The 2017 tax reform law raised the federal estate tax exemption considerably. Before that law was enacted, the exemption was $5.49 million per person for decedents who died in 2017. It's up to $12.92 million for people who die in 2023 ($25.84 million for a married couple). So, now, even fewer taxpayers have to worry about federal estate taxes when they pass away. However, if your goal is to leave as much as you can to your heirs, then you should also pay attention to the state you choose for retirement.
Twelve states and the District of Columbia levy their own estate taxes, sometimes called "death taxes," and some have much lower thresholds than the federal government. In addition, six states have inheritance taxes. Maryland, whose nickname is the Free State, has both.
The good news for retirees focused on estate planning: There are 33 states that have neither estate taxes nor inheritance taxes. Take a look to see if your state is on the list (and also check out some other tax facts for the listed states that might be of interest to you).
Disclaimer
[Note: Income tax brackets are for the 2022 tax year, unless otherwise noted. Average combined state and local sales tax values are for 2022 and were compiled by the Tax Foundation. Property tax data is from 2021 and is based on information from the U.S. Census Bureau.]
Alabama
Overall Rating for Taxes on Retirees: Tax-friendly.
Sales Tax: 4% state levy. Localities can add as much as 7.5% to that, and the average combined rate is 9.24%, according to the Tax Foundation.
- Groceries: Taxable
- Clothing: Taxable
- Motor Vehicles: Taxable (2% state rate; additional local taxes may apply)
- Prescription Drug: Exempt
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).
Some Alabama municipalities also impose occupational taxes on salaries and wages.
Taxes on Social Security: Benefits are not taxed.
Property Taxes: In Alabama, the median property tax rate is $390 per $100,000 of assessed home value.
For more information on these and other Alabama state taxes, see the Alabama State Tax Guide.
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Alaska
Overall Rating for Taxes on Retirees: Mixed tax picture.
Sales Tax: Alaska is one of five states with no state sales tax. However, localities can levy sales taxes, which can reach 7.5%. Higher rates are found in locations that lack a property tax. But, according to the Tax Foundation, the statewide average is only 1.76%.
Income Tax Range: No state income tax.
Taxes on Social Security: Benefits are not taxed.
Property Taxes: In Alaska, the median property tax rate is $1,171 per $100,000 of assessed home value.
For more information on these and other Alaska state taxes, see the Alaska State Tax Guide.
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Arizona
Overall Rating for Taxes on Retirees: Most tax-friendly.
Sales Tax: 5.6% state levy. Localities can add as much as 5.6% to that, but the average combined levy is 8.37%, according to the Tax Foundation.
- Groceries: Exempt from state tax, but local taxes may apply
- Clothing: Taxable
- Motor Vehicles: Taxable
- Prescription Drugs: Exempt
Income Tax Range: Low: 2.55% (on up to $57,305 of taxable income for married filers and up to $28,653 for single filers). High: 2.98% (on taxable income over $57,305 for married filers and over $28,653 for single filers).
Beginning in 2023, a flat rate of 2.5% applies.
Taxes on Social Security: Social Security benefits are not taxed by the state.
Property Taxes: In Arizona, the median property tax rate is $508 per $100,000 of assessed home value.
For more information on these and other Arizona's state taxes, see the Arizona State Tax Guide.
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Arkansas
Overall Rating for Taxes on Retirees: Tax-friendly.
Sales Tax: 6.5% state levy. Localities can add as much as 6.125%, and the average combined rate is 9.47%, according to the Tax Foundation.
- Groceries: Taxable (0.125% state rate; additional local taxes may apply
- Clothing: Taxable
- Motor Vehicles: Taxable (6.5% state rate, or 7% in Texarkana, on purchase price of $4,000 or greater; 3.5% state rate on used motor vehicles priced from $4,000 to $10,000)
- Prescription Drugs: Exempt
Income Tax Range: Low: 2% (on taxable income from $5,000 to $9,999 for taxpayers with net income of $84,500 or less, and on the first $4,300 of net income for taxpayers with net income over $84,500). High: 4.9% (on taxable income from $23,600 to $84,500 for taxpayers with net income of $84,500 or less, and on taxable income over $8,500 for taxpayers with net income over $84,500).
Taxes on Social Security: Social Security benefits are not taxed by the state.
Property Taxes: In Arkansas, the median property tax rate is $572 per $100,000 of assessed home value.
For more information on these and other state taxes, see the Arkansas State Tax Guide.
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California
Overall Rating for Taxes on Retirees: Tax-friendly.
Sales Tax: 7.25% state levy. Localities can add as much as 2.5%, and the average combined rate is 8.82%, according to the Tax Foundation.
- Groceries: Exempt
- Clothing: Taxable
- Motor Vehicles: Taxable
- Prescription Drugs: Exempt
Income Tax Range: Low: 1% (on up to $20,198 of taxable income for married joint filers and up to $10,099 for those filing individually). High: 13.3% (on more than $1,354,550 for married joint filers and $1 million for those filing individually).
Taxes on Social Security: Social Security benefits are not taxed by the state.
Property Taxes: In California, the median property tax rate is $707 per $100,000 of assessed home value.
For more information on these and other California state taxes, see the California State Tax Guide.
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Colorado
Overall Rating for Taxes on Retirees: Most tax-friendly.
Sales Tax: 2.9% state levy. Localities can add as much as 8.3%, and the average combined rate is 7.77%, according to the Tax Foundation.
- Groceries: Exempt
- Clothing: Taxable
- Motor Vehicles: Taxable
- Prescription Drugs: Exempt
Income Tax Range: Colorado has a flat income tax rate of 4.4%. (It was lowered from 4.55% to 4.4% by Proposition 121, which was approved by voters on November 8, 2022.) The state also limits how much its revenue can grow from year-to-year by lowering the tax rate if revenue growth is too high. For example, in 2021, this resulted in a rate reduction from 4.55% to 4.5% for the year.
Denver and a few other cities in Colorado also impose a monthly payroll tax.
Taxes on Social Security: Up to $24,000 of Social Security benefits taxed by the federal government, along with other retirement income, can be excluded for Colorado income tax purposes ($20,000 for taxpayers 55 to 64 years old). However, beginning with the 2022 tax year, the $24,000 cap is removed for federally taxable Social Security benefits. This effectively makes all federally taxed Social Security income deductible for taxpayers 65 and over.
Property Taxes: In Colorado, the median property tax rate is $485 per $100,000 of assessed home value.
For more information on these and other Colorado state taxes, see the Colorado State Tax Guide.
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Delaware
Overall Rating for Taxes on Retirees: Most tax-friendly.
Sales Tax: No state or local 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).
Wilmington also imposes a city tax on wages.
Taxes on Social Security: Social Security benefits are not taxed by the state.
Property Taxes: In Delaware, the median property tax rate is $533 per $100,000 of assessed home value.
For more information on these and other Delaware state taxes, see the Delaware State Tax Guide.
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Florida
Overall Rating for Taxes on Retirees: Tax-friendly.
Sales Tax: 6% state levy. Localities can add as much as 2%, and the average combined rate is 7.01%, according to the Tax Foundation.
- Groceries: Exempt
- Clothing: Taxable
- Motor Vehicles: Taxable (additional county tax on first $5,000 of purchase price may apply)
- Prescription Drugs: Exempt
Income Tax Range: Florida has no state income tax.
Taxes on Social Security: Social Security benefits are not taxed by the state.
Property Taxes: In Florida, the median property tax rate is $804 per $100,000 of assessed home value.
For more information on these and other Florida state taxes, see the Florida State Tax Guide.
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Georgia
Overall Rating for Taxes on Retirees: Tax-friendly.
Sales Tax: 4% state levy. Localities can add as much as 5%, and the average combined rate is 7.37%, according to the Tax Foundation.
- Groceries: Exempt from state tax, but local taxes may apply
- Clothing: Taxable
- Motor Vehicles: Exempt from state tax, but local taxes may apply
- Prescription Drugs: Exempt
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: 5.75% (on the first $10,000 of taxable net income for married couples filing jointly; on the first $7,000 for individual filers; and on the first $5,000 for married couples filing separately).
Beginning in 2024, the state will adopt a flat income tax rate of 5.49%. From 2025 to 2029, the rate will gradually be reduced to 4.99% if certain economic targets are met. If the economic targets are not met, the rate reduction schedule will be delayed.
Taxes on Social Security: Social Security benefits are not taxed by the state.
Property Taxes: In Georgia, the median property tax rate is $812 per $100,000 of assessed home value.
For more information on these and other Georgia state taxes, see the Georgia State Tax Guide.
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Idaho
Overall Rating for Taxes on Retirees: Most tax-friendly.
Sales Tax: 6% state levy. Localities (typically resort communities) can add as much as 3%, but the average combined rate is just 6.02%, according to the Tax Foundation.
- Groceries: Taxable
- Clothing: Taxable
- Motor Vehicles: Taxable
- Prescription Drugs: Exempt
Income Tax Range: Low: 1% (on taxable income up to $3,324 for married joint filers and up to $1,662 for individual filers). High: 6% (on taxable income of $16,622 or more for married joint filers and $8,311 or more for individual filers).
Beginning in 2023, a flat rate of 5.8% on taxable income over $2,500 ($5,000 for joint filers) will apply. The threshold will be adjusted annually for inflation after 2023.
Taxes on Social Security: Social Security benefits are not taxed by the state.
Property Taxes: In Idaho, the median property tax rate is $492 per $100,000 of assessed home value.
For more information on these and other Idaho state taxes, see the Idaho State Tax Guide.
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Indiana
Overall Rating for Taxes on Retirees: Not tax-friendly.
State Sales Tax: 7% state levy. No local taxes.
- Groceries: Exempt
- Clothing: Taxable
- Motor Vehicles: Taxable
- Prescription Drugs: Exempt
Income Tax Range: Indiana has a flat rate of 3.23% of state adjusted gross income after modifications. Counties also levy income taxes.
For 2023 and 2024, the state rate is reduced to 3.15%. If state revenues reach certain thresholds, the state rate will drop to 3.1% for 2025 and 2026, to either 3% or 3.1% for 2027 and 2028, and to either 2.9%, 3% or 3.1% after 2028.
Taxes on Social Security: Social Security benefits are not taxed by the state.
Property Taxes: In Indiana, the median property tax rate is $752 per $100,000 of assessed home value.
For more information on these and other Indiana state taxes, see the Indiana State Tax Guide.
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Kansas
Overall Rating for Taxes on Retirees: Least tax-friendly.
Sales Tax: 6.5% state levy. Localities can add as much as 4.25%, and the average combined rate is 8.71%, according to the Tax Foundation.
- Groceries: Taxable (state rate of 4%)
- Clothing: Taxable
- Motor Vehicles: Taxable
- Prescription Drugs: Exempt
(Note: The state sales tax on groceries is reduced to 2% in 2024, and then to 0% in 2025 and thereafter. Local taxes on groceries will still apply.)
Income Tax Range: Low: 3.1% (on $2,501 to $15,000 of taxable income for single filers and $5,001 to $30,000 for joint filers). High: 5.7% (on more than $30,000 of taxable income for single filers and more than $60,000 for joint filers). Kansas also has an "intangibles tax" levied on unearned income by some localities.
Taxes on Social Security: Social Security benefits are exempt from Kansas income tax for residents with a federal adjusted gross income of $75,000 or less. For taxpayers with a federal AGI above $75,000, Social Security benefits are taxed by Kansas to the same extent they are taxed at the federal level.
Property Taxes: In Kansas, the median property tax rate is $1,330 per $100,000 of assessed home value.
For more information on these and other Kansas state taxes, see the Kansas State Tax Guide.
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Louisiana
Overall Rating for Taxes on Retirees: Tax-friendly.
Sales Tax: 4.45% state levy. Localities can add as much as 7%, and the average combined rate is 9.55%, according to the Tax Foundation.
- Groceries: Exempt from state tax, but local taxes may apply
- Clothing: Taxable
- Motor Vehicles: Taxable
- Prescription Drugs: Exempt from state tax, but local taxes may apply
Income Tax Range: Low: 1.85% (on $12,500 or less of taxable income for individuals, $25,000 for joint filers). High: 4.25% (on more than $50,000 of taxable income; $100,000 for joint filers).
Louisiana's personal income tax rates will be reduced beginning April 1, 2024, and each April 1 thereafter through 2034, if the prior fiscal year's actual individual income tax collections exceed a certain amount.
Taxes on Social Security: Social Security benefits are not taxed by the state.
Property Taxes: In Louisiana, the median property tax rate is $552 per $100,000 of assessed home value.
For more information on these and other Louisiana state taxes, see the Louisiana State Tax Guide.
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Michigan
Overall Rating for Taxes on Retirees: Not tax-friendly.
Sales Tax: 6% state levy. No local taxes.
- Groceries: Exempt, but prepared food is taxable
- Clothing: Taxable
- Motor Vehicles: Taxable
- Prescription Drugs: Exempt
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).
Taxes on Social Security: Social Security benefits are not taxed by the state.
Property Taxes: In Michigan, the median property tax rate is $1,324 per $100,000 of assessed home value.
For more information on these and other Michigan state taxes, see the Michigan State Tax Guide.
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Mississippi
Overall Rating for Taxes on Retirees: Tax-friendly.
Sales Tax: 7% state levy. Only two localities, Jackson (1%) and Tupelo (0.25%) add to that. According to the Tax Foundation, that makes for an average combined rate of 7.07%.
- Groceries: Taxable
- Clothing: Taxable
- Motor Vehicles: Taxable (5%)
- Prescription Drugs: Exempt
Income Tax Range: Low: 4% (on taxable income from $5,001 to $10,000). High: 5% (on taxable income over $10,000).
Starting in 2023, there is no tax on the first $10,000 of taxable income. The tax rate on taxable income above $10,000 will also be reduced to 4.7% in 2024, 4.4% in 2025, and 4% in 2026 and thereafter.
Taxes on Social Security: Social Security benefits are not taxed for married couples with a federal adjusted gross income less than $100,000 and single taxpayers with an AGI of less than $85,000. Taxpayers who exceed those income limits may qualify for a partial exemption on their benefits.
Property Taxes: In Mississippi, the median property tax rate is $753 per $100,000 of assessed home value.
For more information on these and other Mississippi state taxes, see the Mississippi State Tax Guide.
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Missouri
Overall Rating for Taxes on Retirees: Not tax-friendly.
Sales Tax: 4.225% state levy. Localities can add as much as 5.763%, and the average combined rate is 8.3%, according to the Tax Foundation.
- Groceries: Taxable (1.225% state rate; additional local taxes may apply)
- Clothing: Taxable
- Motor Vehicles: Taxable
- Prescription Drugs: Exempt
Income Tax Range: Low: 1.5% (on taxable of income from $112 to $1,121). High: 5.3% (on more than $8,968 of taxable income).
Beginning in 2023, the top rate is reduced to 4.95% and the first $1,000 of income is exempt (adjusted for inflation after 2023). Starting in 2024, additional top rate reductions of 0.15% are possible if the net general revenue collected by the state exceeds a certain threshold. In addition, up to three more top rate reductions of 0.1% are possible if net general revenue exceeds a different threshold.
Kansas City and St. Louis also impose an earnings tax.
Taxes on Social Security: Social Security benefits are not taxed for married couples with a federal adjusted gross income less than $100,000 and single taxpayers with an AGI of less than $85,000. Taxpayers who exceed those income limits may qualify for a partial exemption on their benefits.
Property Taxes: In Missouri, the median property tax rate is $880 per $100,000 of assessed home value.
For more information on these and other Missouri state taxes, see the Missouri State Tax Guide.
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Montana
Overall Rating for Taxes on Retirees: Mixed tax picture.
Sales Tax: No state sales tax. Resort areas such as Big Sky, Red Lodge and West Yellowstone have local sales taxes.
Income Tax Range: Low: 1% (on up to $3,300 of taxable income). High: 6.75% (on taxable income over $19,800).
Beginning in 2024, the income tax rates and brackets will be substantially revised (there will only be two rates – 4.7% and 6.5%).
Taxes on Social Security: Social Security benefits are taxable. The method used to calculate the taxable amount for Montana income tax purposes is similar to the method used for federal returns. However, there are important differences. As a result, the Montana taxable amount may be different than the federal taxable amount. (Beginning in 2024, Social Security benefits will be taxed by Montana to the same extent they are taxed at the federal level.)
Property Taxes: In Montana, the median property tax rate is $740 per $100,000 of assessed home value.
For more information on these and other Montana state taxes, see the Montana State Tax Guide.
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Nevada
Overall Rating for Taxes on Retirees: Most tax-friendly.
Sales Tax: 6.85% state levy. Localities can add as much as 1.53%, and the average combined rate is 8.23%, according to the Tax Foundation.
- Groceries: Exempt
- Clothing: Taxable
- Motor Vehicles: Taxable
- Prescription Drugs: Exempt
Income Tax Range: Nevada has no state income tax.
Taxes on Social Security: Social Security benefits are not taxed by the state.
Property Taxes: In Nevada, the median property tax rate is $484 per $100,000 of assessed home value.
For more information on these and other Nevada state taxes, see the Nevada State Tax Guide.
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New Hampshire
Overall Rating for Taxes on Retirees: Not tax-friendly.
Sales Tax: No state or local sales tax.
Income Tax Range: New Hampshire doesn't have an income tax. However, currently there's a 5% tax on dividends and interest in excess of $2,400 for individuals ($4,800 for joint filers).
The tax on dividends and interest is being phased out. The rate will be 4% for 2023, 3% for 2024, 2% for 2025, and 1% for 2026. The tax will then be repealed on January 1, 2027.
Taxes on Social Security: Social Security benefits are not taxed by the state.
Property Taxes: In New Hampshire, the median property tax rate is $1,766 per $100,000 of assessed home value.
For more information on these and other New Hampshire state taxes, see the New Hampshire State Tax Guide.
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New Mexico
Overall Rating for Taxes on Retirees: Mixed tax picture.
Sales Tax: 5% state levy (4.875% effective July 1, 2023, and then subject to reversion to 5.125% if tax revenues drop below a certain level). Localities can add as much as 4.313%, and the average combined rate is 7.72%, according to the Tax Foundation. New Mexico's tax is a gross receipts tax that covers most services.
- Groceries: Exempt
- Clothing: Taxable
- Motor Vehicles: Exempt from ordinary sales tax, but taxable under special 4% excise tax
- Prescription Drugs: Exempt
Income Tax Range: Low: 1.7% (on up to $5,500 of taxable income for single filers and $8,000 for joint filers). High: 5.9% (on taxable income over $210,000 for single filers and over $315,000 for married couples filing jointly).
Taxes on Social Security: Beginning in 2022, Social Security benefits are not tax by the state for single filers with an adjusted gross income (AGI) of $100,000 or less, joint filers and head-of-household filers with an AGI of $150,000 or less, and married people filing separate returns with an AGI of $75,000 or less. (Prior to 2022, Social Security benefits were taxed to the same extent they were taxed at the federal level.)
Property Taxes: In New Mexico, the median property tax rate is $728 per $100,000 of assessed home value.
For more information on these and other New Mexico state taxes, see the New Mexico State Tax Guide.
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North Carolina
Overall Rating for Taxes on Retirees: Mixed tax picture.
Sales Tax: 4.75% state levy. Localities can add as much as 2.75%, and the average combined rate is 6.98%, according to the Tax Foundation.
- Groceries: Exempt from state tax, but 2% local tax may apply
- Clothing: Taxable
- Motor Vehicles: Exempt from ordinary sales tax, but taxable under special 3% highway-use tax
- Prescription Drugs: Exempt
Income Tax Range: North Carolina has a flat rate of 4.99% of state taxable income. However, the rate is decreased to 4.75% for 2023, 4.6% for 2024, 4.5% for 2025, 4.25% for 2026, and 3.99% for 2027 and thereafter.
Taxes on Social Security: Social Security benefits are not taxed by the state.
Property Taxes: In North Carolina, the median property tax rate is $704 per $100,000 of assessed home value.
For more information on these and other North Carolina state taxes, see the North Carolina State Tax Guide.
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North Dakota
Overall Rating for Taxes on Retirees: Mixed tax picture.
Sales Tax: 5% state levy. Localities can add as much as 3.5%, and the average combined rate is 6.96%, according to the Tax Foundation.
- Groceries: Exempt
- Clothing: Taxable
- Motor Vehicles: Exempt from ordinary sales tax, but taxable under special 5% excise tax
- Prescription Drugs: Exempt
Income Tax Range: Low: 1.1% (on up to $41,775 of taxable income for singles and up to $69,700 for married couples filing jointly). High: 2.9% (on taxable income over $458,350).
Taxes on Social Security: Social Security benefits are not taxed by the state.
Property Taxes: In North Dakota, the median property tax rate is $939 per $100,000 of assessed home value.
For more information on these and other North Dakota state taxes, see the North Dakota State Tax Guide.
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Ohio
Overall Rating for Taxes on Retirees: Not tax-friendly.
Sales Tax: 5.75% state levy. Localities can add as much as 2.25%, and the average combined rate is 7.24%, according to the Tax Foundation.
- Groceries: Exempt
- Clothing: Taxable
- Motor Vehicles: Taxable
- Prescription Drugs: Exempt
Income Tax Range: Low: 2.765% (on taxable income from $26,051 to $46,100). High: 3.99% (on taxable income over $115,300).
Cities and school districts in Ohio can also impose local income taxes.
Taxes on Social Security: Social Security benefits are not taxed by the state.
Property Taxes: In Ohio, the median property tax rate is $1,406 per $100,000 of assessed home value.
For more information on these and other Ohio state taxes, see the Ohio State Tax Guide.
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Oklahoma
Overall Rating for Taxes on Retirees: Mixed tax picture.
Sales Tax: 4.5% state levy. Localities can add as much as 7%, and the average combined rate is 8.99%, according to the Tax Foundation.
- Groceries: Taxable
- Clothing: Taxable
- Motor Vehicles: Taxable (1.25%), and 3.25% excise tax applies
- Prescription Drugs: Exempt
Income Tax Range: Low: 0.25% (on up to $1,000 of taxable income for single filers and up to $2,000 for married joint filers). High: 4.75% (on taxable income over $7,200 for single filers and over $12,200 for married joint filers).
Taxes on Social Security: Social Security benefits are not taxed by the state.
Property Taxes: In Oklahoma, the median property tax rate is $845 per $100,000 of assessed home value.
For more information on these and other Oklahoma state taxes, see the Oklahoma State Tax Guide.
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South Carolina
Overall Rating for Taxes on Retirees: Most tax-friendly.
Sales Tax: 6% state levy. Localities can add as much as 3%, and the average combined rate is 7.44%, according to the Tax Foundation.
- Groceries: Exempt
- Clothing: Taxable
- Motor Vehicles: Exempt from ordinary sales tax, but taxable under special 5% (up to $500) infrastructure maintenance fee
- Prescription Drugs: Exempt
Income Tax Range: Low: 3% (on taxable income from $3,200 to $16,039). High: 6.5% (on taxable income over $16,039).
Beginning with the 2023 tax year, and each year thereafter until it equals 6%, the top rate will decrease by 0.1% if general fund revenues are projected to increase by at least 5% in the fiscal year that begins during the tax year.
Taxes on Social Security: Social Security benefits are not taxed by the state.
Property Taxes: In South Carolina, the median property tax rate is $518 per $100,000 of assessed home value.
For more information on these and other South Carolina state taxes, see the South Carolina State Tax Guide.
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South Dakota
Overall Rating for Taxes on Retirees: Not tax-friendly.
Sales Tax: 4.5% state levy. Localities can add as much as 4.5%, and the average combined rate is 6.4%, according to the Tax Foundation.
- Groceries: Taxable
- Clothing: Taxable
- Motor Vehicles: Exempt from ordinary sales tax, but taxable under special 4% excise tax
- Prescription Drugs: Exempt
Taxes on Social Security: Social Security benefits are not taxed by the state.
Income Tax Range: South Dakota has no state income tax.
Property Taxes: In South Dakota, the median property tax rate is $1,078 per $100,000 of assessed home value.
For more information on these and other South Dakota state taxes, see the South Dakota State Tax Guide.
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Tennessee
Overall Rating for Taxes on Retirees: Most tax-friendly.
Sales Tax: 7% state levy. There's also an additional state tax of 2.75% on sales of single items that applies to the portion of the sales price from $1,600 to $3,200. Localities can add up to 2.75%, with an average combined state and local rate of 9.547%, according to the Tax Foundation. Local taxes are limited, though: Only the first $1,600 of any single item is taxable.
- Groceries: Taxable (4% state rate; additional local taxes may apply)
- Clothing: Taxable
- Motor Vehicles: Taxable (7% basic rate, plus 2.75% state tax on sales price between $1,600 and $3,200; additional local taxes may also apply)
- Prescription Drugs: Exempt
Income Tax Range: Tennessee has no state income tax.
Taxes on Social Security: Social Security benefits are not taxed by the state.
Property Taxes: In Tennessee, the median property tax rate is $560 per $100,000 of assessed home value.
For more information on these and other Tennessee state taxes, see the Tennessee State Tax Guide.
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Texas
Overall Rating for Taxes on Retirees: Least tax-friendly.
Sales Tax: 6.25% state levy. Localities can add up to 2%, with an average combined rate of 8.2%, according to the Tax Foundation.
- Groceries: Exempt
- Clothing: Taxable
- Motor Vehicles: Taxable
- Prescription Drugs: Exempt
Income Tax Range: Texas has no state income tax.
Taxes on Social Security: Social Security benefits are not taxed by the state.
Property Taxes: In Texas, the median property tax rate is $1,599 per $100,000 of assessed home value.
For more information on these and other Texas state taxes, see the Texas State Tax Guide.
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Utah
Overall Rating for Taxes on Retirees: Mixed tax picture.
Sales Tax: State levy is 4.85%, but mandatory 1% local sales tax and 0.25% county option sales tax are added to the state tax (for a 6.1% total rate). Plus, localities can add up to an additional 2.95%, making the average combined state and local rate 7.19%, according to the Tax Foundation.
- Groceries: Taxable (1.75% state tax, plus mandatory 1.25% in local and county taxes)
- Clothing: Taxable
- Motor Vehicles: Taxable
- Prescription Drugs: Exempt
Income Tax Range: Utah has a flat tax of 4.85%.
Taxes on Social Security: Social Security benefits are included in Utah taxable income to the same extent they're taxed at the federal level. However, a nonrefundable tax credit is available for Social Security benefits. The credit is calculated by multiplying the Utah income tax rate (currently 4.85%) by the amount of Social Security benefits included in federal adjusted gross income (AGI). The total credit amount is reduced by $.025 for each dollar by which the taxpayer's modified AGI exceeds $31,000 for a married person filing a separate tax return, $37,000 for a single filer, and $62,000 for a married couple filing a joint return or a head-of-household filer. Taxpayers can't claim both the Social Security credit and the general $450 credit for retirees.
Property Taxes: In Utah, the median property tax rate is $520 per $100,000 of assessed home value.
For more information on these and other Utah state taxes, see the Utah State Tax Guide.
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Virginia
Overall Rating for Taxes on Retirees: Tax-friendly.
Sales Tax: 5.3% state levy, which includes a 1% tax allocated to local governments. Some local governments also impose additional taxes of up to 1.7%, making the average combined state and local rate 5.75%, according to the Tax Foundation.
- Groceries: Taxable by local governments (no state tax)
- Clothing: Taxable
- Motor Vehicles: Exempt from ordinary sales tax, but taxable under special 4.15% excise tax
- Prescription Drugs: Exempt
Income Tax Range: Low: Low: 2% (on up to $3,000 of taxable income). High: 5.75% (on taxable income over $17,000).
Taxes on Social Security: Social Security benefits are not taxed by the state.
Property Taxes: In Virginia, the median property tax rate is $752 per $100,000 of assessed home value.
For more information on these and other Virginia state taxes, see the Virginia State Tax Guide.
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West Virginia
Overall Rating for Taxes on Retirees: Mixed tax picture.
Sales Tax: 6% state levy. Municipalities can add up to 1% to that, with an average combined rate of 6.55%, according to the Tax Foundation.
- Groceries: Exempt
- Clothing: Taxable
- Motor Vehicles: Taxable
- Prescription Drugs: Exempt
Income Tax Range: Low: 3% (on up to $10,000 of taxable income). High: 6.5% (on taxable income of $60,000 or more).
West Virginia municipalities can also impose city service fees on people working in the city.
Taxes on Social Security: Starting in 2022, 100% of Social Security benefits taxed by the federal government are excluded from taxable income for single taxpayers with federal adjusted gross income of $50,000 or less and joint filers with a federal AGI of $100,000 or less. (Before 2022, qualifying taxpayers could exclude 65% of Social Security benefits.)
Property Taxes: In West Virginia, the median property tax rate is $548 per $100,000 of assessed home value.
For more information on these and other West Virginia state taxes, see the West Virginia State Tax Guide.
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Wisconsin
Overall Rating for Taxes on Retirees: Least tax-friendly.
Sales Tax: 5% state levy. Municipalities can add up to 1.75% to that, with the average combined rate at 5.43%, according to the Tax Foundation.
- Groceries: Exempt
- Clothing: Taxable
- Motor Vehicles: Taxable
- Prescription Drugs: Exempt
Income Tax Range: Low: 3.54% (on up to $12,760 of taxable income for singles or up to $17,010 for married couples). High: 7.65% (on taxable income over $280,950 for singles or over $374,600 for married couples).
Taxes on Social Security: Social Security benefits are not taxed by the state.
Property Taxes: In Wisconsin, the median property tax rate is $1,510 per $100,000 of assessed home value.
For more information on these and other Wisconsin state taxes, see the Wisconsin State Tax Guide.
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Wyoming
Overall Rating for Taxes on Retirees: Most tax-friendly.
State Sales Tax: 4% state levy. Municipalities can add up to 2% to that, with a combined rate of 5.36%, according to the Tax Foundation.
- Groceries: Exempt
- Clothing: Taxable
- Motor Vehicles: Taxable
- Prescription Drugs: Exempt
Income Tax Range: Wyoming has no state income tax.
Taxes on Social Security: Social Security benefits are not taxed by the state.
Property Taxes: In Wyoming, the median property tax rate is $545 per $100,000 of assessed home value.
For more information on these and other Wyoming state taxes, see the Wyoming State Tax Guide.
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