Wyoming does not have its own income tax, which means the state will not tax any form of retirement income. This includes Social Security retirement benefits. Property taxes and sales taxes in Wyoming are also among the lowest in the country.
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- Our Tax Expert
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. It is filled with beautiful scenery, including the world’s oldest national park, Yellowstone. And on top of that, 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 no tax on retirement income like Social Security benefits or 401(k) withdrawals.
Additionally, Wyoming’s other taxes are quite low. The state’s average property tax rate is among the 10 lowest in the U.S., as are the state and local sales taxes in Wyoming. In short, if you’re retiring in Wyoming, you can expect your overall state and local tax burden to be 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 0.61%. The state and average local sales tax rate is 5.40%. Wyoming has no estate or inheritance tax.
Is Social Security taxable in Wyoming?
No. Wyoming does not tax Social Security retirement benefits, even those taxed federally. Wyoming’s cost of living is slightly lower than the national average, so it may be possible for some retirees to live off Social Security alone, 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 0.61%. This is the eighth lowest in the U.S. That means homeowners pay about $610 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 $150,000 in the cheapest parts of the state up to $260,000 in more expensive areas. The one exception is Teton County, which contains all of Grand Teton National Park and 40% of Yellowstone National Park. The median home value there is $720,000.
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 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 5.40%. That ranks as the seventh lowest rate in the U.S. Groceries are exempt from sales taxes, though food costs in Wyoming are about 10% higher than the national average. Prescription drugs and medical equipment are also exempt from sales tax.
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. Like all other states, it does have excise taxes on alcohol, cigarettes and gasoline but those taxes 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 To find the most tax friendly places for retirees, our study analyzed how the tax policies of each city would impact a theoretical retiree with an annual income of $50,000. Our analysis assumes a retiree receiving $15,000 from Social Security benefits, $10,000 from a private pension, $10,000 in wages and $15,000 from a retirement savings account like a 401(k) or IRA.
To calculate the expected income tax this person would pay in each location, we applied the relevant 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 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 after subtracting 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 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. The income tax category made up 40% of the index, property taxes accounted for 30%, sales taxes 20% and fuel taxes 10%.
Sources: Internal Revenue Service, Social Security Administration, state websites, local government websites, US Census Bureau 2018 American Community Survey, Avalara, American Petroleum Institute, GasBuddy, UMTRI, Federal Highway Administration