: The Best Social Security Claiming Strategies: How Much Do You Really Know?

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Alaska

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Sales Tax: Alaska is one of five states with no state sales tax. However, localities can levy sales taxes, which can go as high as 7.5%. But, according to the Tax Foundation, the statewide average is only 1.43%. Sales taxes are generally charged in locations without real property taxes and vice versa.

Income Tax Range: There is no state income tax.

Property Taxes: The median property tax on Alaska’s median home value of $257,100 is $3,048

Inheritance and Estate Taxes: There is no inheritance tax or estate tax.

For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in Alaska.

SEE ALSO: Red Flags That Raise Audit Chances for Retirees

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Arizona

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Sales Tax: 5.6% state levy. Localities can add as much as 5.3% to that, but the average combined levy is 8.33%, according to the Tax Foundation. Many cities in Arizona levy a tax on food for home consumption, like Tempe (1.8%) and Scottsdale (1.75%); Phoenix and Mesa are notable exceptions.

Income Tax Range: Low: 2.59% (on up to $20,690 of taxable income for married joint filers and up to $10,346 for all others). High: 4.54% (on more than $310,317 of taxable income for married joint filers and more than $155,159 for all others).

Property Taxes: The median property tax on Arizona’s median home value of $167,500 is $1,356.

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Inheritance and Estate Taxes: There is no inheritance tax or estate tax.

For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in Arizona.

SEE ALSO: 10 Great Tiny Homes for Retirement

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Arkansas

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Sales Tax: 6.5% state levy. Localities can add as much as 5.13%, and the average combined rate is 9.42%, according to the Tax Foundation. The state taxes food at 1.5%, and localities can add to that.

Income Tax Range: Low: 0.9% (on up to $4,499 of taxable income). High: 6.9% (on more than $79,301 of taxable income).

Property Taxes: The median property tax on Arkansas’ median home value of $114,700 is $721.

Inheritance and Estate Taxes: There is no inheritance tax or estate tax.

For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in Arkansas.

SEE ALSO: 10 Things You’ll Spend More on in Retirement

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California

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Sales Tax: 7.25% state levy. Localities can add as much as 2.5%, and the average combined rate is 8.55%, according to the Tax Foundation.

Income Tax Range: Low: 1% (on up to $16,446 of taxable income for married joint filers and up to $8,223 for those filing individually). High: 13.3% (on more than $1,145,960 for married joint filers and $1 million for those filing individually).

Property Taxes: The median property tax on California’s median home value of $409,300 is $3,237.

Inheritance and Estate Taxes: There is no inheritance tax or estate tax.

For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in California.

SEE ALSO: Retirement Mistakes You Will Regret Forever

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Delaware

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Sales Tax: Neither the state nor localities impose a sales tax.

Income Tax Range: Low: 2.2% (on taxable income from $2,001 to $5,000). High: 6.6% (on taxable income above $60,000).

Property Taxes: The median property tax on Delaware’s median home value of $233,100 is $1,274.

Inheritance and Estate Taxes: Delaware’s estate tax expired at the end of 2017. There is no inheritance tax.

For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in Delaware.

SEE ALSO: Claim These Tax Deductions Even If You Don’t Itemize

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Florida

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Sales Tax: 6% state levy. Localities can add as much as 2%, and the average combined rate is 6.80%, according to the Tax Foundation.

Income Tax Range: There is no state income tax.

Property Taxes: The median property tax on Florida’s median home value of $166,800 is $1,702.

Inheritance and Estate Taxes: There is no inheritance tax or estate tax.

For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in Florida.

SEE ALSO: 8 Things You Must Know About Retiring to Florida

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Georgia

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Sales Tax: 4% state levy. Localities can add as much as 4.90%, and the average combined rate is 7.23%, according to the Tax Foundation. While the state doesn’t tax grocery food sales, localities can.

Income Tax Range: Low: 1% (on the first $1,000 of taxable net income for married couples filing jointly; on the first $750 for individual filers; and on the first $500 for married couples filing separately). High: 6% (on taxable income over $10,000 for married couples filing jointly; on taxable income over $7,000 for individual filers; and on taxable income over $5,000 for married couples filing separately)

Property Taxes: The median property tax on Georgia’s median home value of $152,400 is $1,413.

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Inheritance and Estate Taxes: There is no inheritance tax or estate tax.

For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in Georgia.

SEE ALSO: The 7 Best Bond Funds for Retirement Savers in 2019

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Hawaii

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Sales Tax: 4%. Hawaii employs a General Excise Tax that applies to a wide range of goods and services. Only prescription drugs and prostheses are exempt. Oahu has a county surcharge tax of 0.5% to pay for a mass transit system, making the average combined rate 4.35%, as calculated by the Tax Foundation. Complicating matters further, the tax is calculated on the vendor rather than the buyer, which means consumers pay a few percentage points more in practice.

Income Tax Range: Low: 1.4% (on taxable income up to $4,800 for married couples filing jointly; on up to $2,400 for married couples filing separately and individual filers). High: 8.25% (on taxable income over $48,000 for married couples filing jointly and surviving spouses; on over $96,000 for married couples filing separately and individual filers).

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Property Taxes: The median property tax on Hawaii’s median home value of $538,400 is $1,459.

Inheritance and Estate Taxes: Hawaii decided not to follow the big jump in the estate-tax exemption under the new federal tax law and set its own instead: $5.49 million, the same as for 2017. Tax rates range from 10% to 15.7%. There is no inheritance tax.

For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in Hawaii.

SEE ALSO: 9 States With the Scariest Death Taxes

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Idaho

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Sales Tax: 6.0% state levy. Localities (typically resort communities) can add as much as 3%, but the effect on the state average, as calculated by the Tax Foundation, is negligible: It’s 6.03%. Food is taxable, but the state attempts to offset the levy with a $100 per-person tax credit. Seniors can get $120.

Income Tax Range: Low: 1.125% (on taxable income up to $3,008 for married joint filers and up to $1,504 for individual filers). High: 6.925% (on taxable income of $22,558 or more for married joint filers and $11,279 or more for individual filers).

Property Taxes: The median property tax on Idaho’s median home value of $167,900 is $1,276.

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Inheritance and Estate Taxes: There is no inheritance tax or estate tax.

For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in Idaho.

SEE ALSO: 10 Scams That Will Ruin Your Retirement

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Illinois

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Sales Tax: 6.25% state levy. Localities can add as much as 4.75%, and the average combined rate is 8.70%, according to the Tax Foundation. Food, prescription drugs and non-prescription drugs are all taxed at 1% by the state.

Income Tax Range: There is a flat rate of 4.95% of federal adjusted gross income after modifications.

Property Taxes: The median property tax on Illinois’ median home value of $174,800 is $4,058.

Inheritance and Estate Taxes: There is no inheritance tax. Illinois has an estate tax with a $4 million exemption. The maximum estate-tax rate is 16%.

For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in Illinois.

SEE ALSO: The Least Tax-Friendly States in the U.S. 2018

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Indiana

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Sales Tax: State levy of 7%.

Income Tax Range: The Hoosier State taxes income at a flat rate of 3.23%, but counties levy their own income taxes, at rates as high as 3.38% (Pulaski County). The average is 1.56%, according to the Tax Foundation.

Property Taxes: The median property tax on Indiana’s median home value of $126,500 is $1,100.

Inheritance and Estate Taxes: Indiana has no estate or inheritance tax.

For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in Indiana.

SEE ALSO: The 10 Least Tax-Friendly States for Military Retirees

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Iowa

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Sales Tax: 6.0% state levy. Localities can add as much as 1%, and the average combined rate is 6.82%, according to the Tax Foundation.

Income Tax Range: Low: 0.36% (on up to $1,598 of taxable income). High: 8.98% (on taxable income over $71,910). Iowa also allows residents to deduct federal income tax from state taxable income.

Property Taxes: The median property tax on Iowa’s median home value of $132,800 is $1,986.

Inheritance and Estate Taxes: Iowa has no estate tax. The inheritance tax ranges from 0% to 15%, depending on the amount of the inheritance and the relationship of the recipient to the decedent, with these exceptions: No tax is due on property left to a surviving spouse, stepchildren, lineal descendants (children, grandchildren, etc.) or lineal ascendants (parents, grandparents, etc.), and no tax is due if the estate’s net value is less than $25,000.

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For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in Iowa.

SEE ALSO: 15 Things Retirees Should Buy at Costco

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Kentucky

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Sales Tax: State levy of 6%.

Income Tax Range: Kentucky has a flat income tax rate of 5%. Localities can add to this; the average levy is 2.08%, according to the Tax Foundation.

Property Taxes: The median property tax on Kentucky’s median home value of $126,100 is $1,078.

Inheritance and Estate Taxes: Kentucky has an inheritance tax, but all Class A beneficiaries (spouse, parent, child, grandchild, brother and sister) are exempt. Other beneficiaries are subject to inheritance tax rates ranging from 4% to 16%. There is no estate tax.

For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in Kentucky.

SEE ALSO: 15 Reasons You'll Go Broke in Retirement

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Louisiana

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Sales Tax: 4.45% state levy. Localities can add as much as 7%, and the average combined rate is 9.45%, according to the Tax Foundation. Groceries and prescription drugs are exempt from the state sales tax, but localities may tax these.

Income Tax Range: Low: 2% (on $12,500 or less of taxable income for individuals, $25,000 for joint filers). High: 6% (on more than $50,000 of taxable income; $100,000 for joint filers). Residents can deduct all of their federal income tax from state taxable income.

Property Taxes: The median property tax on Louisiana’s median home value of $148,300 is $750.

Inheritance and Estate Taxes: There is no inheritance tax or estate tax.

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For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in Louisiana.

SEE ALSO: 14 Retirement Mistakes You Will Regret Forever

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Maine

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Sales Tax: State levy of 5.5%.

Income Tax Range: Low: 5.8% (on taxable income less than $21,450 for single filers; less than $42,900 for joint filers). High: 7.15% (on taxable income more than $50,750 for single filers; more than $100,550 for joint filers).

Property Taxes: The median property tax on Maine’s median home value of $176,000 is $2,329.

Inheritance and Estate Taxes: Maine decoupled from Federal law and set its 2018 estate tax exemption at the old federal limit: $5.6 million. Tax rates range from 8% to 12%. The exemption will be adjusted for inflation; an estimate of 2019’s limit is $5.712 million.. Estate tax rates range from 8% to 12%. There is no inheritance tax.

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For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in Maine.

SEE ALSO: 10 Surprising (or Surprisingly Common) Estate Planning Mistakes

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Maryland

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Sales Tax: State levy of 6%.

Income Tax Range: Low: 2% (on less than $1,000 of taxable income). High: 5.75% (on more than $250,000 of taxable income for single filers; more than $300,000 for joint filers). Maryland’s 23 counties and Baltimore City may levy additional income taxes ranging from 1.75% to 3.20% of taxable income.

Property Taxes: The median property tax on Maryland’s median home value of $290,400 is $3,191.

Inheritance and Estate Taxes: Maryland estate tax is imposed on estates exceeding $4 million. The Free State’s estate tax exemption will rise to $5 million in 2019 but won’t be indexed to inflation going forward. Rates range from 5.6% to 16%. Maryland collects an inheritance tax, but property passing to a spouse, child or other lineal descendant, spouse of a child or other lineal descendant, parent, grandparent or sibling is exempt from taxation. Property passing to other individuals is subject to a 10% tax.

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For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in Maryland.

SEE ALSO: 7 Things Medicare Doesn't Cover

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Massachusetts

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Sales Tax: State levy of 6.25%. Most clothing and footwear priced at under $175 per item are exempt.

Income Tax Range: Massachusetts has a flat rate of 5.1% of federal adjusted gross income.

Property Taxes: The median property tax on Massachusetts’ median home value of $341,000 is $4,132.

Inheritance and Estate Taxes: Estates valued at more than $1 million are subject to estate tax. Tax rates range from 0.8% to 16%. There is an unlimited marital deduction for property left to a surviving spouse and an unlimited charitable deduction for property left to a qualified charity. Massachusetts has no inheritance tax.

For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in Massachusetts.

SEE ALSO: Great Places to Retire Near the Beach

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Michigan

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Sales Tax: State levy of 6%.

Income Tax Range: Michigan has a flat tax rate of 4.25%. Cities can levy income taxes as well, on both residents and non-residents (who are taxed 1/2 the rate of residents). In Detroit, the resident rate is 2.4%; the state average is 1.70%, according to the Tax Foundation.

Property Taxes: The median property tax on Michigan’s median home value of $122,400 is $2,174.

Inheritance and Estate Taxes: There is no inheritance tax or estate tax.

For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in Michigan.

SEE ALSO: 10 Ways to Minimize Taxes and Penalties on RMDs

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Mississippi

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Sales Tax: 7% state levy. Only two localities, Jackson (1%) and Tupelo (0.25%) add to that, making the average combined rate is 7.07%. Groceries are fully taxable.

Income Tax Range: Low: 3% (on taxable income of $1,000 or more). High: 5% (on more than $10,000 of taxable income).

Property Taxes: The median property tax on Mississippi’s median home value of $105,700 is $841.

Inheritance and Estate Taxes: There is no inheritance tax or estate tax.

For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in Mississippi.

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Nevada

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State Taxes on Social Security: Benefits are not taxed.0

Sales Tax: 6.85% state levy. Localities can add as much as 1.42%, and the average combined rate is 8.14%, according to the Tax Foundation.

Income Tax Range: There is no state income tax.

Property Taxes: The median property tax on Nevada's median home value of $191,600 is $1,478.

Inheritance and Estate Taxes: There is no inheritance tax or estate tax.

For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in Nevada.

QUIZ: Does Medicare Cover That?

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New Hampshire

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Sales Tax: No sales tax.

Income Tax Range: New Hampshire doesn’t have an income tax. But there’s a 5% tax on dividends and interest in excess of $2,400 for individuals ($4,800 for joint filers).

Property Taxes: The median property tax on New Hampshire’s median home value of $239,700 is $5,241.

Inheritance and Estate Taxes: There is no inheritance tax or estate tax.

For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in New Hampshire.

SEE ALSO: Baby Boomers are Rewriting Retirement History

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New Jersey

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Sales Tax: 6.625% state levy. That rate is cut in half (3.313%) for in-person sales in designated Urban Enterprise Zones located in disadvantaged areas. Salem County, which borders no-tax Delaware, also charges the reduced 3.313% rate. Notably, motor vehicles are charged at the regular rate in these locations. Most clothing and footwear are tax-exempt year round throughout the state.

Income Tax Range: Low: 1.4% (on up to $20,000 of taxable income). High: 8.97% (on taxable income over $500,000). New Jersey allows localities to impose an income tax; the average levy is 0.5%, per the Tax Foundation.

Property Taxes: The median property tax on New Jersey’s median home value of $316,400 is $7,601.

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Inheritance and Estate Taxes: New Jersey imposes an inheritance tax, at graduated rates ranging from 11% to 16%, on the transfer from a decedent to certain beneficiaries of real and personal property that has a total value of $500 or more. No tax is imposed on transfers to parents, grandparents, descendants, children and their descendants, spouses, civil union partners, domestic partners or charities. There is a $25,000 exemption per Class C beneficiary (siblings, sons-in-law and daughters-in-law). New Jersey's estate tax, levied on estates that exceed $2 million not passing to a spouse or civil union partner, will end Dec. 31, 2017.

An estate may be subject to the New Jersey estate tax even if there is no New Jersey inheritance tax due. However, any inheritance tax due is taken as a credit against any estate tax.

For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in New Jersey.

SEE ALSO: Top 10 Retirement Tips for Your Millennial

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New York

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Sales Tax: 4% state levy. Localities can add as much as 4.88%, and the average combined rate is 8.49%, according to the Tax Foundation. In the New York City metro area, there is an additional 0.375% sales tax to support transit. Clothing and footwear that cost less than $110 (per item or pair) are exempt from sales tax.

Income Tax Range: Low: 4.0% (on up to $8,500 of taxable income for single filers and up to $17,150 for married couples filing jointly). High: 8.82% (on taxable income over $1,070,550 for single filers and over $2,155,350 for married couples filing jointly). New York allows localities to impose an income tax; the average levy is 2.11%, per the Tax Foundation.

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Property Taxes: The median property tax on New York’s median home value of $286,300 is $4,738.

Inheritance and Estate Taxes: Estates exceeding $5.49 million are subject to estate tax, with a top rate of 16%. The state estate tax is a “cliff tax.” That means if the value of the estate is more than 105% of the current exemption, the exemption won’t be available and the entire estate will be subject to state estate tax.

For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in New York.

QUIZ: How 10 Types of Retirement Income Get Taxed

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North Carolina

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Sales Tax: 4.75% state levy. Localities can add as much as 2.75%, and the average combined rate is 6.95%, according to the Tax Foundation. Groceries are not taxed by the state, but a 2% local tax is levied.

Income Tax Range: North Carolina has a flat tax rate of 5.49%.

Property Taxes: The median property tax on North Carolina’s median home value of $157,100 is $1,345.

Inheritance and Estate Taxes: There is no inheritance tax and no estate tax.

For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in North Carolina.

SEE ALSO: 10 Ways Retirement Will Be Different in 2030

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Ohio

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Sales Tax: 5.75% state levy. Localities can add as much as 2.25%, and the average combined rate is 7.14%.

Income Tax Range: Low: 1.98% (on income over $10,650 of taxable income). High: 4.997% (on taxable income over $213,350). Municipalities can levy income taxes, too; the average local rate is 2.5%, per the Tax Foundation.

Property Taxes: The median property tax on Ohio’s median home value of $131,900 is $2,064.

Inheritance and Estate Taxes: Ohio has no inheritance tax or estate tax.

For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in Ohio.

SEE ALSO: 7 Great Small Towns for Retirement

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Oklahoma

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Sales Tax: 4.5% state levy. Localities can add as much as 6.5%, and the average combined rate is 8.93%, according to the Tax Foundation.

Income Tax Range: Low: 0.5% (on up to $1,000 of taxable income for single filers and up to $2,000 for married joint filers). High: 5% (on taxable income over $7,200 for single filers and over $12,200 for married joint filers).

Property Taxes: The median property tax on Oklahoma’s median home value of $121,300 is $1,076.

Inheritance and Estate Taxes: There is no inheritance tax or estate tax.

For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in Oklahoma.

SEE ALSO: 5 Retirement Lessons Learned From the Great Recession

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Oregon

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Sales Tax: None.

Income Tax Range: Low: 5% (on up to $3,450 of taxable income for single filers and up to $6,900 for married couples filing jointly). High: 9.9% (on taxable income over $125,000 for single filers and over $250,000 for married couples filing jointly). Residents can deduct some of their federal income tax from state taxable income. The subtraction is limited to $6,650 ($3,325 if married filing separately). Local income taxes may be due as well; the average local levy is 0.36%, according to the Tax Foundation.

Property Taxes: The median property tax on Oregon’s median home value of $247,200 is $2,637.

Inheritance and Estate Taxes: Oregon has a state estate tax for estates of more than $1 million. Rates range from 10% to 16%. There is no inheritance tax.

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For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in Oregon.

SEE ALSO: Retirees, Avoid These 11 Costly Medicare Mistakes

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Pennsylvania

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Sales Tax: 6%, but food, clothing, textbooks, heating fuels, and prescription and nonprescription drugs are exempt. Philadelphia has a local sales tax of an additional 2%, and Allegheny County (Pittsburgh's home county) adds a local sales tax of 1%, bringing the population-weighted average to 6.34%, as measured by the Tax Foundation.

Income Tax Range: Pennsylvania has a flat rate of 3.07%.

Property Taxes: Median property tax on Pennsylvania’s median home value of $167,700 is $2,603.

Inheritance and Estate Taxes: The Pennsylvania inheritance tax is calculated as a percentage of the value of the estate transferred to beneficiaries. The amount is determined based on the relationship of the heir to the decedent and the decedent's date of death. The tax rate is 4.5% for transfers to direct descendants (lineal heirs), 12% for transfers to siblings and 15% for transfers to other heirs (except charitable organizations, exempt institutions and government entities). Property a husband and wife own jointly is exempt from the tax, and so is property inherited from a spouse or from a child 21 or younger by a parent. The inheritance tax for farming families was eliminated in 2012. If the inheritance tax is paid within three months of the decedent's death, a 5% discount may apply.

There is no state estate tax.

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For details on tax breaks for retirees and state taxes on other retirement income see the complete guide to taxes on retirees in Pennsylvania.

SEE ALSO: 9 Worst Things Retirees Keep in Their Wallets

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South Carolina

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Sales Tax: 6% state levy. Localities can add as much as 3%, and the average combined rate is 7.43%, according to the Tax Foundation.

Income Tax Range: Low: 3% (on taxable income over $2,970). High: 7% (on taxable income over $14,860).

Property Taxes: Median property tax on South Carolina’s median home value of $143,600