Tax Guide Comparison
Retiree Tax Guide to
Arizona
October 2010
The Grand Canyon State is a major retirement destination with plenty of sunshine and a low personal income-tax rate that tops out at 4.54%. Social Security benefits are exempt. So is up to $2,500 of military, civil-service and Arizona state and local pensions. Although its statewide sales tax averages about 7%, when combined with local rates it can reach nearly 11%. Food and prescription drugs are exempt. Local real estate taxes vary greatly from one location to another. There is no inheritance tax, gift tax or estate tax.
STATE SALES TAX
Arizona's state sales-tax recently rose from 5.6% to 6.6%, effective June 1, 2010. The temporary increase will last three years. Currently, all 15 counties levy a tax. County rates range from 0.5% to 1.125%. The state rate on transient lodging (hotel/motel) is 5.5%. The state of Arizona does not levy a state tax on food for home consumption or on drugs prescribed by a licensed physician or dentist. However, some cities in Arizona do levy a tax on food for home consumption. City rates range from 1% to 4.25%.
INCOME-TAX RANGE
2.59% – 4.54%.
EXEMPTIONS FOR RETIREMENT INCOME
Social Security and Railroad Retirement benefits are exempt. Up to $2,500 total of military, civil-service, and Arizona state- and local-government pensions are also exempt. Out-of-state government pensions are fully taxed.
PROPERTY TAXES
There is no state property tax. Tax jurisdictions set tax rates, which may vary considerably from one area to another. Property tax is administered by county assessors. Single homeowners 65 and older who earn less than $3,750 and married couples who earn less than $5,500 are eligible for a tax credit of up to $502. People who are at least 65 years old, have resided in their primary residence for at least two years and have total income not more than four times the Social Security supplemental security income (SSI) benefit rate may apply to the assessor by September 1 to have the valuation of their primary residence and up to 10 acres of adjoining undeveloped land frozen at the full cash value when the application is filed.
Arizona also taxes personal property, which is defined as all types of property except real estate. Taxable personal property includes property used for commercial, industrial and agricultural purposes. Personal property is considered to be movable and not permanently attached to real estate.
In lieu of a personal property tax on automobiles, the state imposes an annual motor-vehicle license tax. There is a $4 title fee, an $8 registration fee, plus an air-quality research fee of $1.50 and a vehicle license tax (VLT) assessed in place of a personal property tax charged by other states. There may also be a weight fee and a commercial registration fee, if the vehicle is registered as commercial. The VLT is based on an assessed value of 60% of the manufacturer's base retail price, reduced by 16.25% for each year since the vehicle was first registered in Arizona (15% before 8/1/98). Then, as of the Dec. 1, 2000, reduction, the rate is calculated as $2.80 (new vehicles)/$2.89 (used vehicles) for each $100 of the assessed value. For example, for a new vehicle that costs $25,000, the first-year assessed value would be $15,000 and the VLT would be $420. The second year, the assessed value would be $12,562.50 and the VLT would be $363.06. For a mobile home, the title fee is $7 per section or unit.
INHERITANCE AND ESTATE TAXES
There is no inheritance or gift tax, and there's no longer an estate tax.
Retiree Tax Guide to
Nevada
October 2010
The Silver State offers retirees a jackpot of tax savings as there is no state income tax. But its state sales tax is 6.85%, and counties may add up to an additional 0.825%. Food and prescription drugs are exempt. And almost every jurisdiction in Nevada gets a bite at the property-tax apple. All property, including real estate and personal property, is subject to tax by the state, counties, cities, towns and school districts. The assessed value for tax purposes is based on 35% of the fair market value of the property and is revalued every five years. There is no inheritance tax and the estate tax is limited to federal estate-tax collections.
STATE SALES TAX
6.85% until 2011 (food and prescription drugs exempt). Counties may tack on up to 0.875% additional.
INCOME-TAX RANGE
No state income tax
PROPERTY TAXES
All property in the state is subject to tax by the state, counties, cities, towns and school districts. Property taxes are applied to property of every kind and nature, including real and personal property. The assessed valuation for tax purposes is based on 35% of the fair market value of the property and is revalued every year. Homeowners 62 and older who earn $28,677 or less are eligible for a rebate of up to $500 or up to 90% of taxes paid. The program is also available to older taxpayers who, through rent payments, pay a disproportionate amount of their income on property taxes.
INHERITANCE AND ESTATE TAXES
There is no inheritance tax, and there's a limited estate tax related to federal estate-tax collection
Retiree Tax Guide to
California
October 2010
The Golden State is a retiree's tax nightmare. Although Social Security benefits are exempt, all other forms of retirement income are fully taxed. With a top rate of 10.55% (on taxable income of more than $1 million), California residents pay some of the highest income taxes in the U.S. Plus, for 2010 the state has enacted a 0.25-percentage-point increase in each of the state's income-tax brackets. The statewide sales tax is 8.25%. Local taxes can push the top rate to 10.50%. Food and prescription drugs are exempt. Real estate is assessed at 100% of cash value, and real estate taxes are capped at 1% of value. There is no inheritance tax. However, there is a limited California estate tax related to federal estate-tax collection.
STATE SALES TAX
California's statewide sales tax is 8.25% (food and prescription drugs exempt). Tax varies according to locality. It can be as high as 10.50%.
INCOME-TAX RANGE
1.25% – 10.55%. For 2010, the state has enacted a 0.25-percentage-point increase in each of the state's income-tax brackets. A tax credit for dependents was reduced from $309 to $98.
EXEMPTIONS FOR RETIREMENT INCOME
Social 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.
PROPERTY TAXES
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. Under the homestead program, the first $7,000 of the full value of a homeowner's dwelling is exempt. The Franchise Tax Board's Homeowner Assistance program, which provided property-tax relief to persons who were blind, disabled, or at least 62 years old and met certain minimum annual income thresholds, has been halted. The state budgets approved for the 2008/2009 and 2009/2010 fiscal years deleted funding for the Homeowner and Renter Assistance Program, which once provided cash reimbursement of a portion of the property taxes that residents paid on their home.
The State Controller's Property Tax Postponement Program allowed people who were blind, disabled, or at least 62 years old and met certain minimum annual income thresholds to postpone their property taxes. However, effective February 20, 2009, the state budget eliminated the Property Tax Postponement Program.
INHERITANCE AND ESTATE TAXES
There is no inheritance tax. However, there is a limited California estate tax related to federal estate-tax collection.
Retiree Tax Guide to
Florida
October 2010
The Sunshine State is very popular with retirees, not just because of its year-round sunshine but because of the lack of a state income tax. And it got rid of its pesky intangible tax on certain types of investment income in 2007. Still, sales taxes that run as high as 7.5% in some Florida cities will nip you on virtually every dollar you spend, except on food and prescription and nonprescription drugs. Real estate is taxed at 100% of assessed value. Permanent residents are entitled to a homestead exemption of up to $50,000, regardless of age. There is no inheritance tax and a limited estate tax.
STATE SALES TAX
6% (food and prescription and non-prescription drugs exempt). There are additional county sales taxes that could make the combined rate as high as 7.5%.
INCOME-TAX RANGE
No state income tax
EXEMPTIONS FOR RETIREMENT INCOME
Retirement income is not taxed. Starting in 2007, individuals, married couples, personal representatives of estates and businesses are no longer required to file an annual intangible personal property-tax return reporting their stocks, bonds, mutual funds, money market funds, shares of business trusts and unsecured notes.
PROPERTY TAXES
All property is taxable at 100% of its just valuation. Every person who owns and resides on real property in Florida on January 1 and makes the property their permanent residence is eligible to receive a homestead exemption up to $50,000. The first $25,000 applies to all property taxes, including school district taxes. The additional exemption, up to $25,000, applies to the assessed value between $50,000 and $75,000, and only to non-school taxes. If one spouse holds the title, the other spouse may file for the exemption with the consent of the titleholder.
The homestead exemption for all residents applies to all property taxes, not just city and county taxes. Annual increases in the assessment of homestead property are limited to 3% of the prior year's assessed value, or if lower, the percentage change in the consumer price index for the prior year, as long as there was no change in ownership.
INHERITANCE AND ESTATE TAXES
There is no inheritance tax and only a limited estate tax.
Retiree Tax Guide to
Hawaii
October 2010
The Aloha State is known for its high cost of living, but it can be a tax paradise for retirees. It exempts Social Security benefits as well as military, federal, state and local pensions, and some private pensions from state income taxes. All out-of-state government pensions are exempt, too. But if you have other sources of income, watch out. Along with Oregon, Hawaii shares the distinction of having the highest top income-tax rate in the U.S. of 11%. It imposes a 4% sales tax with an exemption for prescription drugs. Real estate is assessed at 100% of fair market value. Homestead exemptions are available to residents 55 and older. There is no inheritance tax, and the estate tax is limited to amounts collected by the federal estate tax.
STATE SALES TAX
4% (prescription drugs exempt). Oahu has a county surcharge tax of 0.5% to pay for a mass transit system.
INCOME-TAX RANGE
1.4% – 11.0%.
EXEMPTIONS FOR RETIREMENT INCOME
Social Security and military, federal, state/local and some private pensions are exempt. All out-of-state government pensions are exempt.
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: 55 to 59 years, 1.5 times the exemption amount; 60 to 64 years, 2.0 times; 65 to 69, 2.5 times; and 70 and older, 3.0 times. Homeowners 55 and older are exempt from property taxes on $60,000 to $120,000 (amount depends on owner's age) of the assessed value of their residence, regardless of income. They must pay at least $100 in taxes, however. Homeowners 55 and older who earn less than $20,000 are also eligible for a tax credit of up to $500.
INHERITANCE AND ESTATE TAXES
There is no inheritance tax and only a limited estate tax related to federal estate-tax collection
