Taxes in Alabama to Iowa


Updated: August 2020

Taxes by State

Please choose a State: 
AlabamaAlaskaArizona, ArkansasCalifornia
Colorado, ConnecticutDelawareDistrict of Columbia, FloridaGeorgia, HawaiiIdahoIllinoisIndianaIowa

You will learn about state taxes that affect retirement income such as sales tax, retirement income tax and property taxes. We’ve provided details about tax credits, exemptions and tax relief programs. You will also find state tax rates for inheritance and estate taxes and retirement-related tax breaks in each state profile.

This section covers taxes in Alabama through Iowa. See Retirement Taxes by State for information from other states.

The following applies to all state retirement taxes:

  • VA Disability Dependency and Indemnity Compensation are not subject to federal or state taxes. Military disability benefits are not taxable.
  • Military SBP/SSBP/RCSBP/RSFPP are typically subject to state taxes except where states have no income tax. Check with the state department of revenue office for specific information.

For current personal state income tax rates and tax brackets, visit The Tax Foundation.


ALABAMA

Sales Taxes

State Sales Tax: The Alabama state sales tax is 4%. Depending on the municipality, combined local and state sales tax is as high as 11%.
Gasoline Tax: 45.61 cents/gallon (Includes all taxes)
Diesel Fuel Tax: 52.55 cents/gallon (Includes all taxes)
Cigarette Tax: 67.5 cents/pack of 20
Medical/Dental Deduction: Limited to the excess of 4% of adjusted gross income. However, taxpayers may deduct 50% of the premiums paid for health insurance if their employer has fewer than 25 employees.
Federal Income Tax Deduction: Full deduction of federal tax liability less claimed tax credits.
Retirement Income Taxes: Alabama does not tax any retirement income.
Retired Military Pay: No tax. Survivor benefits not taxed.

Property Taxes

Alabama’s effective property tax ranks among the lowest in the nation at 0.42%. Homeowners pay $854 on a $205,000 home. Each county may charge an additional property tax.
Homeowners aged 65 and older are exempt from all Alabama state property taxes. In this age group, taxpayers with a net combined federal taxable income of $12,000 or less (homeowner and spouse) pay no property tax on their principal residence.
Taxpayers can take a deduction on the Alabama tax return against contributions to a catastrophe savings account. Interest income is exempt in these accounts, used exclusively to pay for insurance premiums.

Inheritance and Estate Taxes

Alabama does not impose a state estate or inheritance tax.
Visit the Alabama Department of Revenue site for more information about state taxes, or call (334) 242-1170 and choose option #1.


ALASKA

Sales Taxes

State Sales Tax: Alaska does not collect state sales tax. However, 107 municipalities impose local sales taxes that range up to 7%. Typical sales tax rates are from 1% – 7%.
Gasoline Tax: 30.65 cents/gallon (Includes all taxes) (Anchorage – add $0.10/gallon)
Diesel Fuel Tax: 37.15 cents/gallon (Includes all taxes)
Cigarette Tax: $2.00/pack of 20 (Juneau – add $3.00)
Vehicle Rental Tax: 10% on passenger vehicles; 3% on RVs
Excise Tax: $34.50 per voyage on passengers traveling on commercial vessels that provide overnight accommodations while in Alaska waters.

Personal Income Taxes

Alaska does not levy a tax on earned or unearned income.
Year-round residents are eligible to receive an annual payment from the Alaska Permanent Fund. Residents apply online for the Permanent Fund Dividend (PFD), which recently ranged from $800 to over $2,000. These funds generate a 1099 and are taxable income on federal returns.
Retirement Income: Not taxed.
Retirement Military Pay: Not taxed.

Property Taxes

Alaska charges no property tax, but larger municipalities like Anchorage typically do. The effective property tax rate is 1.18% on average ($3,136 on a $265,200 home). Municipalities that levy property tax collect between 0.16% and 1.69%.
Homeowners 65 and older are exempt from municipal taxes on the first $150,000 of assessed property value. If the primary homeowner dies, the rule applies to the surviving spouse who is at least 60 years of age.
Veterans with a 50% or more service-connected disability also pay no tax on the first $150,000 of property value.
For more property tax information, visit the Alaska Office of the State Assessor.

Inheritance and Estate Taxes

There is no state inheritance tax or estate tax in Alaska.
For more Alaska tax information, visit the Alaska Department of Revenue site or call (907) 465-2300.


ARIZONA

Sales Taxes

State Sales Tax: Arizona state sales tax is 5.6%. Local municipalities may charge up to 5.6% additional sales tax. The sales tax in Arizona is commonly called the Transaction Privilege Tax (TPT), but this is actually a tax levied on vendors.
Groceries and prescription medications are state tax-exempt. Some cities in Arizona tax groceries from 1.5% to 4%. Arizona’s Vehicle License Tax (VLT) can add up to several hundred dollars per year.
Gasoline Tax: 37.4 cents/gallon (Includes all taxes)
Diesel Fuel Tax: 51.4 cents/gallon (Includes all taxes)
Cigarette Tax: $2.00 /pack of 20
Water Use Tax: Varies by municipality

Personal Income Taxes

Medical/Dental Deduction: Federal amount. May itemize deductions on state income tax return even if taking the standard deduction on the federal return.
Federal Income Tax Deduction: None
Retirement Income Taxes: Social Security and Railroad Retirement benefits are exempt. Up to $2,500 of retirement income from federal, state and local government plans is tax-exempt.
Retired Military Pay: Up to $3,500 of retired pay and/or survivor benefits excluded. For information on veteran’s services, visit the Arizona Department of Veterans’ Services.

Property Taxes

Individual counties in Arizona assess property and bill for taxes. The average effective property tax rate is 0.69%, for a tax of $1,408 on a $205,000 home.
Homeowners aged 65 or older with a total income of $36,000 or less are eligible for the Senior Property Valuation Protection Option. This program is also known as a tax freeze because the property tax does not increase. This program is also available to multiple owners of a single property with a combined income of $45,000 or less.
Arizona homeowners who are at least 70 years old who do not receive more than $10,000 of annual taxable income defer their property taxes. To qualify, seniors must have lived in their primary residence for at least six years or have been Arizona residents for 10 or more years. Deferred taxes must be paid upon the property owner’s death.
Call (602) 255.0072 or visit the Arizona Department of Revenue for information about property tax relief for seniors.

Inheritance and Estate Taxes

There is no inheritance or estate tax in Arizona.
For further information, visit the Arizona Department of Revenue site or call (602) 255-3381.


ARKANSAS

Sales Taxes

State Sales Taxes: 6.50% (prescription drugs exempt). Groceries are taxed at the 0.125% Arkansas Reduced Food Tax rate. Local taxes add up to 5% to the state sales tax.
Gasoline Tax: 43.2 cents/gallon (Includes all taxes)
Diesel Fuel Tax 53.2 cents/gallon (Includes all taxes)
Cigarette Tax: $1.15 cents/pack of 20

Personal Income Taxes

Medical/Dental Deduction: Same as federal rate, includes out-of-pocket medical insurance premiums
Federal Income Tax Deduction: None
Retirement Income Taxes: Most retirement income is taxable in Arkansas. The state exempts up to $6,000 of income from private or government employer-sponsored retirement plans. Taxpayers who are 59½ or older qualify for this exemption on traditional IRA distributions.
Social Security and Railroad Retirement income are both tax-exempt.
Retired Military Pay: Military retirement benefits, including survivor benefit plans, are not taxed in Arkansas.

Property Taxes

Arkansas property taxes are levied by counties, municipalities and school districts. The effective tax rate is 0.63%. Taxpayers who own homes worth the median value of $123,300 pay $776 in property taxes. Assessments are based on 20% of the true market value of the property.
All households are eligible for the Arkansas Homestead Tax Credit of up to $375, regardless of income or age.
The Age 65 or Disabled Homeowner Property Tax Relief program “freezes” the property value to the amount on date the homeowner turned 65 or the date of disability. If a qualified individual buys a new homestead property, they can apply to have the taxable assessed value frozen as of the purchase date. No property improvements that add 25% to the home value are allowed. Freezing the property value prevents property taxes from increasing, but local millage rates still cause an increase or decrease in taxes.
Arkansas Amendment 79 also limits the amount of taxable assessed value of real property increases due to county-wide reappraisal. This rule allows for only a 5% annual increase in the taxable value of a home until the property reaches the full assessed value. The taxable value of other real property parcels is capped at a 10% annual increase until the property reaches the full assessed value.
Amendment 79 does not apply to new construction or newly discovered real estate. The taxpayer will lose the benefit if they make substantial improvements to the home that adds 25% or more to the property value.
Disabled veterans are exempt from property taxes if they receive monthly compensation from the Department of Veterans Affairs. This entitlement extends to surviving spouses and children.
For more information, see the Arkansas Assessment Coordination Division Property Tax relief information or call the assessor’s office in the county of residence.

Inheritance and Estate Taxes

Arkansas has no estate tax and no inheritance tax.


CALIFORNIA

Sales Taxes

State Sales Tax: California’s state sales tax is 7.25%. Local district taxes increase the tax owed by a seller, ranging from 0.10% to 1.00%. Given that some areas have multiple district taxes, the sales tax can be confusing. You can look up California sales tax by address to research rates.
California charges an annual vehicle license fee of 0.65% of the purchase price, reduced for the first 11 years of ownership.
Gasoline Tax: 80.87 cents/gallon (Includes all taxes)
Diesel Fuel Tax: $1.06/gallon (Includes all taxes)
Cigarette Tax: $2.87/pack of 20

Personal Income Taxes

Medical/Dental Deduction: Federal amount
Federal Income Tax Deduction: None
Retirement Income Taxes: Social Security and Tier 1 Railroad Retirement benefits are exempt. Tier 2 Railroad Retirement income from individual railroads is taxed in California. Any other retirement income is subject to state income tax.
California taxes 2.5% of early retirement distributions and qualified pensions.
Retired Military Pay: Follows federal tax rules.

Property Taxes

The effective property tax rate in California is 0.76%, or $760 for every $100,000 of assessed value.
California’s Homeowners Exemption reduces the taxable value of a home by $7,000 for qualified taxpayers. The property must be the principal residence for the taxpayer as of January 1 in the tax year.
The Property Tax Postponement Program is available to homeowners age 62 or older, or who are blind or have a disability to defer on their principal residence. Annual income must be less than $35,500, and the taxpayer must have at least 40% equity in their homes. A lien is placed on the property with a 7% interest on the amount outstanding. The lien is paid when the taxpayer sells the property, no longer uses it as a primary residence or dies. The California State Controller offers more information.

Inheritance and Estate Taxes

There is no inheritance tax or estate tax in California.
For further tax information, visit the California Franchise Tax Board or the California State Board of Equalization.



COLORADO

Sales Taxes

State Sales Tax: 2.9% (food and prescription drugs exempt), but the local tax rate could be as high as 8.3%. Total Colorado sales tax ranges from 2.9% to 11.2%.
Gasoline Tax: 40.4 cents/gallon (Includes all taxes)
Diesel Fuel Tax: 44.9 cents/gallon (Includes all taxes)
Cigarette Tax: 84 cents/pack of 20

Personal Income Taxes

Medical/Dental Deduction: Federal amount with some limitations. Taxpayers must add back state income taxes deducted on the federal return, regardless of whether paid to Colorado or another state.
Federal Income Tax Deduction: None
Retirement Income Taxes: Railroad Retirement income is tax-exempt. Up to $24,000 of federally taxed Social Security benefits and other retirement income are excluded from state income tax for those over age 65. Taxpayers in the 55 to 64 age range get a $20,000 exclusion.
Retired Military Pay: Retired military members under age 55 can exclude up to $7,500 of income from a military retirement plan. This exemption increases to $10,000 for 2021, then $15,000 for 2022 and 2023. Those over this age use Colorado’s retirement income exemption described above.

Property Taxes

Property taxes levied in Colorado depend on the county where the property is located. The effective tax rate is 0.53%, or $1,647 on the $313,600 median home value.
Colorado Property Tax Exemption Program for Seniors and Disabled Veterans provides tax relief to taxpayers who are at least 65 years old. Veterans who are VA classified as 100% disabled may apply, too. The program exempts 50% of the first $200,000 of the actual value of a primary residence from property taxes. Homeowners must have owned and lived on the property for a minimum of 10 years.
The Colorado Property Tax/Rent Rebate (PTC) benefits Colorado residents who are at least 65 years old or disabled regardless of age. The state has income restrictions for single taxpayers ($14,074) and married couples ($18,972). Rebates max out at $600 plus $192 of annual heating costs. See the Colorado PTC page for more information.
Colorado also offers tax relief programs in the form of a deferral or tax work-off program for seniors.

Inheritance and Estate Taxes

Colorado has no estate tax and no inheritance tax.
For further information, visit the Colorado Department of Revenue site or call (303) 864-7777.


CONNECTICUT

Sales Taxes

State Sales Tax: 6.35% (food, prescription and over-the-counter drugs exempt). There are no local sales taxes. Jewelry valued at more than $5,000 and clothes, footwear and accessories costing over $1,000 per item are taxed at 7.75%.
Gasoline Tax: 54.15 cents/gallon (Includes all taxes)
Diesel Fuel Tax: 69.0 cents/gallon (Includes all taxes)
Cigarette Tax: $4.35/pack of 20.

Personal Income Taxes

Medical/Dental Deduction: None
Federal Income Tax Deduction: None
Retirement Income Taxes: Social Security is tax-exempt for individual taxpayers with a $75,000 federal adjusted gross income. Those who are married and file a joint return must have a federal AGI below $100,000. Taxpayers who exceed the income limit can deduct 75% of federally taxed Social Security income on the Connecticut tax return.
Connecticut exempts 14% of income from pensions and annuities using those same income qualifiers. This phased-in exemption will increase by 14% each year until it reaches 100% in tax year 2025. Teachers can choose from the 14% pension exemption or take a 25% exemption on the state pension income.
Railroad Retirement payments are exempt.
See Connecticut Tax Tips for Seniors for more information.
Retired Military Pay: Connecticut exempts military pensions.

Property Taxes

Connecticut property taxes are among the highest in the nation, with a 2.11% effective rate. The median home value in the state is $272,700 with $5,746 in property taxes.
An annual property tax credit or rent rebate is available to Connecticut residents age 65 or older. A surviving spouse of a previously approved applicant who is age 50 or older and totally disabled persons are also eligible. Income must be $43,900 or less for married couples (maximum $1,250 benefit) and no more than $36,000 for single taxpayers ($1,000). Municipalities may provide additional tax relief for seniors.
See Connecticut Property Tax Credit For Elderly/Disabled for details or call (860) 418-6200 for details.

Inheritance and Estate Taxes

Connecticut has no inheritance tax but does levy an estate tax and a gift tax.
Connecticut taxes the value of an estate over $5.1 million. The tax also applies to nonresidents who owned real or tangible personal property in Connecticut. The estate tax rate starts at 10% on the first $1 million, then $100,000 plus 10.4% on the next million. The tax continues up to $540,000 plus 12% on values over $10.1 million. $15 million is the maximum taxed.
Spouses pay no tax on the descendant’s estate. The nonresident estate tax is calculated by multiplying the estate value by a fraction. Figuring the resident tax is more complicated. See Form CT-706/709 instructions for details.
Connecticut’s gift tax applies to gifts of real estate and other tangible and intangible property taxed by the federal government. The tax applies to gifts valued over $5.1 million and is taxed at the same rates used for estate tax.
For further information, visit the Connecticut Department of Revenue site.


DELAWARE

Sales Taxes

State Sales Tax: Delaware does not impose a state or local sales tax.
Gasoline Tax: 41.4 cents/gallon (Includes all taxes)
Diesel Fuel Tax: 46.4 cents/gallon (Includes all taxes)
Cigarette Tax: $2.10 /pack of 20

Personal Income Taxes

Medical/Dental Deduction: None
Federal Income Tax Deduction: None
Retirement Income Taxes: Social Security and Railroad Retirement benefits are tax exempt in Delaware.
Taxpayers who are at least 60 years of age can exclude $12,500 of retirement income. This income can come from 401(k) plans, pensions and other retirement accounts as dividends, capital gains or interest. Retirees who are landlords must also count net rental income from real property. Retired taxpayers under the age of 60 are entitled to a $2,000 exclusion.
Retired Military Pay: Follows the same rules that apply to other types of retirement income. $12,500 of military retirement benefits are excluded from income tax if the taxpayer is 60 or older. Younger retirees can exclude $2,000.

Property Taxes

The state of Delaware imposes no property tax. Local municipalities levy property tax at an effective rate of 0.56%. The median home value in Delaware is $244,700, with $1,377 in property taxes.
Delaware residents age 65 and older may use the School Property Tax Credit to offset 50% of those local taxes. The credit must be used to reduce property taxes by up to $400 on the primary residence. After January 1, 2018, those who moved to Delaware are not eligible for the credit until they live in the state for 10 consecutive years.

Inheritance and Estate Taxes

You will find no estate or inheritance tax in Delaware.
For further information about state taxes, visit the Delaware Division of Revenue site or call (302) 577-8200.


DISTRICT OF COLUMBIA

Sales Taxes

State Sales Tax: Washington, D.C., has a 6% state sales tax with no additional local sales tax. Food, prescription and nonprescription drugs and residential utility services are exempt. A higher sales tax applies to restaurant meals, vehicle rentals, soft drinks, parking in commercial lots and some entertainment-related purchases.
Gasoline Tax: 41.9 cents/gallon (Includes all taxes)
Diesel Fuel Tax: 47.9 cents/gallon (Includes all taxes)
Cigarette Tax: $4.50/pack of 20

Personal Income Taxes

Medical/Dental Deduction: Same as Federal taxes
Federal Income Tax Deduction: None
Retirement Income Taxes: Social Security and Tier 1 Railroad Retirement benefits are exempt in the District of Columbia. All other retirement account distributions are taxed at the regular income tax rate ranging from 4% to 8.95%.
Retired Military Pay: Follows federal rules

Property Taxes

Property is assessed at 100% of market value. Taxes on owner-occupied real estate are $0.85 per $100 of assessed value. The first $73,350 of assessed value (Homestead Deduction) is exempt from taxes. Several property tax relief programs are available to assist property owners and first time home buyers. These include a Homestead Deduction, tax credits for historic properties, senior citizen tax relief, and property tax exemptions and deferrals. Homeowners 65 and older with household adjusted gross income of less than $130,550 receive an additional exemption equal to 50% of their Homestead Deduction. Click here for details.
District of Columbia taxpayers living in a $568,400 home (state median value) pay $3,113 in property taxes. The effective tax rate is 0.55%.
The Homestead Deduction reduces real property assessed value by $75,700 before computing the annual tax liability. The state lists no income threshold. The deduction saves homeowners around $643.
Taxpayers who become disabled or are age 65 or older are qualified to apply for Senior or Disabled Owner Real Property Tax Relief. Federal adjusted gross income must be less than $134,550 to qualify, and property taxes are reduced by 50% for approved applicants.
Visit the District of Columbia’s Homestead Deduction page for details on both programs.
The district’s Assessment Cap prevents property assessments from increasing more than 10% annually. The district has a separate, more generous 5% cap on property value for seniors and individuals with disabilities. The taxpayer must receive the homestead deduction and Senior or Disabled Owner Real Property Tax Relief to take advantage of the assessment cap.

Inheritance and Estate Taxes

$5,681,760 of estate value is excluded from tax. Estate taxes range from 12% to 16%, which is substantially lower than amounts for years before 2019.
See the District of Columbia’s New Resident Resources to learn more about retirement-related taxes and more, or call (202) 727-2476.


FLORIDA

Sales Taxes

State Sales Tax: 6% (food, prescription and over-the-counter drugs exempt). There are additional local sales and special district taxes, making the combined rate as high as 8.3%.
Gasoline Tax: 60.69 cents/gallon (Includes all taxes)
Diesel Fuel Tax:  59.67 cents/gallon (Includes all taxes)
Cigarette Tax: $1.34/pack of 20

Personal Income Taxes

No state income tax
Retirement Income: Not taxed

Property Taxes

Florida’s average effective real estate tax rate is 0.93%, or $1,902 on a $205,000 home.
Taxpayers who own a permanent residence in Florida are eligible to receive a homestead exemption up to $50,000. The first $25,000 applies to all property taxes. The additional exemption up to $25,000 applies to the home’s assessed value between $50,000 and $75,000 and only offsets nonschool taxes.
Municipal governments may have an ordinance granting seniors over age 65 another $50,000 exemption. Some Florida counties exempt property tax 100% on real estate valued at less than $250,000 when the homeowner makes it the permanent residence for 25 or more years.
Veterans who are 65 or who are partially or totally permanently disabled may qualify for a property tax discount on their home. The discount is equal to the percentage of the veteran’s permanent, service-connected disability as determined by the United States Department of Veterans Affairs.
See the Florida Department of Revenue Property Tax Oversight page to find details about real estate taxes in the county you’re considering for retirement.

Inheritance and Estate Taxes

There is no inheritance tax or estate tax in Florida.
To review information for new residents, click here.
For general information on Florida taxes, visit the Florida Department of Revenue site or call (850) 488-6800.


GEORGIA

Sales Taxes

State Sales Tax: 4% (some prescription drugs and medical supplies are exempt). Local taxes may add up to an additional 5%. Local municipalities may tax groceries, which have no state sales tax.
Gasoline Tax: 50.6 cents/gallon (Includes all taxes)
Diesel Fuel Tax: 61.94 cents/gallon (Includes all taxes)
Cigarette Tax: 37 cents/pack of 20

Personal Income Taxes

Medical/Dental Deduction: Same as Federal taxes
Federal Income Tax Deduction: None
Retirement Income Taxes: Social Security and Railroad Retirement income are tax-exempt. Georgia offers an income tax exclusion to taxpayers who are 62 years of age or older or individuals with a total and permanent disability. The exclusion ranges from $35,000 to $65,000 and depends on all retirement income plus $4,000 of earned income.
Married couples who file separate tax returns may each qualify for this program. Retirement income exceeding the maximum adjustable amount will be taxed at the normal rate.
Retired Military Pay: Treated the same as other retirement income.

Property Taxes

Georgia’s average effective property tax rate is 0.91%, or $1,510 on the median home value of $166,800. Real estate taxes are assessed and administered by counties.
Homeowners age 62 and older who earn $10,000 or less can apply to have up to $10,000 of assessed property value exempted from school taxes.
Taxpayers who are at least 62 years old with family income up to $30,000 may qualify for an exemption from state and county property taxes. The amount of tax relief is determined by how much the assessed value of the home exceeds the preceding year’s assessed value.
Georgia’s standard homestead exemption is $2,000 deducted from 40% of the property’s assessed value. Residents who are 65 or older and earn $10,000 are eligible to double the exemption to $4,000. Some counties offer more generous homestead deductions to seniors.
See Georgia’s County Property Tax Facts to learn about taxes in specific counties.

Inheritance and Estate Taxes

Georgia levies no estate tax or inheritance tax.


HAWAII

Sales Taxes

State Sales Tax: Hawaii has no sales tax but charges a general excise tax (GET) of 4%. Local governments may charge separate sales tax and one or more special district taxes or mass transit tax. Combined GET rates in Hawaii range from 4% to 4.5%. Prescription medications are tax-exempt, but you’ll pay sales tax on prescribed medical devices and all other sales, including groceries.
Gasoline Tax: 66.68 cents/gallon (Includes all taxes)
Diesel Fuel Tax: 73.65 cents/gallon (Includes all taxes)
Cigarette Tax: $3.20/pack of 20

Personal Income Taxes

Medical/Dental Deduction: Same as Federal taxes
Federal Income Tax Deduction: None
Retirement Income Taxes: Social Security, Tier 1 Railroad Retirement benefits are exempt. Military, government and private pensions and employer-sponsored plans are 100% exempt from income tax if the employee made no contributions to the plan. If the employee contributed to the plan, such as a 401(k) with employer matching, only employer contributions are exempt.
Retired Military Pay: Not taxed.

Property Taxes

Personal property such as cars or boats are not subject to property tax. Real property and land are assessed at 100% “fair market value.” Taxes are administered by the four counties. The Homestead Exemption is $12,000, but is $40,000 in the city and county of Honolulu. Persons 60 to 69 years of age may claim double the homestead exemption, and a person age 70 or older, may claim 2.5 times the homestead exemption. In the city and county of Honolulu, the exemptions are:
The average effective property tax rate in Hawaii is 0.27%. The median home value is the highest in the nation at $587,700. However, the property tax on this assessed value is only $1,607.
Counties administer real estate taxes in Hawaii, and tax relief programs for seniors vary depending on location. A typical homestead exemption for seniors is $120,000 to $180,000 for the minimum age of 60 or 65 (depending on the county). This amount may increase from $140,000 to $200,00 based on annual gross income combined with the minimum age of 70 or 75.
Disabled veterans are eligible for property tax breaks. For example, the County of Kauai has a flat $100 property tax for veterans who are totally disabled due to injuries received while on active duty.
The state offers a household renters credit to help taxpayers who meet income limits offset rental costs.
See the website for the Hawaii county of your choice to learn more about property taxes.

Inheritance and Estate Taxes

Hawaii’s estate tax rate ranges from 10% to 20%. $5,490,000 is excluded from the estate value for taxation purposes. Hawaii has no inheritance tax.
For further information, visit the Hawaii Department of Taxation site or call (808) 587-4242.


IDAHO

Sales Taxes

State Sales Tax: 6% (prescription drugs exempt). Some local municipalities charge up to an additional 3% sales tax. Idaho offers a grocery tax credit of $100 to $120 to residents who claim it on their tax return or by filling out Form 40 or 43.
Gasoline Tax: 51.4 cents/gallon (Includes all taxes)
Diesel Fuel Tax: 57.4 cents/gallon (Includes all taxes)
Cigarette Tax: 57 cents/pack of 20

Personal Income Taxes

Medical/Dental Deduction: Federal amount
Federal Income Tax Deduction: None
Retirement Income Tax: Idaho taxes all retirement income except Social Security and Railroad Retirement benefits.
Generally, all income received by an Idaho resident, regardless of the source, is subject to Idaho income tax of 1.125% to 6.925%.

Idaho’s Retirement Benefit Deduction applies to some pensions. Residents who are age 65 or older (or at least 62 or older and disabled) may deduct all or a portion of distributions from these retirement plans:

  • Military retirement
  • Civil Service Retirement System (CSRS if the account number begins with 0 through 4)
  • Idaho’s firemen’s retirement fund (not PERSI)
  • Policemen’s retirement fund of an Idaho city (not PERSI)

Retired Military Pay: No tax for military retirees over 65 or disabled retirees over 62.

Property Taxes

Idaho counties levy and collect property tax to support local services and schools. The state does not levy or receive any property tax. The average effective property tax rate in Idaho is 0.72%, or $1,382 on the median home value of $192,300.
Idaho’s Property Tax Reduction (Circuit Breaker) program reduces taxes on the home and 1 acre of land up to $1,320. Homeowners aged 65 or older with an income of $31,280 or less are eligible for a property tax reduction of up to $1,320. The reduction is also available for veterans and individuals with disabilities with no age qualification.
Idaho residents who are 65 or older with an income of $45,756 or less can defer property tax payments. Taxpayers with disabilities are eligible regardless of age. Property taxes accrue with interest. Payment is due when the property is sold or transferred or the owner dies or is no longer the Idaho Homeowner’s Exemption.

Inheritance and Estate Taxes

Idaho has no inheritance tax, gift tax or estate tax.
For more tax information, visit the Idaho State Tax Commission site or call (800) 972-7660.


ILLINOIS

Sales Taxes

State Sales Tax: 6.25% combined with local sales tax. Illinois lowers the state tax to 1% on qualifying food, prescription and over-the-counter medications and medical appliances. Combined state and local tax is 6.25% to 11%.
Gasoline Tax:  70.41 cents/gallon (Includes all taxes)
Diesel Fuel Tax: 82.84 cents/gallon (Includes all taxes)
Cigarette Tax: $2.98/pack of 20 (In Chicago, the state and local rate is $6.16)

Personal Income Taxes

Medical/Dental Deduction: Illinois has no deduction for health care expenses, but medical insurance and long-term care insurance premiums are deductible.
Federal Income Tax Deduction: None
Retirement Income Taxes: Illinois does not tax distributions from most retirement plans. Income sources include qualified employee benefit plans, 401(k) plans, military pensions, IRAs, government retirement plans and others. Railroad Retirement income and Social Security benefits are also exempt. See Illinois taxes on retirement income for more information.
Retired Military Pay: Not taxed.

Property Taxes

Illinois property tax average effective rate is among the highest in the country at 2.30%. Property tax is $4,705 on a $205,000 home. Local government taxing districts impose taxes, and most residential property in the state is assessed at 33.33% of its market value. Cook County property tax for homeowners is currently 10%.
Illinois provides several property tax relief programs. Those available for taxpayers aged 65 or older and retired military personnel include:

  • Senior Citizens Homestead Exemption: Reduces equalized value up to $8,000 in Cook County and $5,000 in all other counties.
  • Senior Citizens Real Estate Tax Deferral Program: Defers all or a portion of real estate taxes and special assessments up to $5,000. When the homeowner sells or transfers the property or dies, the taxes are paid with 6% interest. Maximum deferral, including interest and lien fees, is 80% of the owner’s equity.
  • Senior Citizens Assessment Freeze Homestead Exemption (SCAFHE): Those with an income of $65,000 or less may apply to have their property assessment frozen. The program stops real estate taxes from rising significantly.
  • Homestead Exemption for Persons with Disabilities: Annual $2,000 reduction in the equalized assessed value of a primary residence owned and occupied by a person with a disability.
  • Standard Homestead Exemption for Veterans with Disabilities: The exemption amount depends on the percentage of VA-certified, service-connected disability. Reduction in equalized assessed value ranges from $2,500 to $5,000. Veterans with a 70% or greater disability are completely exempted from property tax. The property’s total EAV must be less than $250,000 after subtracting any portion used for commercial purposes to qualify.
  • Veterans with Disabilities Exemption for Specially-Adapted Housing: Reduces the home’s assessed value by $100,000 for certain types of housing owned and used exclusively by a veteran with a disability. Federal funds must have been used to purchase or build specially adapted housing.

See Illinois Property Relief for more information and to learn about all property tax relief programs in the state.

Inheritance and Estate Taxes

Illinois taxes estates worth over $4 million at variable rates up to 16%. Illinois has no inheritance tax.
For more information about estate taxes, visit the Illinois Attorney General estate tax page.
For information, visit the Illinois Department of Revenue site, or you can email the appropriate tax assistance department.


INDIANA

Sales Taxes

State Sales Tax: 7% (food, prescription drugs and durable medical equipment are exempt)
Gasoline Tax: 66.02 cents/gallon (Includes all taxes)
Diesel Fuel Tax:  76.4 cents/gallon (Includes all taxes)
Cigarette Tax: 99.5 cents/pack of 20

Personal Income Taxes

Medical/Dental Deduction: None
Federal Income Tax Deduction: None
Retirement Income Taxes: Social Security and Railroad Retirement benefits are exempt. All other retirement income is taxed at the flat 3.23% Indiana income tax rate.
Retired Military Pay: Military retirees age 60 and older are entitled to deduct up to $6,250 of benefits plus 50% over that amount. This increases to 75% in 2021 income tax on military retirement pay is being phased out in Indiana. There will be no tax on military retirement benefits beginning in 2022.

Property Taxes

Property taxes in Indiana are administered at the local level with oversight by the Indiana Department of Local Government Finance. The average effective rate is 0.86%, which amounts to $1,164 on a median value home.
Indiana offers a homestead credit and two property tax breaks to residents who are age 65 or older.
Over 65 or Surviving Spouse Deduction lowers your home’s assessed value to $12,480 or half the assessed value, whichever is less. The property must be valued at a maximum of $182,430 and combined adjusted gross income $25,000 or less. This deduction is also available to surviving spouses who are at least 60 years of age and who do not remarry if the spouse was at least 65 years of age when they died.
Indiana’s Over 65 Circuit Breaker Credit limits property tax bills from being raised more than 2% annually. The taxpayer must qualify for the homestead standard deduction on the property both the current and prior year. Adjusted gross income limits are $30,000 or less if single combined AGI of no more than $40,000. The property value must be $160,000 or less on the homestead portion.
Homeowners are eligible for a homestead deduction of $45,000 or 60% of the assessed value of the homestead, whichever is less. A supplemental 35% deduction is available for homesteads with an assessed value under $600,000, or 25% for a homestead assessed at more than $600,000.
See Indiana’s tax deductions page for more information.

Inheritance and Estate Taxes

Indiana currently has no estate or inheritance tax.
For further information, visit the Indiana Department of Revenue site.


IOWA

Sales Taxes

State Sales Tax: 6% (food and prescription drugs exempt). Local sales taxes can add up to another 2%.
Gasoline Tax:: 48.9 cents/gallon (Includes all taxes)
Diesel Fuel Tax: 56.90 cents/gallon (Includes all taxes)
Cigarette Tax: $1.36/pack of 20

Personal Income Taxes

Medical/Dental Deduction: Federal amount. Subtract the federal deduction for health insurance premiums if you used it.
Federal Income Tax Deduction: Full
Retirement Income Taxes: Social Security, military pensions and Railroad Retirement benefits are fully exempt.
Taxpayers who are at least 55 years old can exclude up to $6,000 ($12,000 for joint filers) of federally taxed distributions from a pension, annuity, IRA or other retirement plans.
Retired Military Pay: Up to $12,000 can be excluded for joint filers and up to $6,000 for all other filing statuses for those 55 and older, disabled or surviving spouse of qualifying person.

Property Taxes

Iowa’s effective property tax rate is 1.56%, or $2,219 on the $142,300 median home value. Iowa property taxes vary by county. There are more than 2,000 taxing authorities in the state, and multiple authorities tax most property.
Iowa offers several property tax relief programs, some specifically for seniors and retired military members. The Rent Reimbursement and Property Tax Credit is available for citizens who are 65 and older or at least 18 years old with a disability. Income must be under $23,810. Approved applicants who own a home or mobile home get a credit on their property tax bill. Renters receive a rebate check.
See Iowa Tax Credits and Exemptions for a full list of property tax relief available from the state.

Inheritance and Estate Taxes

Iowa’s inheritance tax ranges from 0% to 15%. The tax amount depends on the relationship the heir has to the decedent and the amount of the inherited. Exceptions are surviving spouses and lineal relatives (for example, children or parents) pay no tax if the estate’s net value is less than $25,000.
Iowa imposes no estate tax.
For further information, visit the Iowa Department of Revenue or visit the state’s Contact page for phone numbers or email addresses.

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