SS Benefits Are Tax Free in These States

Social Security Benefits Are Tax Free in These States

When you’re trying to decide where to live when you retire, there are a lot of factors to consider. Do you like the weather? Are there community activities? And, of course, what is the tax situation in the state you want to live in?

Many people about to retire can be unpleasantly surprised to find that Social Security benefits are taxable. In fact, the government could even tax up to 85% of your benefits! Luckily, not every state taxes Social Security income. That is why we have created this comprehensive list of states that do not tax Social Security benefits. It is important to note that even though some of these states on this list may not tax Social Security, they can affect retiree income in other ways.

States That Do Not Tax Social Security Benefits

It is important to note that these rates are subject to change. Legislation can update and tax rates can vary. All of the data reviewed for tax rates was from the Tax Foundation. Information in regards to property taxes were calculated using the SmartAsset calculator by state. Below is some more tax information about states that do not tax Social Security benefits:

Alabama:

  • Overview of Sales Tax: There is a 4% state tax. Depending on the area, the local rate can be 7.5% more than that. On average, the combined rate is 9.22%. Alabama is a part of the minority of states that do not exempt food from sales tax.
  • Property Taxes for Homeowners: The average annual  property tax rate is roughly $310 per $100,000 of the appraised value of the home.

Alaska:

  • Overview of Sales Tax: Alaska has no state sales tax! However, depending on the area, there could be a local sales tax as high as 7.5%. Luckily, the state average is around 1.76%.
  • Property Taxes for Homeowners: The average annual  property tax rate is $1,320 per $100,000 of appraised home value.

Arizona:

  • Overview of Sales Tax: There is a 5.6% state tax.  Depending on the area, the local rate can be 5.6% more than that. On average, the combined rate is 8.4%. A lot of local areas in Arizona also place a tax on food for home consumption.
  • Property Taxes for Homeowners: The average annual property tax in Arizona is $610 per $100,000 of appraised home value.

Arkansas:

  • Overview of Sales Tax: There is a 6.5% state tax.  Depending on the area, the local rate can be 5.125% more than that. On average, the combined rate is 9.47%. The state also has a tax on food at 0.125% (in addition to other local sales taxes)
  • Property Taxes for Homeowners: The average annual property tax in Arkansas is $640 per $100,000 of appraised home value.

California:

  • Overview of Sales Tax: There is a 7.25% state tax.  Depending on the area, the local rate can be 2.5% more than that. On average, the combined rate is 8.66%
  • Property Taxes for Homeowners: The average annual property tax in California is $720 per $100,000 of appraised home value.

Delaware:

  • Overview of Sales Tax: Delaware has no types of sales tax from a state level to a local level.
  • Property Taxes for Homeowners: The average annual property tax in Delaware is $740 per $100,000 of appraised home value.

District of Columbia:

  • Overview of Sales Tax: There is a 6% tax rate.
  • Property Taxes for Homeowners: The average annual property tax in the District of Columbia is $550 per $100,000 of appraised home value.

Florida:

  • Overview of Sales Tax: There is a 6% state tax.  Depending on the area, the local rate can be 2.5% more than that. On average, the combined rate is 7.05%
  • Property Taxes for Homeowners: The average annual property tax in Florida is $850 per $100,000 of appraised home value.

Georgia:

  • Overview of Sales Tax: There is a 4% state tax.  Depending on the area, the local rate can be 5% more than that. On average, the combined rate is 7.31%. Even though there is not a state grocery food tax, local areas have the option to impose one.
  • Property Taxes for Homeowners: The average annual property tax in Georgia is $1,070 per $100,000 of appraised home value.

Hawaii:

  • Overview of Sales Tax: There is a 4% state tax. Hawaii also has taxes on a variety of services and goods (which include groceries). Some areas of Hawaii charge taxes for mass transit systems. All of these aspects average to a rate of 4.44%.
  • Property Taxes for Homeowners: The average annual property tax in Hawaii is $290 per $100,000 of appraised home value.

Idaho:

  • Overview of Sales Tax: There is a 6% state tax.  Depending on the area, the local rate can be 3% more than that. On average, the combined rate is 6.03%. The state has a tax on food. However, Idaho tries to counteract the tax with tax credits. Seniors could get $120!
  • Property Taxes for Homeowners: The average annual property tax in Idaho is $920 per $100,000 of appraised home value.

Illinois:

  • Overview of Sales Tax: There is a 6.25% state tax.  Depending on the area, the local rate can be 10% more than that. On average, the combined rate is 9.08%. State taxes for food, prescription drugs, and non-prescription drugs are at a rate of 1%.
  • Property Taxes for Homeowners: The average annual property tax in Illinois $2,870 per $100,000 of appraised home value.

Indiana:

  • Overview of Sales Tax: There is a 7% state tax.  Even though there is no state tax on food or groceries, areas can decide if they want to add 1% or 2% sales tax on beverages and food.
  • Property Taxes for Homeowners: The average annual property tax in Indiana is $950 per $100,000 of appraised home value.

Iowa:

  • Overview of Sales Tax: There is a 6% state tax.  Depending on the area, the local rate can be 1% more than that. On average, the combined rate is 6.94%.
  • Property Taxes for Homeowners: The average annual property tax in Iowa is $1,690 per $100,000 of appraised home value.

Kentucky:

  • Overview of Sales Tax: There is a 6% state tax.
  • Property Taxes for Homeowners: The average annual property tax in Kentucky is $870 per $100,000 of appraised home value.

Louisiana:

  • Overview of Sales Tax: There is a 4.45% state tax.  Depending on the area, the local rate can be 7% more than that. On average, the combined rate is 9.52%. Areas also have the option to add tax on groceries and prescription drugs even though they are exempt from state sales tax.
  • Property Taxes for Homeowners: The average annual property tax in Louisiana is $520 per $100,000 of appraised home value.

Maine:

  • Overview of Sales Tax: There is a 5.5% state tax.  You will typically see taxes on food unless they are considered “food staples.” Sales of prepared foods are taxed at a rate of 8%.
  • Property Taxes for Homeowners: The average annual property tax in Maine is $1,270 per $100,000 of appraised home value.

Maryland:

  • Overview of Sales Tax: There is a 6% state tax.
  • Property Taxes for Homeowners: The average annual property tax in Maryland is $1,250 per $100,000 of appraised home value.

Massachusetts:

  • Overview of Sales Tax: There is a 6.25% state tax. However, a majority of apparel including clothing and footwear are exempt if they cost less than $175 per item.
  • Property Taxes for Homeowners: The average annual property tax in Massachusetts is $1,710 per $100,000 of appraised home value.

Michigan:

  • Overview of Sales Tax: There is a 6% state tax.
  • Property Taxes for Homeowners: The average annual property tax in Michigan is $1,370 per $100,000 of appraised home value.

Mississippi:

  • Overview of Sales Tax: There is a 7% state tax. Depending on the area, the local rate can be 1% more than that. On average, the combined rate is 7.07%.
  • Property Taxes for Homeowners: The average annual property tax in Mississippi is $760 per $100,000 of appraised home value.

Nevada:

  • Overview of Sales Tax: There is a 6.85% state tax.  Depending on the area, the local rate can be 1.65% more than that. On average, the combined rate is 8.32%.
  • Property Taxes for Homeowners: The average annual property tax in Nevada is $650 per $100,000 of appraised home value.

New Hampshire:

  • Overview of Sales Tax: New Hampshire has no sales tax.
  • Property Taxes for Homeowners: The average annual property tax in New Hampshire is $2,230 per $100,000 of appraised home value.

New Jersey:

  • Overview of Sales Tax: There is a 6.625% state tax.  Depending on the area, it may be different.
  • Property Taxes for Homeowners: The average annual property tax in New Jersey is $2,390 per $100,000 of appraised home value.

New York:

  • Overview of Sales Tax: There is a 4% state tax.  Depending on the area, the local rate can be 4.875% more than that. On average, the combined rate is 8.52%.
  • Property Taxes for Homeowners: The average annual property tax in New York is $2,370 per $100,000 of appraised home value.

North Carolina:

  • Overview of Sales Tax: There is a 4.75% state tax.  Depending on the area, the local rate can be 2.75% more than that. On average, the combined rate is 6.97%.
  • Property Taxes for Homeowners: The average annual property tax in North Carolina is $730 per $100,000 of appraised home value.

Ohio:

  • Overview of Sales Tax: There is a 5.75% state tax.  Depending on the area, the local rate can be 2.25% more than that. On average, the combined rate is 7.17%.
  • Property Taxes for Homeowners: The average annual property tax in Ohio is $1,450 per $100,000 of appraised home value.

Oklahoma:

  • Overview of Sales Tax: There is a 4.5% state tax.  Depending on the area, the local rate can be 7% more than that. On average, the combined rate is 8.94%.
  • Property Taxes for Homeowners: The average annual property tax in Ohio is $540 per $100,000 of appraised home value.

Oregon:

  • Overview of Sales Tax: Oregon does not have any sales tax.
  • Property Taxes for Homeowners: The average annual property tax in Oregon is $1,160 per $100,000 of appraised home value.

Pennsylvania:

  • Overview of Sales Tax: There is a 6% state tax.   However, apparel, heating fuels, textbooks, food, and drugs both non-prescribed and prescribed are exempt from this rate. Depending on the area, the local rate can be 2% more than that. On average, the combined rate is 6.34%.
  • Property Taxes for Homeowners: The average annual property tax in Pennsylvania is $1,690 per $100,000 of appraised home value.

South Carolina:

  • Overview of Sales Tax: There is a 6% state tax.  Depending on the area, the local rate can be 3% more than that. On average, the combined rate is 7.46%.
  • Property Taxes for Homeowners: The average annual property tax in South Carolina is $650 per $100,000 of appraised home value.

South Dakota:

  • Overview of Sales Tax: There is a 4.5% state tax.  Depending on the area, the local rate can be 4.5% more than that. On average, the combined rate is 6.4%.
  • Property Taxes for Homeowners: The average annual property tax in South Dakota is $1,330 per $100,000 of appraised home value.

Tennessee:

  • Overview of Sales Tax: There is a 7% state tax.  Depending on the area, the local rate can be 2.75% more than that. On average, the combined rate is 9.53%.
  • Property Taxes for Homeowners: The average annual property tax in Tennessee is $720 per $100,000 of appraised home value.

Texas:

  • Overview of Sales Tax: There is a 6.25% state tax.  Depending on the area, the local rate can be 2% more than that. On average, the combined rate is 8.19%.
  • Property Taxes for Homeowners: The average annual property tax in Texas is $1,820 per $100,000 of appraised home value.

Virginia:

  • Overview of Sales Tax: There is a 5.30% state tax.  Depending on the area, the local rate can be 1.7% more than that. On average, the combined rate is 5.65%.
  • Property Taxes for Homeowners: The average annual property tax in Virginia is $1,080 per $100,000 of appraised home value.

Washington:

  • Overview of Sales Tax: There is a 6.50% state tax.  Depending on the area, the local rate can be 4% more than that. On average, the combined rate is 9.21%.
  • Property Taxes for Homeowners: The average annual property tax in Washington is $930 per $100,000 of appraised home value.

Wisconsin:

  • Overview of Sales Tax: There is a 5% state tax.  Depending on the area, the local rate can be 1.75% more than that. On average, the combined rate is 5.46%.
  • Property Taxes for Homeowners: The average annual property tax in Wisconsin is $1,910 per $100,000 of appraised home value.

Wyoming:

  • Overview of Sales Tax: There is a 4% state tax.  Depending on the area, the local rate can be 2% more than that. On average, the combined rate is 5.34%.
  • Property Taxes for Homeowners: The average annual property tax in Wyoming is $610 per $100,000 of appraised home value.