State Taxes on Unemployment Benefits
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Is Unemployment Taxable? State-by-State Guide to Unemployment Benefits

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As the coronavirus crisis drags on, more and more Americans are suddenly getting an unwanted crash course on the U.S. unemployment compensation system. There are a lot of common questions for people seeking unemployment benefits for the first time. How do I apply for benefits? How much will I get? How long will the benefits last? People need answers to these questions right away. But, before long, another question will likely spring to mind: Will I have to pay taxes on my unemployment benefits?

When it comes to federal income taxes, the answer is yes. Uncle Sam taxes unemployment benefits as if they were wages. However, when it comes to state income taxes, it depends on where you live. The majority of states follow the federal government and fully tax unemployment benefits. However, some states don't tax them at all (sometimes because the state doesn't have an income tax), and a couple of states will only tax part of your benefits.

Where does your state stand when it comes to taxing unemployment benefits? Read on to find out. We also outline each state's income, sales, and property tax levels—and provide a link to the state's page in our full tax guide—so you can get a sense of the overall tax burden where you live.

SEE ALSO: 10 Things You Must Know About Filing for Unemployment Benefits

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Alabama

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State Taxes on Unemployment Benefits: Alabama does not tax unemployment benefits. In addition, the first $25,000 received from an employer as severance pay, unemployment compensation, and the like as a result of "administrative downsizing" is not taxed.

State Income Tax Range: Low: 2% (on up to $1,000 of taxable income for married joint filers and up to $500 for single filers). High: 5% (on more than $6,000 of taxable income for married joint filers and more than $3,000 for single filers). Alabama also allows residents to deduct all of their federal income tax (not including certain federal tax credits) from state taxable income. Some cities impose a "municipal occupational tax" of 0.5% to 2% on income paid to workers.

Sales Tax: 4% state levy. Localities can add as much as 7.5% to that, and the average combined rate is 9.22%. Alabama is one of the few states that does not exempt food from sales tax.

Property Taxes: The median property tax rate in Alabama is $417 per $100,000 of assessed home value.

Go to Alabama's Full State Profile

SEE ALSO: Your 2020 Stimulus Check: How Much? When? And Other Questions Answered

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Alaska

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State Taxes on Unemployment Benefits: Alaska does not tax unemployment compensation.

State Income Tax Range: There is no state income tax.

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 1.76%.

Property Taxes: In Alaska, the median property tax rate is $1,183 per $100,000 of assessed home value.

Go to Alaska's Full State Profile

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Arizona

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State Taxes on Unemployment Benefits: Arizona taxes unemployment compensation to the same extent as it is taxed under federal law.

State Income Tax Range: Low: 2.59% (on up to $53,000 of taxable income for married joint filers and up to $26,500 for single filers). High: 4.5% (on more than $318,000 of taxable income for married joint filers and more than $159,000 for single filers).

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. 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.

Property Taxes: Arizona's median property tax rate is $687 per $100,000 of assessed home value.

Go to Arizona's Full State Profile

SEE ALSO: Arizona's 30 Largest Cities and Towns Ranked for Local Taxes

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Arkansas

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State Taxes on Unemployment Benefits: Arkansas began taxing unemployment benefits in 2018.

State Income Tax Range: Low: 2% (on taxable income from $4,600 to $9,099). High: 6.9% (on more than $86,200 of taxable income).

Sales Tax: 6.5% state levy. Localities can add as much as 5.125%, and the average combined rate is 9.47%, according to the Tax Foundation. The state taxes food at 0.125% (plus local sales taxes).

Property Taxes: The median property tax rate for Arkansas homeowners is $629 per $100,000 of assessed home value.

Go to Arkansas's Full State Profile

SEE ALSO: 6 Money-Smart Ways to Spend Your Stimulus Check

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California

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State Taxes on Unemployment Benefits: Californians do not have to pay state income taxes on unemployment benefits.

State Income Tax Range: Low: 1% (on up to $17,618 of taxable income for married joint filers and up to $8,809 for single filers). High: 13.3% (on more than $1,181,484 of taxable income for married joint filers and $1 million for single filers).

Sales Tax: 7.25% state levy. Localities can add as much as 2.5%, and the average combined rate is 8.66%, according to the Tax Foundation.

Property Taxes: In California, the median property tax rate is $760 per $100,000 of assessed home value.

Go to California's Full State Profile

SEE ALSO: 24 Major U.S. Companies Hiring Now to Meet Coronavirus Demand

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Colorado

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State Taxes on Unemployment Benefits: Colorado taxes all unemployment benefits.

Income Tax Range: All Colorado residents who have federal taxable income pay a flat rate of 4.5% for 2019 (the rate was temporarily reduced from 4.63% for 2019). Denver and a few other cities in Colorado also impose a monthly payroll tax.

Sales Tax: 2.9% state levy. Localities can add as much as 8.3%, and the average combined rate is 7.65%, according to the Tax Foundation.

Property Taxes: In Colorado, the median property tax rate is $525 per $100,000 of assessed home value.

Go to Colorado's Full State Profile

SEE ALSO: Best States for Low Taxes: 50 States Ranked for Taxes

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Connecticut

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State Taxes on Unemployment Benefits: Connecticut taxes unemployment compensation to the same extent as it is taxed under federal law.

State Income Tax Range: Low: 3% (on up to $20,000 of taxable income for married joint filers and up to $10,000 for single filers); High: 6.99% (on more than $1 million of taxable income for married joint filers and more than $500,000 for single filers).

Sales Tax: The state taxes most items at 6.35%, and localities are not allowed to add to that. Jewelry valued at more than $5,000 and clothing, footwear and accessories priced at more than $1,000 per item are taxable at 7.75%.

Property Taxes: The median property tax rate for Connecticut residents is $2,107 per $100,000 of assessed home value.

Go to Connecticut's Full State Profile

SEE ALSO: 11 Ways the Stimulus Package and Other Government Measures Could Help You in 2020

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Delaware

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State Taxes on Unemployment Benefits: Unemployment compensation is fully taxed in Delaware.

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

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

Property Taxes: For Delaware homeowners, the median property tax rate is $563 per $100,000 of assessed home value.

Go to Delaware's Full State Profile

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

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District of Columbia

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State Taxes on Unemployment Benefits: The District of Columbia (Washington, D.C.) taxes unemployment benefits.

State Income Tax Range: Low: 4% (on up to $10,000 of taxable income). High: 8.95% (on more than $1 million of taxable income).

Sales Tax: 6%

Property Taxes: In the District of Columbia, the median property tax rate is $548 per $100,000 of assessed home value.

Go to the District of Columbia's Full State Profile

SEE ALSO: 10 Ways the SECURE Act Will Impact Your Retirement Savings

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Florida

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State Taxes on Unemployment Benefits: There are no taxes on unemployment benefits in Florida.

State Income Tax Range: There is no state income tax.

Sales Tax: 6% state levy. Localities can add as much as 2.5%, and the average combined rate is 7.05%, according to the Tax Foundation.

Property Taxes: In Florida, the median property tax rate is $928 for every $100,000 of assessed home value.

Go to Florida's Full State Profile

SEE ALSO: Florida's 50 Largest Cities and Towns Ranked for Local Taxes

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Georgia

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State Taxes on Unemployment Benefits: Georgia taxes unemployment benefits.

State Income Tax Range: Low: 1% (on up to $1,000 of taxable income for married joint filers and up to $750 for single filers). High: 5.75% (on more than $10,000 of taxable income for married joint filers and more than $7,000 for single filers). If approved by the governor and state legislature, the top rate will drop to 5.5% for the 2020 tax year.

Sales Tax: 4% state levy. Localities can add as much as 5%, and the average combined rate is 7.31%, according to the Tax Foundation. While the state doesn't tax grocery food sales, localities can.

Property Taxes: Georgia's median property tax rate is $905 per $100,000 of assessed home value.

Go to Georgia's Full State Profile

SEE ALSO: The 10 Most Tax-Friendly States in the U.S.

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Hawaii

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State Taxes on Unemployment Benefits: Unemployment compensation is fully taxed in Hawaii.

State Income Tax Range: Low: 1.4% (on up to $4,800 of taxable income for married joint filers and up to $2,400 for single filers). High: 11% (on more than $400,000 of taxable income for married joint filers and more than $200,000 for single filers).

Sales Tax: 4% state levy. Hawaii employs a General Excise Tax that applies to a wide range of goods and services (including groceries). In addition, Hawaii, Honolulu, and Kauai Counties also impose a 0.5% surcharge tax to pay for mass transit systems, making the average combined rate 4.44%, as calculated by the Tax Foundation. Complicating matters further, the tax is calculated on the vendor rather than the buyer, which means consumers can pay a few percentage points more in practice if a vendor passes all of its tax on to its customers.

Property Taxes: The median property tax rate in Hawaii is $273 per $100,000 of assessed home value.

Go to Hawaii's Full State Profile

SEE ALSO: The 10 Least Tax-Friendly States in the U.S.

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Idaho

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State Taxes on Unemployment Benefits: Idaho taxes unemployment benefits to the same extent as they are taxed at the federal level.

State Income Tax Range: Low: 1.125% (on up to $3,082 of taxable income for married joint filers and up to $1,541 for single filers). High: 6.925% (on more than $23,108 of taxable income for married joint filers and more than $11,554 for single filers).

Sales Tax: 6% 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 income tax credit. Seniors can get $120.

Property Taxes: In Idaho, the median property tax rate is $719 per $100,000 of assessed home value.

Go to Idaho's Full State Profile

SEE ALSO: 20 Great Places to Retire Near the Mountains

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Illinois

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State Taxes on Unemployment Benefits: Illinois fully taxes unemployment compensation.

State Income Tax Range: There is a flat rate of 4.95% of federal adjusted gross income after modifications and personal exemptions. On November 3, 2020, Illinois residents will vote to approve or reject a proposed constitutional amendment that would allow graduated income tax rates instead of a flat rate.

Sales Tax: 6.25% state levy. Localities can add as much as 10%, and the average combined rate is 9.08%, according to the Tax Foundation. Food, prescription drugs and non-prescription drugs are all taxed at 1% by the state.

Property Taxes: In Illinois, the median property tax rate is $2,296 per $100,000 of assessed home value.

Go to Illinois' Full State Profile

SEE ALSO: 10 Products in Short Supply Due to the Coronavirus

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Indiana

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State Taxes on Unemployment Benefits: Although unemployment benefits are taxable in Indiana, part of your benefits may be deductible. The deductible amount depends on your federal adjusted gross income, how much unemployment compensation you receive, and your filing status. Complete the "Unemployment Compensation Worksheet" in the Form IT-40 instruction booklet to calculate the exact amount of your deduction.

State 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).

Sales Tax: State levy of 7%. Food and groceries are generally exempt from the state tax, but some counties and municipalities do impose a 1% or 2% sales tax on food and beverages.

Property Taxes: The median property tax rate for Indiana homeowners is $860 per $100,000 of assessed home value.

Go to Indiana's Full State Profile

SEE ALSO: 10 States With the Highest Sales Taxes

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Iowa

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State Taxes on Unemployment Benefits: Unemployment benefits are fully taxable in Iowa.

State Income Tax Range: Low: 0.33% (on up to $1,638 of taxable income). High: 8.53% (on more than $73,710 of taxable income). Iowa also allows residents to deduct federal income tax from state taxable income.

Sales Tax: 6.0% state levy. Localities can add as much as 1%, and the average combined rate is 6.94%, according to the Tax Foundation.

Property Taxes: Iowa's median property tax rate is $1,559 per $100,000 of assessed home value.

Go to Iowa's Full State Profile

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

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Kansas

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State Taxes on Unemployment Benefits: Kansas taxes unemployment benefits.

State Income Tax Range: Low: 3.1% (on taxable income from $5,001 to $30,000 for married joint filers and on taxable income from $2,501 to $15,000 for single filers); High: 5.7% (on more than $60,000 of taxable income for married joint filers and more than $30,000 for single filers).

Sales Tax: 6.5% state levy. Localities can add as much as 4%, and the average combined rate is 8.68%, according to the Tax Foundation. These rates apply to groceries as well. A food sales income tax credit of $125 per person is available to seniors and those claiming dependents; income limitations apply.

Property Taxes: In Kansas, the median property tax rate for homeowners is $1,406 for every $100,000 of assessed home value.

Go to Kansas' Full State Profile

SEE ALSO: CARES Act Expands Tax Deductions for Charitable Giving

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Kentucky

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State Taxes on Unemployment Benefits: Unemployment compensation is fully taxable in Kentucky.

State Income Tax Range: Kentucky has a flat income tax rate of 5%. Localities can impose additional income taxes.

Sales Tax: State levy of 6%. There are no local sales taxes in Kentucky.

Property Taxes: The median property tax rate in Kentucky is $862 per $100,000 of assessed home value.

Go to Kentucky's Full State Profile

SEE ALSO: 4 Ways Claiming Social Security Benefits Early Could Work for You

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Louisiana

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State Taxes on Unemployment Benefits: Louisiana taxes unemployment benefits to the same extent as they are taxed under federal law.

State Income Tax Range: Low: 2% (on up to $25,000 of taxable income for married joint filers and up to $12,500 for single filers). High: 6% (on more than $100,000 of taxable income for married joint filers and more than $50,000 for single filers). Residents can deduct their federal income tax from state taxable income.

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 and prescription drugs are exempt from the state sales tax, but localities may tax these.

Property Taxes: Louisiana's median property tax rate is $532 per $100,000 of assessed home value.

Go to Louisiana's Full State Profile

SEE ALSO: 10 States with the Highest Beer Taxes

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Maine

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State Taxes on Unemployment Benefits: Unemployment benefits are fully taxable in Maine.

State Income Tax Range: Low: 5.8% (on up to $43,700 of taxable income for married joint filers and up to $21,850 for single filers). High: 7.15% (on more than $103,400 of taxable income for married joint filers and more than $51,700 for single filers).

Sales Tax: State levy of 5.5%. Food and groceries are generally subject to sales tax, except for "grocery staples." The tax rate for sales of prepared foods is 8%.

Property Taxes: In Maine, the median property tax rate is $1,363 for every $100,000 of assessed home value.

Go to Maine's Full State Profile

SEE ALSO: 9 Great Deals You'll Find Only on Costco.com

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Maryland

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State Taxes on Unemployment Benefits: Maryland taxes unemployment benefits.

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

Sales Tax: State levy of 6%. There are no local sales taxes in Maryland.

Property Taxes: In Maryland, the median property tax rate for homeowners is $1,095 per $100,000 of assessed home value.

Go to Maryland's Full State Profile

SEE ALSO: 11 Surprising Things That Are Taxable

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Massachusetts

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State Taxes on Unemployment Benefits: Massachusetts taxes unemployment benefits to the same extent they are taxed on your federal return.

State Income Tax Range: Massachusetts has a flat rate of 5.05% for most classes of taxable income (5% starting with the 2020 tax year).

Sales Tax: State levy of 6.25%. Most clothing and footwear priced at under $175 per item are exempt. There are no local sales taxes in Massachusetts.

Property Taxes: The Massachusetts median property tax rate is $1,229 for every $100,000 of assessed home value.

Go to Massachusetts' Full State Profile

SEE ALSO: Great Places to Retire Near the Beach

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Michigan

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State Taxes on Unemployment Benefits: Unemployment compensation is subject to tax in Michigan.

State 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 ½ the rate of residents). In Detroit, the resident rate is 2.4%.

Sales Tax: State levy of 6%. There are no local sales taxes in Michigan.

Property Taxes: In Michigan, the median property tax rate is $1,581 per $100,000 of assessed home value.

Go to Michigan's Full State Profile

SEE ALSO: 10 States with the Highest Gas Taxes

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Minnesota

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State Taxes on Unemployment Benefits: Minnesota taxes unemployment benefits.

State Income Tax Range: Low: 5.35% (on up to $38,770 of taxable income for married joint filers and up to $26,520 for single filers); High: 9.85% (on more than $269,010 of taxable income married joint filers and more than $161,720 for single filers).

Sales Tax: 6.875% state levy. Localities can add as much as 2%, with an average combined rate of 7.46%, according to the Tax Foundation. Most clothing and footwear are exempt.

Property Taxes: The Minnesota median property tax rate is $1,127 per $100,000 of assessed home value.

Go to Minnesota's Full State Profile

SEE ALSO: 27 Solid Ways to Build Your Wealth

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Mississippi

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State Taxes on Unemployment Benefits: Mississippi residents are fully taxed on their unemployment compensation.

State Income Tax Range: Low: 3% (on taxable income from $2,001 to $5,000). High: 5% (on more than $10,000 of taxable income). For 2020, there is no tax on the first $3,000 of taxable income.

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

Property Taxes: The median property tax rate for Mississippi homeowners is $807 per $100,000 of assessed home value.

Go to Mississippi's Full State Profile

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Missouri

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State Taxes on Unemployment Benefits: Unemployment compensation is fully taxed in Missouri.

State Income Tax Range: 1.5% (on taxable income from $105 to $1,053); High: 5.4% (on more than $8,424 of taxable income). Kansas City and St. Louis also impose a 1% earnings tax. Residents can deduct some of their federal income tax from state taxable income (up to $10,000 for joint filers or $5,000 for single filers).

Sales Tax: 4.225% state levy. Localities can add as much as 5.625%, and the average combined rate is 8.18%, according to the Tax Foundation. Food that qualifies for the federal supplemental nutrition assistance program (SNAP) and is intended for home consumption is taxed at 1.225%; local tax is also due.

Property Taxes: For Missouri residents, the median property tax rate is $970 per $100,000 of assessed home value.

Go to Missouri's Full State Profile

SEE ALSO: 7 Ways to Sabotage Your Financial Future

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Montana

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State Taxes on Unemployment Benefits: Montana does not tax unemployment benefits.

State Income Tax Range: Low: 1% (on up to $3,100 of taxable income); High: 6.9% (on more than $18,400 of taxable income). Montana permits filers to deduct some of their federal income tax.

Sales Tax: No state sales tax. Resort areas such as Big Sky, Red Lodge and West Yellowstone have local sales taxes.

Property Taxes: For homeowners in Montana, the median property tax rate is $836 for every $100,000 of assessed home value.

Go to Montana's Full State Profile

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Nebraska

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State Taxes on Unemployment Benefits: Unemployment benefits are taxed in Nebraska.

State Income Tax Range: Low: 2.46% (on up to $6,440 of taxable income for married joint filers and up to $3,230 for single filers); High: 6.84% (on more than $62,320 of taxable income for married joint filers and more than $31,160 for single filers).

Sales Tax: 5.5% state levy. Localities can add as much as 2.5%, and the average combined rate is 6.93%, according to the Tax Foundation.

Property Taxes: In Nebraska, the median property tax rate for homeowners is $1,773 per $100,000 of assessed home value.

Go to Nebraska's Full State Profile

SEE ALSO: How 10 Types of Retirement Income Get Taxed

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Nevada

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State Taxes on Unemployment Benefits: There are no taxes on unemployment benefits in Nevada.

State Income Tax Range: There is no state income tax.

Sales Tax: 6.85% state levy. Localities can add as much as 1.65%, and the average combined rate is 8.32%, according to the Tax Foundation.

Property Taxes: Nevada's median property tax rate is $636 per $100,000 of assessed home value.

Go to Nevada's Full State Profile

SEE ALSO: 8 Tax Tips for Gambling Winnings and Losses

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New Hampshire

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State Taxes on Unemployment Benefits: There are no taxes in New Hampshire on unemployment benefits.

State 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).

Sales Tax: No sales tax.

Property Taxes: The median property tax rate in New Hampshire is $2,195 for every $100,000 of assessed home value.

Go to New Hampshire's Full State Profile

SEE ALSO: The 25 Best Low-Fee Mutual Funds to Buy in 2020

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New Jersey

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State Taxes on Unemployment Benefits: New Jersey does not tax unemployment compensation.

State Income Tax Range: Low: 1.4% (on up to $20,000 of taxable income). High: 10.75% (on more than $500,000 of taxable income). The City of Newark also imposes a 1% payroll tax.

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 3.3125% 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.

Property Taxes: In New Jersey, the median property tax rate is $2,471 per $100,000 of assessed home value.

Go to New Jersey's Full State Profile

SEE ALSO: The 10 Best Cars for Senior Drivers

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New Mexico

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State Taxes on Unemployment Benefits: Unemployment benefits are taxed in New Mexico.

State Income Tax Range: Low: 1.7% (on up to $8,000 of taxable income for married joint filers and up to $5,500 for single filers); High: 4.9% (on more than $24,000 of taxable income for married joint filers and more than $16,000 for single filers).

Sales Tax: 5.125% state levy. Localities can add as much as 4.125%, and the average combined rate is 7.82%, according to the Tax Foundation. New Mexico's tax is a gross receipts tax that covers most services.

Property Taxes: In New Mexico, the median property tax rate is $789 for every $100,000 of assessed home value.

Go to New Mexico's Full State Profile

SEE ALSO: 10 States With the Lowest Gas Taxes

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New York

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State Taxes on Unemployment Benefits: New York taxes unemployment compensation to the same extent it is taxed under federal law.

State Income Tax Range: Low: 4% (on up to $8,500 of taxable income for $17,150 for married joint filers and up to $17,150 for single filers). High: 8.82% (on more than $2,155,350 for married joint filers and $1,070,550 for single filers). New York City and Yonkers also impose their own income taxes, and there's a commuter tax for self-employed people working in and around New York City.

Sales Tax: 4% state levy. Localities can add as much as 4.875%, and the average combined rate is 8.52%, according to the Tax Foundation. In the New York City metro area, there is also 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.

Property Taxes: New York's median property tax rate is $1,706 per $100,000 of assessed home value.

Go to New York's Full State Profile

SEE ALSO: 20 Most-Overlooked Tax Breaks and Deductions

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North Carolina

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State Taxes on Unemployment Benefits: Unemployment benefits are taxed in North Carolina.

State Income Tax Range: North Carolina has a flat tax rate of 5.25%.

Sales Tax: 4.75% state levy. Localities can add as much as 2.75%, and the average combined rate is 6.97%, according to the Tax Foundation. Groceries are not taxed by the state, but a 2% local tax is levied.

Property Taxes: The median property tax rate in North Carolina is $850 per $100,000 of assessed home value.

Go to North Carolina's Full State Profile

SEE ALSO: 14 States That Won't Tax Your Pension

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North Dakota

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