Wyoming does not have its own income tax, which means all forms of retirement income will not be taxed by the state. This includes Social Security retirement benefits. Property taxes and sales taxes in Wyoming are very low.
Annual Social Security Income
Annual Retirement Account Income
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Annual Income from Private Pension
Annual Income from Public Pension
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Jennifer Mansfield, CPA Tax
Jennifer Mansfield, CPA, JD/LLM-Tax, is a Certified Public Accountant with more than 30 years of experience providing tax advice. SmartAsset’s tax expert has a degree in Accounting and Business/Management from the University of Wyoming, as well as both a Masters in Tax Laws and a Juris Doctorate from Georgetown University Law Center. Jennifer has mostly worked in public accounting firms, including Ernst & Young and Deloitte. She is passionate about helping provide people and businesses with valuable accounting and tax advice to allow them to prosper financially. Jennifer lives in Arizona and was recently named to the Greater Tucson Leadership Program.
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Wyoming Retirement Taxes
For retirees, Wyoming has it all. The cost of living in the Cowboy State is low – 7.3% lower than the national average to be exact. It is filled with beautiful scenery, including one of the country’s greatest national park (Yellowstone). And to top it all off, Wyoming has some of the lowest retirement taxes in the country.
Why are Wyoming’s retirement taxes so low? For starters, there’s no state income tax in Wyoming. That means retirement income like Social Security benefits or 401(k) withdrawals won’t be taxed.
Additionally, Wyoming’s other taxes are also quite low. The state’s average property tax rate is among the ten lowest in the U.S., as are the state and local sales taxes in the Wyoming. In short, if you’re retiring in Wyoming, you can expect your overall state and local tax burden to be very low as compared with other states.
Is Wyoming tax-friendly for retirees?
Yes. In fact, Wyoming may be the most tax-friendly state south of Alaska. It does not have its own income tax, which means all forms of retirement income will not be taxed by the state of Wyoming. The average effective property tax rate in Wyoming is just 0.62%. The state and average local sales tax rate is 5.47%. Wyoming has no estate or inheritance tax.
Is Social Security taxable in Wyoming?
No. Social Security retirement benefits, even those taxed federally, will not be taxed by the state of Wyoming. In light of Wyoming’s low cost of living, it may be possible for some retirees to live off Social Security alone in Wyoming, especially in the less expensive parts of the state.
Are other forms of retirement income taxable in Wyoming?
No. Wyoming does not tax any income. That means withdrawals from a 401(k), an IRA, a 403(b) or any other type of retirement account will not be taxed at the state level in Wyoming. Likewise, pension income is tax-free in Wyoming. Remember, however, that federal taxes will still be owed on these other types of retirement income.
How high are property taxes in Wyoming?
Very low. Wyoming’s average effective property tax rate is 0.62%. This is the ninth lowest in the U.S. That means homeowners pay about $620 in property taxes for every $100,000 in home value.
Budget-conscious retirees will likely be able to find an affordable place to live in Wyoming, where housing costs are 8.7% below the national average. Median home values in Wyoming range from about $140,000 in the cheapest parts of the state up to $250,000 in more expensive areas. The one exception is Teton County, where the median home value is more than $650,000.
What is the Wyoming tax rebate to the elderly and disabled?
The Wyoming Department of Health provides a tax rebate to elderly people and people with disabilities in order to offset the cost of sales taxes and property taxes. The refund is up to $800 for single persons and $900 for married couples.
To qualify you must be at least 65 years old or fully disabled. Single applicants can have income no greater than $17,500. For married applicants the limit is $28,500. Lastly, you must have lived in Wyoming for at least one year prior to applying for the rebate.
How high are sales taxes in Wyoming?
Wyoming’s sales taxes are very low. The total rate, including the state rate and the average of all local rates, is 5.47%. That ranks as the eighth lowest rate in the U.S. Prescription drugs and groceries are exempt from any sales taxes. That may be one reason the overall cost of food is 2.7% below the national average in Wyoming.
What other Wyoming taxes should I be concerned about?
Wyoming has no other major taxes that will significantly affect seniors and retirees. It does not have an estate or inheritance tax. It does have some excise taxes on alcohol, cigarettes and gasoline but these are all fairly low.
Most Tax Friendly Places for Retirees
SmartAsset’s interactive map highlights the places in the country with tax policies that are most favorable to retirees. Zoom between states and the national map to see the most tax-friendly places in each area of the country.
Methodology Our study aims to find the areas with the most tax-friendly policies for retirees. To do that we looked at how the tax policies of each city would impact a retiree with a $50,000 income. Our hypothetical retiree is getting $15,000 from Social Security benefits, $10,000 from a private pension, $15,000 from retirement savings like a 401(k) or IRA and $10,000 in wages.
To calculate the expected income tax this person would pay in each location we applied deductions and exemptions. This included the standard deduction, personal exemption and deductions for each specific type of retirement income. We then calculated how much this person would pay in income tax at the federal, state, county and local levels.
We calculated the effective property tax rate by dividing median property tax paid by median home value for each city.
In order to determine sales tax burden we estimated that 35% of take-home (after-tax) pay is spent on taxable goods. We multiplied the average sales tax rate for a city by the household income less income tax. This product is then multiplied by 35% to estimate the sales tax paid.
For fuel taxes, we first distributed statewide vehicle miles traveled down to the city level using the number of vehicles in each county. We then calculated miles driven per capita in each city. Using the nationwide average fuel economy, we calculated the average gallons of gas used per capita in each city and multiplied that by the fuel tax.
For each city we determined whether or not Social Security income was taxable.
Finally, we created an overall index weighted to best capture the taxes that most affect retirees. We gave a 4x weighting to income tax, 3x weighting to property tax rate, a 2x weighting to sales tax and 1x weighting to fuel tax.
Sources: Internal Revenue Service, Social Security Administration, state websites, local government websites, US Census Bureau 2016 American Community Survey, Avalara, American Petroleum Institute, GasBuddy, UMTRI, Federal Highway Administration