Fidelity's effective tax rates on IRA withdrawals by state

[wwillson]

If you can stick it out here in IL, taxes on retirees is one thing they have right. No taxes on pensions or other retirement income.

Of course, property taxes take a big big bite here.

Illinois has a good tax policy on IRA and pension distributions, but a terrible tax policy on about everything else. One of the reasons we escaped.

 

[javacontour]

oilBabe wants to move to Oregon. I'm sure that will change as she's picked a half-dozen places.

I'm still more Eastern Washington or Western Idaho. Can wake up and see mountains, but not be in Seattle

 

[99Saturn]

Interesting data point, but I am heavily invested in Roth accounts so

I do agree with others, only part of the picture.

 

[gfh77665]

No. Kinda fail. They used loose language and should have said INCOME tax in the title at the very least.

Further details are in their link.

Its part of the picture but by no means comprehensive. The cost of living, EX tax load, is the other part. For example MS, OK, and AR has much lower real estate costs than CA, NY, and HI. So tax rate alone is an important factor, but only one factor.

 

[gfh77665]

The property taxes are getting insane. I probably will retire elsewhere. I pay more than $10K/yr, it's more than my federal income tax.

Texas is reducing property taxes and raising exemptions significantly. $51 billion on property tax cuts over the next two years!

https://www.texastribune.org/2025/06/04/texas-legislature-property-tax-cuts-2025/

https://www.fox26houston.com/news/m...ad-sb-4-add-onto-historic-property-tax-relief

Texas property owners are seeing significant efforts to provide tax relief in 2025. Here's a breakdown of the key initiatives:
Increased Homestead Exemptions:

• General Homestead Exemption: Legislation has been passed to increase the standard school district residence homestead exemption from $100,000 to $140,000. This change, if approved by voters in November 2025, is projected to save the average homeowner around $484 annually.
• Enhanced Exemption for Seniors and Disabled Texans: A separate exemption for homeowners aged 65 or older or those with disabilities is proposed to increase from $10,000 to $60,000. When combined with the proposed general homestead exemption, eligible individuals could receive a total exemption of $200,000, resulting in average annual savings of over $950.
• Disabled Veterans Exemption: Veterans with a 100% service-connected disability rating or deemed unemployable by the VA are entitled to a total property tax exemption on their residence homestead.

Business Personal Property Exemption:

• Legislation would raise the business personal property tax exemption from $2,500 to $125,000. This would reduce taxes on businesses' equipment and is estimated to save business owners an average of $2,500 annually.

Important Notes:

• These measures, including the homestead exemption increases, are contingent on voter approval in the constitutional amendment election scheduled for November 4, 2025.
• The homestead exemptions primarily affect school district property taxes, which are the largest portion of a homeowner's tax bill.
• The new homestead exemption levels would apply retroactively to the 2025 tax year if approved by voters.
• In addition to these proposed measures, Texas voters already approved Proposition 4 in 2023, which increased the general homestead exemption from $40,000 to $100,000.
• Some provisions of Senate Bill 2, or the "Property Tax Relief Act," took effect on January 1, 2025, including limitations on increases in the appraised value of non-homestead properties valued at $5 million or less and protection against reductions or repeals of homestead exemptions established in 2022.
• Property owners with homestead exemptions are now required to verify their eligibility at least once every five years with their local appraisal district.

This should easily pass in November. This welcome relief, in conjunction with affordable real estate values we already have in most of the state, will truly set up the average TX homeowner very nicely.

 

[cptbarkey]

Texas is reducing property taxes and raising exemptions significantly. $51 billion on property tax cuts over the next two years!

https://www.texastribune.org/2025/06/04/texas-legislature-property-tax-cuts-2025/

https://www.fox26houston.com/news/m...ad-sb-4-add-onto-historic-property-tax-relief

Texas property owners are seeing significant efforts to provide tax relief in 2025. Here's a breakdown of the key initiatives:
Increased Homestead Exemptions:

• General Homestead Exemption: Legislation has been passed to increase the standard school district residence homestead exemption from $100,000 to $140,000. This change, if approved by voters in November 2025, is projected to save the average homeowner around $484 annually.
• Enhanced Exemption for Seniors and Disabled Texans: A separate exemption for homeowners aged 65 or older or those with disabilities is proposed to increase from $10,000 to $60,000. When combined with the proposed general homestead exemption, eligible individuals could receive a total exemption of $200,000, resulting in average annual savings of over $950.
• Disabled Veterans Exemption: Veterans with a 100% service-connected disability rating or deemed unemployable by the VA are entitled to a total property tax exemption on their residence homestead.

Business Personal Property Exemption:

• Legislation would raise the business personal property tax exemption from $2,500 to $125,000. This would reduce taxes on businesses' equipment and is estimated to save business owners an average of $2,500 annually.

Important Notes:

• These measures, including the homestead exemption increases, are contingent on voter approval in the constitutional amendment election scheduled for November 4, 2025.
• The homestead exemptions primarily affect school district property taxes, which are the largest portion of a homeowner's tax bill.
• The new homestead exemption levels would apply retroactively to the 2025 tax year if approved by voters.
• In addition to these proposed measures, Texas voters already approved Proposition 4 in 2023, which increased the general homestead exemption from $40,000 to $100,000.
• Some provisions of Senate Bill 2, or the "Property Tax Relief Act," took effect on January 1, 2025, including limitations on increases in the appraised value of non-homestead properties valued at $5 million or less and protection against reductions or repeals of homestead exemptions established in 2022.
• Property owners with homestead exemptions are now required to verify their eligibility at least once every five years with their local appraisal district.

This should easily pass in November. This welcome relief, in conjunction with affordable real estate values we already have in most of the state, will truly set up the average TX homeowner very nicely.

They already tried this two years ago, all cities and counties raised their tax rates in response. I don’t have much faith that won’t happen again.

 

[4WD]

Texas is reducing property taxes and raising exemptions significantly. $51 billion on property tax cuts over the next two years!

https://www.texastribune.org/2025/06/04/texas-legislature-property-tax-cuts-2025/

https://www.fox26houston.com/news/m...ad-sb-4-add-onto-historic-property-tax-relief

Texas property owners are seeing significant efforts to provide tax relief in 2025. Here's a breakdown of the key initiatives:
Increased Homestead Exemptions:

• General Homestead Exemption: Legislation has been passed to increase the standard school district residence homestead exemption from $100,000 to $140,000. This change, if approved by voters in November 2025, is projected to save the average homeowner around $484 annually.
• Enhanced Exemption for Seniors and Disabled Texans: A separate exemption for homeowners aged 65 or older or those with disabilities is proposed to increase from $10,000 to $60,000. When combined with the proposed general homestead exemption, eligible individuals could receive a total exemption of $200,000, resulting in average annual savings of over $950.
• Disabled Veterans Exemption: Veterans with a 100% service-connected disability rating or deemed unemployable by the VA are entitled to a total property tax exemption on their residence homestead.

Business Personal Property Exemption:

• Legislation would raise the business personal property tax exemption from $2,500 to $125,000. This would reduce taxes on businesses' equipment and is estimated to save business owners an average of $2,500 annually.

Important Notes:

• These measures, including the homestead exemption increases, are contingent on voter approval in the constitutional amendment election scheduled for November 4, 2025.
• The homestead exemptions primarily affect school district property taxes, which are the largest portion of a homeowner's tax bill.
• The new homestead exemption levels would apply retroactively to the 2025 tax year if approved by voters.
• In addition to these proposed measures, Texas voters already approved Proposition 4 in 2023, which increased the general homestead exemption from $40,000 to $100,000.
• Some provisions of Senate Bill 2, or the "Property Tax Relief Act," took effect on January 1, 2025, including limitations on increases in the appraised value of non-homestead properties valued at $5 million or less and protection against reductions or repeals of homestead exemptions established in 2022.
• Property owners with homestead exemptions are now required to verify their eligibility at least once every five years with their local appraisal district.

This should easily pass in November. This welcome relief, in conjunction with affordable real estate values we already have in most of the state, will truly set up the average TX homeowner very nicely.

I’m sure my county and city will add enough to ruin that - they are constantly starting projects that I have no use for - just fix the roads please …

 

[MHartfield]

I've been through the calculations between AZ & CA, and there's no way the rates are the same.

They are calculating total, IRS and state, so that lowers the differential some, but my calculations were that AZ was about 2/3 of CA, depending.

 

[Brons2]

I have to live in an area with zero snow is very important to me.

I would like to live in an area with close to zero snow but not far from snow (the mountains) as I like to ski, hike, camp, fish, etc. Kind of limits you. I told someone at work the other day if they would just move the office to Amarillo, I could get to the mountains in New Mexico in 3 hours or maybe less.

For now, I'm here in Central Texas because of my aging parents and my wife's extended family are nearby.

 

[Brons2]

Texas is reducing property taxes and raising exemptions significantly. $51 billion on property tax cuts over the next two years!

https://www.texastribune.org/2025/06/04/texas-legislature-property-tax-cuts-2025/

https://www.fox26houston.com/news/m...ad-sb-4-add-onto-historic-property-tax-relief

Texas property owners are seeing significant efforts to provide tax relief in 2025. Here's a breakdown of the key initiatives:
Increased Homestead Exemptions:

• General Homestead Exemption: Legislation has been passed to increase the standard school district residence homestead exemption from $100,000 to $140,000. This change, if approved by voters in November 2025, is projected to save the average homeowner around $484 annually.
• Enhanced Exemption for Seniors and Disabled Texans: A separate exemption for homeowners aged 65 or older or those with disabilities is proposed to increase from $10,000 to $60,000. When combined with the proposed general homestead exemption, eligible individuals could receive a total exemption of $200,000, resulting in average annual savings of over $950.
• Disabled Veterans Exemption: Veterans with a 100% service-connected disability rating or deemed unemployable by the VA are entitled to a total property tax exemption on their residence homestead.

Business Personal Property Exemption:

• Legislation would raise the business personal property tax exemption from $2,500 to $125,000. This would reduce taxes on businesses' equipment and is estimated to save business owners an average of $2,500 annually.

Important Notes:

• These measures, including the homestead exemption increases, are contingent on voter approval in the constitutional amendment election scheduled for November 4, 2025.
• The homestead exemptions primarily affect school district property taxes, which are the largest portion of a homeowner's tax bill.
• The new homestead exemption levels would apply retroactively to the 2025 tax year if approved by voters.
• In addition to these proposed measures, Texas voters already approved Proposition 4 in 2023, which increased the general homestead exemption from $40,000 to $100,000.
• Some provisions of Senate Bill 2, or the "Property Tax Relief Act," took effect on January 1, 2025, including limitations on increases in the appraised value of non-homestead properties valued at $5 million or less and protection against reductions or repeals of homestead exemptions established in 2022.
• Property owners with homestead exemptions are now required to verify their eligibility at least once every five years with their local appraisal district.

This should easily pass in November. This welcome relief, in conjunction with affordable real estate values we already have in most of the state, will truly set up the average TX homeowner very nicely.

You typed all that for this dog and pony show? They've done nothing for the average homeowner in Central Texas, well actually, all of the urban areas in Texas. $484 is chickenscratch when your property taxes are north of $10K. This action is all smoke and mirrors for the middle class.

I'm sure it will help people who have 5 acres and a trailer in Loving County (the USA's least populated county), but for real middle class Texans living in urban areas these savings aren't enough to pay for one extra meal out a month for a family of 4.

 

[gfh77665]

You typed all that for this dog and pony show? They've done nothing for the average homeowner in Central Texas, well actually, all of the urban areas in Texas. $484 is chickenscratch when your property taxes are north of $10K. This action is all smoke and mirrors for the middle class.

I'm sure it will help people who have 5 acres and a trailer in Loving County (the USA's least populated county), but for real middle class Texans living in urban areas these savings aren't enough to pay for one extra meal out a month for a family of 4.

Not even voted on yet so you can't expect anything, yet.

In Austin, your problem is runaway property values, not tax rates, per se. No one forces you to live there, BTW.

And $51 Billion in tax relief in two years is "chickenscratch"?

Sorry to trigger you. Geeze.

 

[4WD]

Not even voted on yet so you can't expect anything, yet.

In CenTex, your problem is runaway property values, not tax rates, per se.

And $51 Billion in tax relief in two years is "chickenscratch"?

Sorry to trigger you. Geeze.

Think this came from State

https://texaslawhelp.org/article/over-65-property-tax-exemptions-and-deferrals

 

[gfh77665]

They already tried this two years ago, all cities and counties raised their tax rates in response. I don’t have much faith that won’t happen again.

That game (which I hate too) has been addressed. This is a really good package for the average Texan.

• Some provisions of Senate Bill 2, or the "Property Tax Relief Act," took effect on January 1, 2025, including limitations on increases in the appraised value of non-homestead properties valued at $5 million or less and protection against reductions or repeals of homestead exemptions established in 2022.

 

[4WD]

They already tried this two years ago, all cities and counties raised their tax rates in response. I don’t have much faith that won’t happen again.

And what was it in response to all those other years ? We are running out of low tax counties as the spending is beyond unrealistic …

 

[4WD]

I have never met anyone who said they are better off financially after moving to TX.

Oh, I have and have heard it many times …

 

[gfh77665]

And what was it in response to all those other years ? We are running out of low tax counties as the spending is beyond unrealistic …

Exactly. Metro counties especially, like Harris, Travis, Dallas have runaway spending. These counties have higher tax loads because of it. The rural counties generally do not operate the same way in most cases. The relief package that Bettencourt engineered will significantly help most Texans across the state. He cannot solve all locally induced problems. The respective voters must do that.

 

[SC Maintenance]

Everything is relative. I lived in Alabama, South Carolina, Michigan, California, and Colorado.
In the end of the day, Alabama gets you the least for your money. Some taxes are lower, but wages are far lower, and health care is good in some counties; in some, they would not rank well in the race to the bottom among third-world countries. And sales tax, I moved to CA from AL, and paid less for food, by far, in CA than in AL.
There are too many variables. I find it absolutely ridiculous to decide where to live solely based on tax rates.

You clearly don't hate the government enough.

 

[SC Maintenance]

I appreciate the data post. Its good to have actual data.

I have to point out that the data is based on withdrawing $100K per year out of a traditional IRA. OK, some folks may do that - but not many most likely.

Also as mentioned there is no correlation for things like property tax, or which states tax social security, etc.

So its still one data point - which is admittedly 1 more than I had a few minute ago, so thanks again.

 

[Brons2]

Not even voted on yet so you can't expect anything, yet.

In Austin, your problem is runaway property values, not tax rates, per se. No one forces you to live there, BTW.

And $51 Billion in tax relief in two years is "chickenscratch"?

Sorry to trigger you. Geeze.

Take any of the Texas metro areas average prices, then. Property values are not the "problem" they are what they are. Also the direct result of the state government's economic polices of trying to prioritize growth above quality of life.

This has not just affected "Austin" there has been tremendous price increases across all metro areas.

Real property tax rates need to be lower. And we need to get rid of MUDs that allow developers to create political entities to reassign the cost of land development onto buyers.

Otherwise, I'm out. Not getting taxed to death in retirement.

 

[Astro14]

And this is such a narrow slice of data.

Taxes on IRA withdrawals at the $100,000 level. Interesting, but…

Ignoring all other income sources, state and local income taxes on the other income and capital gains, property taxes, estate taxes, etc.

To cherry pick the data like this is specious, at best.