State Taxes: A National Overview

MAY 2000 - When we
reported on taxes in other states, we’ve generally looked at whether
they taxed our public pensions. But what about the added cost of buying
merchandise and goods – in other words, sales taxes – which also
impacts on a retiree’s standard of living.

It’s interesting to note that Massachusetts, with a 5% sales tax, is among the majority of
states that levy at that rate or more. In fact, 28 other states, plus
the District of Columbia, charge 5% or more.

Our
neighbor, Rhode Island, and Mississippi have the dubious honor of
imposing the highest rate, 7%. Another neighbor, New Hampshire, and
four other states can boast that they charge nothing.

As
for income taxes, unfortunately there has been no change since we
reported on this issue one year ago. There remain 13 other states that
do not tax Mass pensions.

Of
that number, nine, including again New Hampshire, have no personal
income tax at all. Unfortunately, what that also means is 36 states do
tax our public pensions, at least to some degree.

“New
Hampshire appears really attractive to retirees with no income or sales
taxes, but members living there have complained to us about extremely
high property taxes - higher than their old Mass real estate taxes,”
comments Legislative Chairman Bill Hill. “So clearly one has to examine
the total package before deciding to make a move elsewhere.”

As
for the other 36 states that tax Mass. pensions, there is a wide range
of tax breaks given to retirees. For example, while Colorado offers a
$20,000 exemption for all residents 55 or over, a retiree, 62 or over,
living in Georgia, receives a $13,000 retirement income exclusion.

So
while a state does not simply exempt Mass. pensions from its income
tax, it could offer other tax exemptions and credits that may amount to
a total exclusion. One should, therefore, check with a particular state
to see exactly what tax breaks are given to retirees. You may also take
it a step further to find out if there are any county or municipal
sales/income taxes.

“We’re
not encouraging our members to leave the Commonwealth,” jokes Hill.
“But then again, we understand that health and other factors may prompt
such a move, and hopefully information, such as this, proves helpful in
making the right decision.”

Also,
readers may recall that almost a year ago we reported on efforts by our
members in North Carolina to obtain relief under that state’s income
tax law. According to Association member Charlie Peckham, who has been
spearheading the campaign down there, they’ve been working closely with
members of the New York Retired Public Employees Association, who live
in that state, to obtain commitments during this campaign session for
the next (2001) session of the North Carolina Legislature.

“We applaud the efforts by Charlie and others in North Carolina,” says Hill. “And wish them the best of luck in 2001.”

Kentucky 6%
Louisiana 4%
Maine 5.5%
Maryland 5%
Mass. 5%
Michigan 6%
Minnesota 6.5%
Mississippi 7%
Missouri 4.225%
Montana 0%
Nebraska 5%
Nevada 2%
New Hampshire 0%
New Jersey 6%
New Mexico 5%
New York 4%
North Carolina 4%

North Dakota 5%
Ohio 5%
Oklahoma 4.5%
Oregon 0%
Pennsylvania 6%
Rhode Island 7%
South Carolina 5%
South Dakota 4%
Tennessee 6%
Texas 6.25%
Utah 4.75%
Vermont 5%
Virginia 4.5%
Washington 6.5%
West Virginia 6%
Wisconsin 5%
Wyoming 4%

 

Pennsylvania
South Dakota*
Tennessee*
Texas*
Washington*
Wyoming*

 

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