--- title: How Is Retirement Income Taxed Per State? Part 5 description: Here is a guide on how retirement income is taxed in 10 states. image: https://www.realized1031.com/hubfs/taxes-1081805300.jpg --- [![Realized 1031 Exchange Marketplace](https://www.realized1031.com/hs-fs/hubfs/Images/Brand/Logo/Realized/Realized-Logo-Black.png?width=240&height=80&name=Realized-Logo-Black.png "Realized 1031 Logo") ](https://www.realized1031.com/) - [Wealth Management Gap](https://www.realized1031.com/the-wealth-management-gap) - [Our Process](https://www.realized1031.com/how-realized-works) - [Financial Advisors](https://www.realized1031.com/advisor) - [Resources](https://www.realized1031.com/resources) - [The Company](https://www.realized1031.com/about-us) - [Articles](https://www.realized1031.com/blog) [Register](https://www.realized1031.com/marketplace) [Log In](https://www.realized1031.com/login) - Better Business Bureau Rating: **A+** - [FINRA BrokerCheck](https://brokercheck.finra.org/firm/summary/22333) - [Call](tel:1-877-797-1031) **(877) 797-1031** # How Is Retirement Income Taxed Per State? Part 5 Posted Jul 25, 2022 ![taxes-1081805300](https://www.realized1031.com/hs-fs/hubfs/taxes-1081805300.jpg?width=750&height=392&name=taxes-1081805300.jpg) When you're planning your future, you should have a clear understanding of what your taxes will be. Keep in mind that some states will tax [401(k)](https://www.realized1031.com/glossary/401k) and [IRA](https://www.realized1031.com/glossary/traditional-ira) account income without taxing Social Security benefits. How will income be taxed across states? Here is a guide on how retirement income is taxed in 10 states.  ### South Dakota South Dakota doesn't require citizens to pay income taxes, which means that retirement income and Social Security benefits aren't taxed. Property taxes are relatively high with very limited tax breaks. As for sales taxes, the rates in South Dakota are below the national average.  ### Tennessee   Tennessee doesn't collect income taxes and has very low property taxes. Senior citizens may also qualify for relief on some property taxes. The sales tax in Tennessee is among the highest in the U.S. at a rate of 9.547%.  ### Texas Texas is another state that doesn't task residents with paying income taxes. However, the average property tax rate is $1,692 for every $100,000 of assessed value on your home. A few tax breaks are available to senior citizens via property tax deferrals, a valuation freeze program, and a homestead exemption.  ### Utah Utah has a flat income tax rate of 4.85% for all income. This tax rate applies to Social Security benefits as well as most retirement income. A small tax credit is available for retirement income that can effectively offset the Social Security taxes. Keep in mind, however, that the tax credit isn't available to everyone.  ### Vermont   Vermont has a tax rate of 3.35% on taxable income of up to $40,350 for individual filers and $67,450 for joint filers. Any income above $204,000 for individual filers and $248,350 for joint filers is taxed at a rate of 8.75%. Retirees are also required to pay high property taxes as well as an estate tax. Most Social Security benefits will be taxed as well.  ### Virginia  Virginia has an income tax rate of 2% for all taxable income below $3,000 and 5.75% for taxable income above $17,000. Retirees also gain access to some tax breaks that make for a friendly tax environment. For instance, Social Security benefits aren't taxed. Any resident 65 or older is able to deduct as much as $12,000 of income.  ### Washington   Washington doesn't have income taxes but does require citizens to pay a sales tax rate of 9.29%. Since Washington doesn't tax income, your Social Security benefits, pensions, and retirement income won't be taxed. Property taxes are somewhat reasonable and are close to the national average.  ### Washington D.C.   The tax rate in Washington D.C. is 4% for as much as $10,000 in taxable income and 8.95% for any taxable income above $1 million. Keep in mind that the tax rate for income above $1 million is increasing to 10.75% in 2022. Even though Social Security income is exempt, most types of retirement income are fully taxed. However, a sizable income tax credit is available for anyone who pays property taxes.  ### West Virginia West Virginia has an income tax rate of 3% on less than $10,000 in taxable income. All income above $60,000 is taxed at a rate of 6.5%. Property taxes and sales taxes are also relatively low. However, Social Security benefits are taxed unless your income is below a certain threshold. Exemptions exist for government pensions.  ### Wisconsin   Wisconsin has a tax rate of 3.54% on less than $12,120 of taxable income for individual filers and $16,160 for joint filers. All income above $266,930 for individual filers and $355,910 for joint filers is taxed at a rate of 7.65%. The average property tax rate is $1,684 per $100,000. Even though Social Security benefits are exempt from state taxes, pension and annuity income is taxed. The same is true of most 401(k) and IRA plans.  ### Wyoming Wyoming is a tax-friendly state that doesn't collect income taxes. The average sales tax rate and property tax rate are also well below the national average. Even though property taxes are low, senior citizens may gain the ability to defer property tax payments.  As you can see, each state can have much different tax guidelines and requirements when it comes to retirement income. Whether you already know where you are going to live once you retire or are currently searching for the most tax-friendly state, knowing how your income is going to be taxed should allow you to avoid being surprised by income taxes once you reach retirement age.  Sources:  [https://www.aarp.org/money/taxes/info-2020/states-that-dont-tax-retirement-distributions.html](https://www.aarp.org/money/taxes/info-2020/states-that-dont-tax-retirement-distributions.html)  [https://smartasset.com/retirement/retirement-taxes](https://smartasset.com/retirement/retirement-taxes)  [https://www.kiplinger.com/kiplinger-tools/retirement/t055-s001-state-by-state-guide-to-taxes-on-retirees/index.php](https://www.kiplinger.com/kiplinger-tools/retirement/t055-s001-state-by-state-guide-to-taxes-on-retirees/index.php)  [https://www.aarp.org/money/taxes/info-2020/states-that-dont-tax-retirement-distributions.html](https://www.aarp.org/money/taxes/info-2020/states-that-dont-tax-retirement-distributions.html)  This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Realized does not provide tax or legal advice. 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South Dakota South Dakota doesn't require citizens to pay income taxes, which means that retirement income and Social Security benefits aren't taxed. Property taxes are relatively high with very limited tax breaks. As for sales taxes, the rates in South Dakota are below the national average. Tennessee Tennessee doesn't collect income taxes and has very low property taxes. Senior citizens may also qualify for relief on some property taxes. The sales tax in Tennessee is among the highest in the U.S. at a rate of 9.547%. Texas Texas is another state that doesn't task residents with paying income taxes. However, the average property tax rate is $1,692 for every $100,000 of assessed value on your home. A few tax breaks are available to senior citizens via property tax deferrals, a valuation freeze program, and a homestead exemption. Utah Utah has a flat income tax rate of 4.85% for all income. This tax rate applies to Social Security benefits as well as most retirement income. A small tax credit is available for retirement income that can effectively offset the Social Security taxes. Keep in mind, however, that the tax credit isn't available to everyone. Vermont Vermont has a tax rate of 3.35% on taxable income of up to $40,350 for individual filers and $67,450 for joint filers. Any income above $204,000 for individual filers and $248,350 for joint filers is taxed at a rate of 8.75%. Retirees are also required to pay high property taxes as well as an estate tax. Most Social Security benefits will be taxed as well. Virginia Virginia has an income tax rate of 2% for all taxable income below $3,000 and 5.75% for taxable income above $17,000. Retirees also gain access to some tax breaks that make for a friendly tax environment. For instance, Social Security benefits aren't taxed. Any resident 65 or older is able to deduct as much as $12,000 of income. Washington Washington doesn't have income taxes but does require citizens to pay a sales tax rate of 9.29%. Since Washington doesn't tax income, your Social Security benefits, pensions, and retirement income won't be taxed. Property taxes are somewhat reasonable and are close to the national average. Washington D.C. The tax rate in Washington D.C. is 4% for as much as $10,000 in taxable income and 8.95% for any taxable income above $1 million. Keep in mind that the tax rate for income above $1 million is increasing to 10.75% in 2022. Even though Social Security income is exempt, most types of retirement income are fully taxed. However, a sizable income tax credit is available for anyone who pays property taxes. West Virginia West Virginia has an income tax rate of 3% on less than $10,000 in taxable income. All income above $60,000 is taxed at a rate of 6.5%. Property taxes and sales taxes are also relatively low. However, Social Security benefits are taxed unless your income is below a certain threshold. Exemptions exist for government pensions. Wisconsin Wisconsin has a tax rate of 3.54% on less than $12,120 of taxable income for individual filers and $16,160 for joint filers. All income above $266,930 for individual filers and $355,910 for joint filers is taxed at a rate of 7.65%. The average property tax rate is $1,684 per $100,000. Even though Social Security benefits are exempt from state taxes, pension and annuity income is taxed. The same is true of most 401(k) and IRA plans. Wyoming Wyoming is a tax-friendly state that doesn't collect income taxes. The average sales tax rate and property tax rate are also well below the national average. Even though property taxes are low, senior citizens may gain the ability to defer property tax payments. As you can see, each state can have much different tax guidelines and requirements when it comes to retirement income. Whether you already know where you are going to live once you retire or are currently searching for the most tax-friendly state, knowing how your income is going to be taxed should allow you to avoid being surprised by income taxes once you reach retirement age. Sources: https://www.aarp.org/money/taxes/info-2020/states-that-dont-tax-retirement-distributions.html https://smartasset.com/retirement/retirement-taxes https://www.kiplinger.com/kiplinger-tools/retirement/t055-s001-state-by-state-guide-to-taxes-on-retirees/index.php https://www.aarp.org/money/taxes/info-2020/states-that-dont-tax-retirement-distributions.html This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Realized does not provide tax or legal advice. This material is not a substitute for seeking the advice of a qualified professional for your individual situation.", "articleSection" : [ "Retirement Income" ], "author" : { "@type" : "Person", "email" : "marketing@realized1031.com", "image" : "", "name" : "The Realized Team", "url" : "https://www.realized1031.com/blog/author/the-realized-team" }, "dateModified" : "2022-07-26T00:00:00+0000", "datePublished" : "2022-07-26T00:00:00+0000", "description" : "Here is a guide on how retirement income is taxed in 10 states. ", "headline" : "How Is Retirement Income Taxed Per State? Part 5", "image" : { "@type" : "ImageObject", "height" : 392, "url" : "https://733513.fs1.hubspotusercontent-na1.net/hubfs/733513/taxes-1081805300.jpg", "width" : 750 }, "mainEntityOfPage" : "https://www.realized1031.com/blog/how-is-retirement-income-taxed-per-state-part-5", "name" : "How Is Retirement Income Taxed Per State? Part 5", "publisher" : { "@type" : "Organization", "address" : { "@type" : "PostalAddress", "addressCountry" : "USA", "addressLocality" : "Austin", "addressRegion" : "TX", "postalCode" : "78701", "streetAddress" : "500 W 13th Street " }, "logo" : { "@type" : "ImageObject", "height" : 60, "url" : "http://www.realized1031.com/hubfs/Images/Brand/Logo/Realized/Realized-Logo-Black-No-Margin-296x60-AMP.png", "width" : 296 }, "name" : "Realized" }, "thumbnailUrl" : "https://733513.fs1.hubspotusercontent-na1.net/hubfs/733513/taxes-1081805300.jpg" } ```