TAX BURDEN BY STATE
A key factor for
retirement home location selection is the total State Tax Burden. While state
taxes are a concern to everyone, they are especially important to retirees, as
most retiree's income is fixed upon retirement.
Don't make the
mistake of basing your decision on whether a state has a state income tax or
not. One must consider the total
state tax burden, as a state's other taxes may negate not having a state income
Tobacco Tax (Good Reason beside health to stop
Personal Income Tax
Inheritance and Estate Tax
Licenses and Registration Fees
Treatment of Retirement Income
Treatment of Retired Military Pay
Treatment of Social Security and Railroad
Medical and Dental Deductions
Federal Income Tax Deduction
the total State Tax Burden is a key factors in planning your retirement. It is very easy to give yourself at
least a 10% raise by choosing a retirement home location with a low State Tax
links are provided, so you can check the tax burden of any location you might be
are listed alphabetically in three sections:
I have included the data for
California below, so you can see your publisher pays through the nose for
privilege of living in Paradise.
State Sales Tax: 7.25% (food and prescription drugs exempt.
Tax vary according to locality. Can be as high as
Tax: * 40.1
Diesel Fuel Tax: * 41.9 cents/gallon
Cigarette Tax: 37 cents/pack of 20 plus an
additional surcharge of 50 cents per pack, bringing the total to 87
Personal Income Taxes
- 1.0%; High - 9.3%
$6,319; Highest - $43,468
Single - $85;
Married - $170; Dependents - $265; 65 years of age or older -
Single - $3,254;
filing jointly - $6,508
Deduction: Same as
Federal Income Tax Deduction:
Security and Railroad Retirement benefits are exempt. There is a 2.5% tax
on early distributions and qualified pensions. All private, local, state
and federal pensions are fully taxed.
Retired Military Pay:
Follows federal tax rules.
Disability Portion - Length of Service
Pay; Member on September 24, 1975 - No tax; Not Member on September
24, 1975 - Taxed, unless combat incurred. Retired Pay - Based
solely on disability: Member on September 24, 1975 - No tax; Not Member on
September 24, 1975 - Taxed, unless all pay based on disability and disability
resulted from armed conflict, extra-hazardous service, simulated war, or an
instrumentality of war.
VA Disability Dependency and Indemnity
Compensation: Not subject to federal or state taxes
SBP/SSBP/RCSBP/RSFPP: Generally subject to state taxes for those states with
income tax. Check with state department of revenue
Property is assessed at 100% of full cash
value. The maximum amount of tax on real estate is limited to 1% of the
full cash value. After taxes have been paid, homeowners 62 and older who
earn $35,051 or less may file a claim for assistance on 96 percent of property
taxes, up to $34,000 of the assessed value of their homes. Call
800-852-5711 or visit for details.
Homestead exemptions are handled at the county level. Under the homestead
program, the first $7,000 of the full value of a homeowner's dwelling is exempt.
The state has a property tax postponement program that allows eligible
homeowners (seniors, blind and disabled residents) to postpone payments of
property taxes on their principal place of residence. Interest is charged
on the postponed taxes. For more information, contact the California State
Board of Equalization Office -- 1-800-
Inheritance and Estate Taxes
no inheritance tax. However, there is a limited California estate tax
related to federal estate tax collection.
further information, visit the California Franchise Tax Board or the California State Board of
* Does not include 1 cent local option.
returns, the taxes are twice the tax imposed on half the income.