33 States with No Estate Taxes or Inheritance Taxes
Even with the federal exemption from death taxes raised, retirees should pay more attention to estate taxes and inheritance taxes levied by states.
The Tax Cuts and Jobs Act raised the federal estate tax exemption considerably. Before the tax reform law, it was $5.49 million per person for 2017. It's up to $11.7 million for 2021 ($23.4 million for a married couple). So, now, even fewer taxpayers have to worry about federal estate taxes when they die. 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.
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 9.22%, 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 $395 per $100,000 of assessed home value.
For more information on these and other Alabama state taxes, see the Alabama State Tax Guide for Retirees.
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 $1,182 per $100,000 of assessed home value.
For more information on these and other Alaska state taxes, see the Alaska State Tax Guide for Retirees.
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 8.4%, 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: 2.59% (on up to $54,544 of taxable income for married filers and up to $27,272 for single filers). High: 4.5% (on $327,263 and over of taxable income for married joint filers and $163,632 and over for single filers).
Starting in 2021, Proposition 208 (approved by voters on the November 3, 2020, ballot) imposes a 3.5% surtax on taxable income over $500,000 for joint filers and over $250,000 for single taxpayers.
Taxes on Social Security: Social Security benefits are not taxed by the state.
Property Taxes: In Arizona, the median property tax rate is $617 per $100,000 of assessed home value.
For more information on these and other Arizona's state taxes, see the Arizona State Tax Guide for Retirees.
Arkansas
Overall Rating for Taxes on Retirees: Most tax-friendly.
Sales Tax: 6.5% state levy. Localities can add as much as 5.125%, and the average combined rate is 9.51%, 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; effective January 1, 2022, 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 $4,500 to $8,899 for taxpayers with net income less than $22,200), 0.75% (on first $4,499 of taxable income for taxpayers with net income from $22,200 to $79,300), or 2% (on first $4,000 of taxable income for taxpayers with net income over $79,300). High: 3.4% (on taxable income from $13,400 to $22,199 for taxpayers with net income less than $22,200), 5.9% (on taxable income from $37,200 to $79,300 for taxpayers with net income from $22,200 to $79,300), or 6.6% (on taxable income over $79,300 for taxpayers with net income over $79,300).
Beginning in 2021, the top rate for taxpayers with net income over $79,300 will be 5.9% (on taxable income over $8,000). A "bracket adjustment" of between $40 and $440 is subtracted from the amount of tax due for taxpayers with net income from $79,301 to $84,600.
Taxes on Social Security: Social Security benefits are not taxed by the state.
Property Taxes: In Arkansas, the median property tax rate is $612 per $100,000 of assessed home value.
For more information on these and other state taxes, see the Arkansas State Tax Guide for Retirees.
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 8.68%, according to the Tax Foundation.
- Groceries: Exempt
- Clothing: Taxable
- Motor Vehicles: Taxable
- Prescription Drugs: Exempt
Income Tax Range: Low: 1% (on up to $17,864 of taxable income for married joint filers and up to $8,932 for those filing individually). High: 13.3% (on more than $1,198,024 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 $729 per $100,000 of assessed home value.
For more information on these and other California state taxes, see the California State Tax Guide for Retirees.
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 7.72%, 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 4.55% (the approval of Proposition 116, which appeared on the November 2020 ballot, reduced the rate from 4.63% to 4.55%). The state also limits the how much its revenue can grow from year-to-year by lowering the tax rate if revenue growth is too high. For example, in 2019, this resulted in a rate reduction to 4.5%.
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).
Property Taxes: In Colorado, the median property tax rate is $494 per $100,000 of assessed home value.
For more information on these and other Colorado state taxes, see the Colorado State Tax Guide for Retirees.
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 $562 per $100,000 of assessed home value.
For more information on these and other Delaware state taxes, see the Delaware State Tax Guide for Retirees.
Florida
Overall Rating for Taxes on Retirees: Tax-friendly.
Sales Tax: 6% state levy. Localities can add as much as 2.5%, and the average combined rate is 7.08%, 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 $830 per $100,000 of assessed home value.
For more information on these and other Florida state taxes, see the Florida State Tax Guide for Retirees.
Georgia
Overall Rating for Taxes on Retirees: Tax-friendly.
Sales Tax: 4% state levy. Localities can add as much as 4.9%, and the average combined rate is 7.32%, 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 $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).
Taxes on Social Security: Social Security benefits are not taxed by the state.
Property Taxes: In Georgia, the median property tax rate is $875 per $100,000 of assessed home value.
For more information on these and other Georgia state taxes, see the Georgia State Tax Guide for Retirees.
Idaho
Overall Rating for Taxes on Retirees: Tax-friendly.
Sales Tax: 6% state levy. Localities (typically resort communities) can add as much as 3%, but the average combined rate is just 6.03%, 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 $3,136 for married joint filers and up to $1,568 for individual filers). High: 6.5% (on taxable income of $23,520 or more for married joint filers and $11,760 or more for individual filers). (Note: Dollar amounts may still need to be adjusted for inflation for 2021.)
Taxes on Social Security: Social Security benefits are not taxed by the state.
Property Taxes: In Idaho, the median property tax rate is $633 per $100,000 of assessed home value.
For more information on these and other Idaho state taxes, see the Idaho State Tax Guide for Retirees.
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.
Taxes on Social Security: Social Security benefits are not taxed by the state.
Property Taxes: In Indiana, the median property tax rate is $810 per $100,000 of assessed home value.
For more information on these and other Indiana state taxes, see the Indiana State Tax Guide for Retirees.
Kansas
Overall Rating for Taxes on Retirees: Least tax-friendly.
Sales Tax: 6.5% state levy. Localities can add as much as 4%, and the average combined rate is 8.69%, according to the Tax Foundation.
- Groceries: Taxable
- Clothing: Taxable
- Motor Vehicles: Taxable
- Prescription Drugs: Taxable
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 $1,369 per $100,000 of assessed home value.
For more information on these and other Kansas state taxes, see the Kansas State Tax Guide for Retirees.
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 9.52%, 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: 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). (Note: On October 9, 2021, Louisiana voters will decide whether to cap the maximum rate at 4.75% starting in 2022.)
Taxes on Social Security: Social Security benefits are not taxed by the state.
Property Taxes: In Louisiana, the median property tax rate is $534 per $100,000 of assessed home value.
For more information on these and other Louisiana state taxes, see the Louisiana State Tax Guide for Retirees.
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. Although taxpayers born after 1952 can claim a $20,000 deduction ($40,000 for joint filers) in lieu of the Social Security exemption and other tax breaks.
Property Taxes: In Michigan, the median property tax rate is $1,448 per $100,000 of assessed home value.
For more information on these and other Michigan state taxes, see the Michigan State Tax Guide for Retirees.
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: 3% (on taxable income from $3,001 to $5,000). High: 5% (on taxable income over $10,000).
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 $787 per $100,000 of assessed home value.
For more information on these and other Mississippi state taxes, see the Mississippi State Tax Guide for Retirees.
Missouri
Overall Rating for Taxes on Retirees: Mixed tax picture.
Sales Tax: 4.225% state levy. Localities can add as much as 5.763%, and the average combined rate is 8.25%, 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 of $107 or more). High: 5.4% (on more than $8,584 of taxable income).
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 $930 per $100,000 of assessed home value.
For more information on these and other Missouri state taxes, see the Missouri State Tax Guide for Retirees.
Montana
Overall Rating for Taxes on Retirees: Tax-friendly.
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 $3,100 of taxable income). High: 6.9% (on taxable income over $18,700). Starting in 2022, the top rate will be 6.75% on taxable income over $17,400. Then, 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 $831 per $100,000 of assessed home value.
For more information on these and other Montana state taxes, see the Montana State Tax Guide for Retirees.
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 $533 per $100,000 of assessed home value.
For more information on these and other Nevada state taxes, see the Nevada State Tax Guide for Retirees.
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. But there's a 5% tax on dividends and interest in excess of $2,400 for individuals ($4,800 for joint filers).
Taxes on Social Security: Social Security benefits are not taxed by the state.
Property Taxes: In New Hampshire, the median property tax rate is $2,050 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 for Retirees.
New Mexico
Overall Rating for Taxes on Retirees: Not tax-friendly.
Sales Tax: 5.125% state levy. Localities can add as much as 4.313%, and the average combined rate is 7.83%, 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: 4.9% (on taxable income over $16,000 for single filers and over $24,000 for married couples filing jointly).
Beginning with the 2021 tax year, the top rate will be 5.9% on taxable income over $210,000 for single filers and over $315,000 for joint filers.
Taxes on Social Security: Social Security benefits are taxed to the same extent they are taxed at the federal level.
Property Taxes: In New Mexico, the median property tax rate is $776 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 for Retirees.
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: Low: 1.1% (on up to $40,125 of taxable income for singles and up to $67,050 for married couples filing jointly). High: 2.9% (on taxable income over $440,600).
Taxes on Social Security: Social Security benefits are not taxed by the state.
Property Taxes: In North Carolina, the median property tax rate is $773 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 for Retirees.
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 $40,125 of taxable income for singles and up to $67,050 for married couples filing jointly). High: 2.9% (on taxable income over $440,600).
Taxes on Social Security: Social Security benefits are not taxed for joint filers with a federal adjusted gross income of $100,000 or less and other taxpayers with a federal AGI of $50,000 or less. For taxpayers exceeding these thresholds, Social Security benefits are taxed by North Dakota to the same extent they are taxed at the federal level.
Property Taxes: In North Dakota, the median property tax rate is $986 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 for Retirees.
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 7.23%, according to the Tax Foundation.
- Groceries: Exempt
- Clothing: Taxable
- Motor Vehicles: Taxable
- Prescription Drugs: Exempt
Income Tax Range: Low: 2.85% (on taxable income from $22,150 to $44,250). High: 4.797% (on taxable income over $221,300).
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 $1,478 per $100,000 of assessed home value.
For more information on these and other Ohio state taxes, see the Ohio State Tax Guide for Retirees.
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 8.95%, 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: 0.5% (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).
Starting in 2022, the lowest rate will be 0.25% and the highest rate will be 4.75%.
Taxes on Social Security: Social Security benefits are not taxed by the state.
Property Taxes: In Oklahoma, the median property tax rate is $869 per $100,000 of assessed home value.
For more information on these and other Oklahoma state taxes, see the Oklahoma State Tax Guide for Retirees.
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 7.46%, 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 over $3,070). High: 7% (on taxable income over $15,400).
Taxes on Social Security: Social Security benefits are not taxed by the state.
Property Taxes: In South Carolina, the median property tax rate is $545 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 for Retirees.
South Dakota
Overall Rating for Taxes on Retirees: Mixed tax picture.
Sales Tax: 6% state levy. Localities can add as much as 3%, and the average combined rate is 7.46%, 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
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 $1,219 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 for Retirees.
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 9.55%, 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. But dividends and some interest are subject to the Hall Tax at a 1% rate. The first $1,250 in taxable income for individuals ($2,500 for joint filers) is exempt. 2020 is the last year for the tax, which is being phased out. Also, the tax is waived if you’re over 100.
Taxes on Social Security: Social Security benefits are not taxed by the state.
Property Taxes: In Tennessee, the median property tax rate is $636 per $100,000 of assessed home value.
For more information on these and other Tennessee state taxes, see the Tennessee State Tax Guide for Retirees.
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 8.19%, 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 $1,692 per $100,000 of assessed home value.
For more information on these and other Texas state taxes, see the Texas State Tax Guide for Retirees.
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 5%.
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, beginning in 2021, a nonrefundable tax credit is available for Social Security benefits. The credit is calculated by multiplying the Utah income tax rate (currently 4.95%) 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 $25,000 for a married person filing a separate tax return, $30,000 for a single filer, and $50,000 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 $575 per $100,000 of assessed home value.
For more information on these and other Utah state taxes, see the Utah State Tax Guide for Retirees.
Virginia
Overall Rating for Taxes on Retirees: Tax-friendly.
Sales Tax: 5.3% state levy, including 1% that is allocated to local governments. Northern Virginia, Central Virginia, and the Hampton Roads area have an additional 0.7% sales tax to pay for transportation improvements. An additional 1% tax is levied in Halifax and Henry Counties, and an extra 1.7% tax is levied in the "Historic Triangle" area (City of Williamsburg, James City County, and York County). Effective July 1, 2021, an additional 1% tax will be levied in Charlotte, Gloucester, Northampton, and Patrick Counties. Overall, the additional taxes give the state an average combined state and local rate of 5.73%, according to the Tax Foundation.
- Groceries: Taxable (1.5% state rate, plus 1% local 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 $804 per $100,000 of assessed home value.
For more information on these and other Virginia state taxes, see the Virginia State Tax Guide for Retirees.
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 6.5%, 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: In 2020, 35% 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 ($100,000 or less for joint filers). In 2021, 65% will be excluded for qualifying taxpayers. After 2021, qualifying taxpayers can exclude all Social Security benefits.
Property Taxes: In West Virginia, the median property tax rate is $571 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 for Retirees.
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 $11,450 of taxable income for singles or up to $15,960 for married couples). High: 7.65% (on taxable income over $263,480 for singles or over $351,310 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 $1,684 per $100,000 of assessed home value..
For more information on these and other Wisconsin state taxes, see the Wisconsin State Tax Guide for Retirees.
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 5.33%, 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 $575 per $100,000 of assessed home value.
For more information on these and other Wyoming state taxes, see the Wyoming State Tax Guide for Retirees.
