state tax on $60k income (MFJ)

perinova said:
The six states that impose an inheritance tax are:

Iowa
Kentucky
Maryland
Nebraska
New Jersey
Pennsylvania
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There are also state estate taxes in twelve states plus DC according to this article:

https://taxfoundation.org/data/all/state/state-estate-tax-inheritance-tax-2023

...

My larger point is that the estate/inheritance tax might wipe out any income tax savings. WA appears to have no income tax but has an estate tax with what looks like a $2.19M exemption and a starting rate of 10%. Die in WA with $3.19M and write the state a $100K estate tax check.

I should say I don't know the details of WA state or any of the other states listed in the article above, so I could be wrong in my specific example somehow. My point is just to consider the possibility that a state might be luring you in with a tax loss leader. :)
 
perinova said:
IL still exempts 40k/IRA distributions apparently.
I don't see any exemption in NY in my reading?
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Out-to-Lunch said:
Kiplingers (https://www.kiplinger.com/retirement/602202/taxes-in-retirement-how-all-50-states-tax-retirees) and rssa.com (https://rssa.com/state/new-york/#:~:text=Social%20Security%3A%20It%27s%20tax%2Dfree,of%20your%20Social%20Security%20benefit.) say that NY does not tax SS. I have not looked more carefully.
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perinova said:
Yes, for sure SS not taxed in NY.
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Okay, I must have misunderstood what you meant in post #23. What exemptions are we looking for?
 
Gumby said:
Here in Connecticut, it would depend on the source of that $60k. If it were all social security, you wouldn't pay any income tax. If it were military retirement pay, you wouldn't pay any income tax. If it were from pensions, you wouldn't pay any income tax. And assuming you paid more than $300 in personal property tax, if it were all withdrawals from tIRAs, you would pay no state income tax. If it were wage income (and again assuming you paid more than $300 in property tax), your CT state income tax would be $1500. That's for 2023. In 2024, it would be about $1194.

All my numbers come from actually calculating the taxes using the relevant CT Department of Revenue Services tax forms for this year, with knowledge of how the law changes things for next year.

So, I would say your source is incorrect. I don't really blame them, because Connecticut taxes are complicated, due to a variety of credits, exemptions and thresholds, but they are still wrong
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Yes, similar in Hawaii. Earned income is likely correct, but SS, pension, military and proportional 401(k) or similar qualified employer plans puts it closer to 0 but YMMV.
 
Out-to-Lunch said:
A few years ago, I undertook a similar (crude) exercise using the MMM Case Study (Cashflow) Worksheet. But I targeted two pertinent retirement scenarios. In both, there is a $60k govt. pension. In addition, one scenario (early years) had us drawing $50k from tIRA. The other scenario (later years) had us drawing $60k in SS. The following table is sorted based on the second scenario.

You see that some notoriously high-tax states are reasonable for retirees (like NY, PA, HI). I did this in 2019, so I think IL had not yet removed taxes on IRA withdrawals at that time?

50IRA+60Pension 66SS+60P
AK 0 0
FL 0 0
GA 0 0
NV 0 0
NH 0 0
SD 0 0
TN 0 0
TX 0 0
WA 0 0
WY 0 0
HI 2482 0
PA 48 48
AZ 2894 58
NY 2870 220
CA 3950 893
NJ 1039 1039
ND 1146 1126
OH 3200 1367
LA 3654 1602
ME 4901 1668
SC 5235 1735
CT 3978 1878
IN 3530 1924
OK 4488 1988
DC 5809 2030
ID 5505 2040
MS 4568 2068
WI 5223 2088
NC 4800 2182
MI 4367 2242
MD 4724 2350
MO 4600 2432
DE 5700 2449
AL 4973 2470
MA 5189 2666
KY 5319 2819
IL 5300 2822
VA 5705 2840
CO 4036 2877
AR 6379 2929
IA 7034 2958
RI 3438 3400
VT 3847 3780
NM 3900 3813
OR 8721 4221
NE 4563 4493
KS 4605 4557
UT 4314 4624
MN 5669 5600
WV 5866 5800
MT 6115 6044
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Yea, Illinois is zero in both cases. They haven't taxed 401k,IRAs, SS, or pensions since at the least the least the mid 80s.
 
perinova said:
Most of you probably already know the following information,

Social security is usually not taxable except:
CO over 20,000 MFJ if under 65yo ONLY, not taxed if >=65yo
RI over 20,000 MFJ if under 67yo ONLY, 126,250 if >=67yo
MT over 32,000 MFJ
VT over 75,000 MFJ
UT over 75,000 MFJ
NM over 100,000 MFJ
CT over 100,000 MFJ
MN over 105,380 MFJ
RI over 126,250 MFJ if over 67yo
KS over 75,000 (not sure MFJ)
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New Mexico is single or married filing separate is income above 100k and for married filing jointly its income above 150k were social security is taxable.
 
Really, it's a good idea to research state taxes in depth. For example, the NJ values quoted are not accurate as far as I can tell for seniors. And the inheritance tax does not apply to children, and so on.

Up until Jan. 1, 2018, New Jersey had both an inheritance tax and an estate tax. Following the repeal of the estate tax on that date, New Jersey only has an inheritance tax, in addition to the federal estate tax you must account for. However, if you are a family member of the deceased, you may be exempt from the inheritance tax. https://smartasset.com/financial-advisor/nj-inheritance-laws
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The devil is always in the details. YMMV.
 
target2019 said:
Really, it's a good idea to research state taxes in depth. For example, the NJ values quoted are not accurate as far as I can tell for seniors. And the inheritance tax does not apply to children, and so on.



The devil is always in the details. YMMV.
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There are lots of state tax nuances here in Paradise. You don't really find out about them until you try to file. We use a CPA and she has saved her fees over the years - just on state stuff. YMMV
 
Mass has a flat income tax of 5%, which seems a bit unfair to me for low wage earners.

We also have a 4% surtax on income over $1MM.

The worst one seems to be an estate tax on over $2MM which, is not that high a threshold for homeowners, considering that most homes now are in the $800k-$900k range. It is 7% and gradually increases to 16%, capped out at $11MM. It had been $1MM but was changed last year and there is also a $99k credit.

But it's all worth it because the weather is always nice, the people are super friendly and the traffic is easy to handle.
 
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Koolau said:
There are lots of state tax nuances here in Paradise. You don't really find out about them until you try to file. We use a CPA and she has saved her fees over the years - just on state stuff. YMMV
Click to expand...
I learned about the NJ weeds by preparing something like 125-150 individual returns (2018 through 2020) a few years back.

I'm not the CPA but I can understand that tax ticker going up and down as one enters the numbers.
 
Out-to-Lunch said:
Okay, I must have misunderstood what you meant in post #23. What exemptions are we looking for?
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In NY as follows.

"For those 59½ or older, the first $20,000 of retirement income (from a corporate pension, an IRA, a 401(k) account or another retirement plan) is tax-exempt. Married couples get a double exemption (each spouse is eligible for the $20,000 exclusion) for a total of $40,000."


https://states.aarp.org/new-york/state-taxes-guide
 
marko said:
Mass has a flat income tax of 5%, which seems a bit unfair to me for low wage earners.

We also have a 4% surtax on income over $1MM.

The worst one seems to be an estate tax on over $2MM which, is not that high a threshold for homeowners, considering that most homes now are in the $800k-$900k range. It is 7% and gradually increases to 16%, capped out at $11MM. It had been $1MM but was changed last year and there is also a $99k credit.

But it's all worth it because the weather is always nice, the people are super friendly and the traffic is easy to handle.
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We ARE talking about Massachusetts, right? :facepalm:
 
I live in PA and that number is way off. Even if it was all earned income, the tax would be $2802 for state and local.

For state and local, the sources of income is important. Our state income tax is a flat rate of 3.07%, so it would be $1842 on income of $60000. We paid around $2200 for tax year 2022, as our income was somewhat higher. However, if you are over 59.5 IRA distributions (even inherited IRA distributions), SS, and pensions are not taxed. Local tax is 1.6%, or would be $960. But that is on earned income. Many things are excluded from local income tax: pensions, SS, interest and dividends, IRA distributions, gambling winnings and about 15 other things are not taxed at a local level. We paid $27 in local income tax in for TY 2022.

I guess SmartAsset isn't so smart after all.
 
djsander said:
New Mexico is single or married filing separate is income above 100k and for married filing jointly its income above 150k were social security is taxable.
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Thanks, I corrected that!
 
EastWest Gal said:
I live in PA and that number is way off. Even if it was all earned income, the tax would be $2802 for state and local.

For state and local, the sources of income is important. Our state income tax is a flat rate of 3.07%, so it would be $1842 on income of $60000. We paid around $2200 for tax year 2022, as our income was somewhat higher. However, if you are over 59.5 IRA distributions (even inherited IRA distributions), SS, and pensions are not taxed. Local tax is 1.6%, or would be $960. But that is on earned income. Many things are excluded from local income tax: pensions, SS, interest and dividends, IRA distributions, gambling winnings and about 15 other things are not taxed at a local level. We paid $27 in local income tax in for TY 2022.

I guess SmartAsset isn't so smart after all.
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'
I think the local tax rate varies a lot from location to location in PA? (some other states too, maybe MD...), I put Philadelphia zip code, knowing it is one of the highest in the state. $1842 was the amount given by the calculator for state tax.
 
marko said:
But it's all worth it because the weather is always nice, the people are super friendly and the traffic is easy to handle.
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I'm tempted to move there. I hear parking in downtown Boston is plentiful as well.

Idaho is too cold in the winter, too hot in the summer, everyone here is an uneducated potato farmer, and there are rattlesnakes and bears and wolves running around wild.
 
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perinova said:
'
I think the local tax rate varies a lot from location to location in PA? (some other states too, maybe MD...), I put Philadelphia zip code, knowing it is one of the highest in the state. $1842 was the amount given by the calculator for state tax.
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Yes. If you scroll down on the smartasset PA-specific site you'll see all the different rates by city. Philli's local rate is higher than the state rate! Who voted for that?

https://smartasset.com/taxes/pennsylvania-tax-calculator

Maryland's local rate is ~3% on top of the state rate, and generally only varies by tenths of a percent by county. But a lot of state tax articles and calculators only look at MD's 4.75-5.75% state rate (with squat for personal deductions) and show MD as a low or moderate tax state - LOL.
 
Minnesota will take a minimum of 5.65% of your taxable income (including social security and long term capital gains.... after standard deduction. So about $2,250 of the $60 k
gross mentioned.
 
SecondCor521 said:
My larger point is that the estate/inheritance tax might wipe out any income tax savings. WA appears to have no income tax but has an estate tax with what looks like a $2.19M exemption and a starting rate of 10%. Die in WA with $3.19M and write the state a $100K estate tax check.

I should say I don't know the details of WA state or any of the other states listed in the article above, so I could be wrong in my specific example somehow. My point is just to consider the possibility that a state might be luring you in with a tax loss leader. :)
Click to expand...

And keep $3.09M. How many years of no income tax does it take to cover $100K? You have a tax. You just pay it. States aren't trying to lure people in based solely on low income tax.

PA has an inheritance tax. Doesn't apply to spouses. Our son will have to pay 4.5%. Every legislative session they introduce a bill to phase out the inheritance tax for direct descendents. It never goes anywhere. Guess what he'll do? He'll pay it. If you inherit $10M (much more than we have), would it really change your life negatively to pay $450K our of that $10M? No. Would it change your life to inherit $9.5M? Yes. I don't make decisions on where I want to live based on taxes, especially an inheritance tax. When that inheritance tax comes around, I won't be living at all.
 
perinova said:
'
I think the local tax rate varies a lot from location to location in PA? (some other states too, maybe MD...), I put Philadelphia zip code, knowing it is one of the highest in the state. $1842 was the amount given by the calculator for state tax.
Click to expand...

Philadelphia is about 3x higher than much of the state, as well as a smattering of cities. But even with Philadelphia's local tax rate of 3.83% and the state tax rate, it doesn't quite add up to what Smart Asset quoted. I live in one of the less expensive areas. Most of PA is 1-2%.
 
Philadelphia and PA do not tax SSA or pension if over the age of 59.5. If you're working there's a city wage tax in Phila.

There are R.E. taxes and sales tax, so there's that to consider.
 
EastWest Gal said:
A.... I don't make decisions on where I want to live based on taxes....
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Me neither. Over the course of my life I have lived in 14 different states (and spent at least a night in 32 more). I deliberately chose to come back to live in Connecticut simply because it's the one I liked the best. Taxes had nothing to do with it.
 
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EastWest Gal said:
And keep $3.09M. How many years of no income tax does it take to cover $100K? You have a tax. You just pay it. States aren't trying to lure people in based solely on low income tax.

PA has an inheritance tax. Doesn't apply to spouses. Our son will have to pay 4.5%. Every legislative session they introduce a bill to phase out the inheritance tax for direct descendents. It never goes anywhere. Guess what he'll do? He'll pay it. If you inherit $10M (much more than we have), would it really change your life negatively to pay $450K our of that $10M? No. Would it change your life to inherit $9.5M? Yes. I don't make decisions on where I want to live based on taxes, especially an inheritance tax. When that inheritance tax comes around, I won't be living at all.
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With $10 million just setup an irrevocable trust, domiciled out-of-state.

Cost to both setup & administer would be significantly less than $450k.
 
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