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States Income Tax Chart

Retire to a state with no income tax

There are nine states with little or no income tax. For retirees looking for a state with no income tax, Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming do not levy a tax on income.  New Hampshire and Tennessee, while having no general state income tax, do charge tax on dividend and interest income, which is often a major source of income for retirees. Below is a chart of all States and their respective income tax rates.

Should the fact that a state income tax may or may not exist in a state you are considering retiring to sway your decision on where to retire? According to financial experts, the tax ramifications of retirement and where to retire depend on the sources of your income, but taxability is rated as one of the reasons future retirees pick one place over another.

The most important deciding factor when choosing a place to retire is knowing someone else that lives there.

According to U.S. News and World Report, when interviewing baby boomers that plan to retire, the following factors were rated:

Cost of Living     (81%)

Health Care        (66%)

Culture and Recreation (61%)

Climate (60%)

Proximity to Children (46%)

Proximity to Grandchildren (38%)

Proximity to parents of In-Laws (30 %)

 

Any retiree looking at potential retirement spots should consider the following:

 

Affordability - not just of real estate, but of utilities, healthcare and transportation as well

Taxes – Income, Sales and Property

Crime Rates

Climate

Availability of Medical Care

Availability of Transportation (airports, train, local)

Amenities

 

Retirement is an intensely personal decision that cannot be made with a macro picture of state-wide or even city-wide statistics. The tax situation is just one consideration, but may be the SWING deciding factor between two choices.

Summary Chart of State Income Taxes

State

Low

High

Brackets

Lowest

Highest

Single

Married

Dependents

Deductable

Alabama

2

5

3

500b

3000b

1500

3000

300

*

Alaska

NO STATE INCOME TAX

Arizona

2.59

4.54

5

10000

15000

2100

4200

2300

 

Arkansas(a)

1

7

6

3899

32600

23c

46c

23c

 

California(a)

1.25

9.5

6

7300

47900

98c

196c

98c

 

Colorado

4.63

 

1

FLAT RATE

Connecticut

3

6.5

3

10000

500001

13000f

26000

0f

 

Delaware

2.2

6.95

6

5000

60001

110c

220c

110c

 

Florida

NO STATE INCOME TAX

Georgia

1

6

6

750

7000

2700

5400

3000

 

Hawaii

1.4

11

12

2400

200001

1040

2080

1040

 

Idaho(a)

1.6

7.8

8

1320

26418

3650d

7300d

3650d

 

Illinois

3

 

1

FLAT RATE

Indiana

3.4

 

1

FLAT RATE

Iowa(a)

.36

8.98

9

1407

63316

40c

80c

40c

 

Kansas

3.5

6.45

3

15000

30000

2250

4500

2250

 

Kentucky

2

6

6

3000

75000

20c

40c

20c

 

Louisiana

2

6

3

12500

50000

4500i

9000i

1000i

 

Maine(a)

2

8.5

4

4949

19750

2850

5700

2850

 

Maryland

2

6.25

8

1000

1000001

2400

4800

2400

 

Massachusetts(a)

5.3

 

1

FLAT RATE

Michigan(a)

4.35

 

1

FLAT RATE

Minnesota(a)

6.35

7.85

3

22770

74781

3650d

7300d

3650d

 

Mississippi

3

5

3

5000

10000

6000

12000

1500

 

Missouri

1.5

6

10

1000

9000

2100

4200

1200

 

Montana(a)

1

6.9

7

2600

15401

2110

4220

2110

 

Nebraska(a)

2.56

6.84

4

2400

27001

118c

236c

118c

 

Nevada

NO STATE INCOME TAX

New Hampshire

Tax limited to Dividend and Interest Income

New Jersey

1.4

10.75

8

20000

1000000

1000

2000

1500

 

New Mexico

1.7

4.9

4

5500

16000

3650d

7300d

3650d

 

New York

4

8.97

7

8000

500000

0

0

1000

 

North Carolina

6

7.75n

3

12750

60000

3650d

7300d

3650d

 

North Dakota(a)

1.84

4.86

5

34000

373650

3650d

7300d

3650d

 

Ohio(a)

.608

6.24

9

5000

200000

1550p

3100p

1550p

 

Oklahoma

.5

5.5q

7

1000

8701

1000

2000

1000

 

Oregon(a)

5

11

5

2000

250000

176c

352c

176c

 

Pennsylvania

3.07

 

1

FLAT RATE

Rhode Island

3.8

9.9y

5

33500

372950

3650d

7300d

3650d

 

South Carolina(a)

0

7

6

2740

13701

3650d

7300d

3650d

 

South Dakota

NO STATE INCOME TAX

Tennessee

Tax limited to Dividend and Interest Income

Texas

NO STATE INCOME TAX

Utah

5

 

1

FLAT RATE

Vermont(a)

3.55

8.95

5

33950

372951

3650d

7300d

3650d

 

Virginia

2

5.75

4

3000

17000

930

1860

930

 

Washington

NO STATE INCOME TAX

West Virginia

3

6.5

5

10000

60000

2000

4000

2000

 

Wisconsin (a)

4.6

7.75

5

10220

225001

700

1400

700

 

Wyoming

NO STATE INCOME TAX

 



Footnotes

STATE INDIVIDUAL INCOME TAXES (footnotes)

Source: The Federation of Tax Administrators from various sources.

(a) 16 states have statutory provision for automatic adjustment of tax brackets, personal exemption or

standard deductions to the rate of inflation. Massachusetts, Michigan, Nebraska and Ohio index the

personal exemption amounts only.

(b) For joint returns, the taxes are twice the tax imposed on half the income.

(c) Tax credits.

(d) These states allow personal exemption or standard deductions as provided in the IRC.

(e) A special tax table is available for low-income taxpayers reducing their tax payments.

(f) Combined personal exemptions and standard deduction. An additional tax credit is allowed ranging from

75% to 0% based on state adjusted gross income. Exemption amounts are phased out for higher income

taxpayers until they are eliminated for households earning over $61,000.

(g) The tax brackets reported are for single individuals. For married households, the same rates apply to

income brackets ranging range from $1,000 to $10,000.

(h) For joint returns, the tax is twice the tax imposed on half the income. A $10 filing tax is charge for each

return and a $15 credit is allowed for each exemption.

(i) Combined personal exemption and standard deduction.

(j) The tax brackets reported are for single individual. For married couples filing jointly, the same rates apply

for income under $33,280 to over $132,221. A 6.4% AMT rate is also applicable.

(k) The tax brackets reported are for single individual. For married couples filing jointly, the same rates

apply for income under $4,800 to over $54,000.

(l) The tax brackets reported are for single individuals. For married couples filing jointly, the tax rates range

from 1.4% to 10.75% (with 9 income brackets) applying to income brackets from $20,000 to over $1 million.

(m) The tax brackets reported are for single individuals. For married couples filing jointly, the same rates

apply for income under $8,000 to over $24,000. Married households filing separately pay the tax imposed

on half the income.

(n) The tax brackets reported are for single individuals. For married taxpayers, the same rates apply to

income brackets ranging from $21,250 to $100,000. Lower exemption amounts allowed for high-income

taxpayers. For tax years 2009 and 2010, a surcharge that equals 2% of total liability for taxpayers with

income over $60,000 single filer ($100,000 joint) and 3% of total liability for income over $150,000

($250,000).

(o) The tax brackets reported are for single individuals. For married taxpayers, the same rates apply to

income brackets ranging from $56,850 to $373,650. An additional $300 personal exemption is allowed for

joint returns or unmarried head of households.

(p) Plus an additional $20 per exemption tax credit.

(q) The rate range reported is for single persons. For married persons filing jointly, the same rates apply to

income brackets ranging from $2,000 to $15,000.

(r) Deduction is limited to $10,000 for joint returns and $5,000 for individuals in Missouri and Montana, and

to $5,600 in Oregon.

(s) Federal Tax Liability prior to the enactment of Economic Growth and Tax Relief Act of 2001. Or,

taxpayers have the option of computing tax liability based on a flat 7.0% (6.5% in 2009) of gross income.

(t) Tax credits are equal to 6% of federal standard/itemized deductions (w/o state taxes paid) and 75% of

Federal personal exemption amounts. The credit amount is phased out above $12,000 in income ($24,000

for joint returns).

(u) The tax brackets reported are for single individuals. For married couples filing jointly, the same rates

apply for income under $56,700 to over $372,950.

(v) The tax brackets reported are for single individuals. For married taxpayers, the same rates apply to

income brackets ranging from $13,620 to $300,000.

(w) An additional 1% tax is imposed on taxable income over $1 million. Tax rates are scheduled to fall by

0.25% after 2011.

(x) The tax brackets reported are for single individuals. For married taxpayers, the same rates apply to

income brackets ranging from $16,000 to $500,000.

(y) Or and alternative flat rate of 6.5%. Rates reported are for a single filer calculated based on a tax of 25%

of federal liability using IRC in 2001. For married taxpayers filing jointly, the same rates apply to income

brackets ranging from $56,700 to $372,950.