Some retirees want to be closer to family, while others are just looking for warmer weather and more sunshine. But whatever reason you may have for moving from one state to another, make sure you check out the tax situation in any potential new location before packing your bags.

Among other things, we may receive free products, services, and/or monetary compensation in exchange for featured placement of sponsored products or services. We strive to write accurate and genuine reviews and articles, and all views and opinions expressed are solely those of the authors.

States With No Income Tax

Thirty-two states levy graduated income tax rates similar to federal tax brackets, although brackets differ widely by state. No state has a single-rate tax structure in which one rate applies to all taxable income. In the following tables we have compiled the most up-to-date data available on state individual income tax rates, brackets, standard deductions, and personal exemptions for state income tax rates both single and joint filers. After the tables, we document notable individual income tax changes implemented in 2022. The table below illustrates the differences among states with no income tax. When it comes to your federal income taxes, you pay the same rate no matter where you live, but each state – and sometimes locality – can set its own tax rules that apply to its residents.

Along with having the highest long-term capital gains tax at 33%, California also has the biggest income tax percentage with a whopping 13.3%. The good news is it only applies to those earning over a million dollars.

State and Local Taxes

Any such amount of Connecticut taxable income to which, as provided in the preceding sentence, the 3 percent tax rate does not apply shall be an amount to which the 5 percent tax rate shall apply. Of those states taxing wages, nine have single-rate tax structures, with one rate applying to all taxable income. Legislators passed the income tax plan after Gov. Mike Parson called a special session to address the tax rate and agricultural tax credits in the face of a $4.9 billion budget surplus for 2023.

Your location will determine whether you owe local and / or state taxes. Illinois, Mississippi, and Pennsylvania don’t tax distributions from 401 plans, individual retirement accounts , and pensions. The remaining nine states that don’t levy a state tax at all are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. Alabama and Hawaii also don’t tax pensions but they do tax distributions from 401 plans and IRAs. Lawmakers from both parties expressed concerns about a federal rule that prohibits states from using American Rescue Plan funds to offset tax cuts. A capital gains tax is a levy on the profit that an investor makes from the sale of an investment such as stock shares. But at the high and low ends, there are large differences in state tax burdens that could have a real impact on your ability to make ends meet in the short run and to save for the long run.

Personal tools

Caps the mortgage interest deduction to the first $750,000 in principal value. Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns.

Alaska also levies the second-highest beer tax of any state in the union at $1.07 per gallon, bested only by Tennessee. The third column shows the state’s affordability ranking, which combines both the cost of housing and cost of living, and the last column includes the state’s rank on the U.S. Instead, GOP leaders have said they’d prefer to tackle teacher raises in next year’s regular session that begins in January. They said such action should come after the House and Senate education committees file their adequacy report, a review of the state’s education funding needs that occurs every two years. Arkansas joined a federal lawsuit challenging that rule, and a judge permanently blocked the rule’s enforcement. Lea has worked with hundreds of federal individual and expat tax clients. Estate tax laws across the nation have changed immensely in recent years and will probably continue to be so moving forward.

rates for states with flat income tax systems

An independent analysis of the plan finds that it will create the largest savings for the state’s wealthiest, while those on fixed incomes will see few benefits from the plan. Learn about the tax-to-GDP ratio, a ratio of a nation’s tax revenue relative to its gross domestic product. Constitution, the federal government was granted the authority to impose taxes on its citizens.