Fortunately, you could have a say over how much the taxman takes if you’re willing to relocate. But you should consider a state’s overall tax landscape before making a move.

For instance, some states make up for low income taxes with higher taxes in other areas, such as sales and property tax rates — making you perhaps no better off than you were before relocating, tax-wise.

Kiplinger found the one U.S. state that might offer the best balance of low income, sales, and property taxes for your family’s wallet.

The most tax-friendly state for the middle class

To determine the “most tax-friendly state for the middle-class,” Kiplinger considered each state's median annual salary to determine which states have the lowest tax burden for households with middle incomes.

Then we calculated the average annual tax spent on three tax categories: state income tax, property taxes, and sales taxes on essential items (groceries, diapers, and gas). (See the end of the article for more information about methodology.)

The state with the lowest tax burden is considered the most "tax-friendly " for these rankings.

Best state for middle-class taxes

Nevada.

Nevada has no state income tax, which is one reason it’s the most tax-friendly state for middle-class families. Among the many types of income that you’ll find tax-exempt in the Silver State are:

• Investment income (Nevada is one of the most tax-friendly states for investing).
• Short-term rental income and capital gains.
• Most retirement income, such as 401(k) withdrawals and Social Security benefits.

Nevada residents save on property tax bills, too. The annual median property tax paid in the Silver State is $2,143, which is about $1,000 less than the national average, according to U.S. Census Bureau data.

• This is partly due to Nevada’s effective property tax rate of .49%, per the Tax Foundation, which is one of the lowest rates in the nation.
• Nevada has a property tax abatement law that caps yearly increases on property taxes for primary residences, protecting homeowners from sudden hikes.

Even better is that the Silver State is one of the few states that don’t tax inheritance or estates, meaning more money for your heirs is also tax-exempt.

But although these tax benefits generally outweigh the tax cons in our ranking, as with all states, there might be a few tax reasons you wouldn’t want to move to Nevada. Let’s go over those next.

Nevada taxes for middle-class families

Nevada has low taxes compared to other states, yet there is one primary tax caveat that might raise an eyebrow for middle-class families.

• The Nevada sales tax rate is 6.85%, which may be higher than where you are living now.
• This is especially true when you factor in local taxes, which average 1.39%, for a combined average local and state tax rate of 8.24%, per the Tax Foundation.

Yet while Nevada might levy higher sales taxes to compensate for lower taxes in other key areas, several essentials are exempt from the Silver State’s high sales tax rate.

• Nevada has one of the lowest state gas tax rates in the U.S., which might help reduce your weekly commuting expenses (though local taxes can raise the rate).
• Groceries, diapers, prescription medicine and feminine products are all tax-exempt in Nevada, which might further reduce your monthly spending.

If most of your annual spending is on essentials, you might save on your state sales taxes even if the Nevada rate is a little higher than where you currently reside.

Is Nevada a good state for middle-class families?

Before you’re ready for a move to Nevada, there are other important factors to consider.

While Kiplinger’s ranking considered state tax burdens, you’ll probably want to research other key considerations, like cost of living, political climate and crime rates.

• For instance, Nevada is famously known for extreme heat, which might increase your monthly utility bill. The state’s desert geography makes the transportation of goods more challenging and limits local agriculture compared to most other states. Because of this, the cost of groceries might be higher than where you live now.
• Yet year-round sunshine supports Nevada’s thriving outdoor recreation scene, with a variety of national parks, and entertainment centers like Las Vegas.
• However, Nevada typically receives a lower score in national rankings that compare pre-K-12 education quality and outcomes.

Ultimately, consider your family’s unique lifestyle and financial needs before deciding to move to a new locale. Just because Nevada is generally the most tax-friendly state for middle-class families, it might not be the most optimal state for you and your family.

Note: No matter where you move, federal income taxes still apply, and local taxes might vary. The definition of “middle-income” can also differ greatly. For purposes of this ranking, “family” means any household with at least one adult still raising at least one child. The amount of taxes paid can vary depending on several factors, including family size and the number of adults in the household who work. Full details about the methodology Kiplinger used to rank state tax burdens for this story are available in Kiplinger’s report, Low-Tax States for 'Middle-Class' Families in 2026.

Read More

• The GOP Wants to Auto-Enroll Your Child in a Trump Account for Savings
• Claiming the Standard Deduction? Here Are 10 Tax Breaks For Middle-Class Families in 2025
• Nevada Tax Guide 2025
• New 2026 Child Tax Credit and other Family Credit Amounts Could Save You More

Unlike income taxes, which often decline in retirement, property taxes are based on the value of your home — and in many parts of the country, assessed values have skyrocketed in recent years. Median property taxes rose by an average of 10.4% between 2021 and 2023, according to an analysis of the latest data available by LendingTree, an online marketplace for consumer loans. The median property tax in 2023 was nearly $3,000 ($2,969), but median property taxes in 50 metropolitan areas ranged from $1,091 to nearly $10,000, according to LendingTree.

Before writing a check for your next property tax bill, make sure you take full advantage of property tax relief programs offered by your state or locality. While more than 9 million Americans likely qualify for property tax relief, only about 8% apply for it, according to the AARP. “Many aren’t aware these programs exist or assume they’re not going to qualify,” says Nicole Heckman, vice president of well-being for the AARP Foundation.

The types of property tax relief available vary, not only by state but by individual counties and jurisdictions. Many states and jurisdictions offer expanded relief to homeowners who are 65 or older; some offer breaks to homeowners who are 61 and older. Veterans and residents with disabilities may also qualify for a reduction in their property taxes. While eligibility is often income-based, the income thresholds “can be pretty expansive,” Heckman says, so don’t assume you earn too much to qualify. In New Jersey, for example, homeowners with incomes of up to $500,000 are eligible for reimbursement of a portion of their property tax bill.

Tax relief isn’t automatic. In most cases, you must fill out an application and file it by a deadline set by your locality or state. Some jurisdictions require you to apply in person. Other states and localities allow you to apply online, but that can be challenging for older adults who don’t have broadband internet, Heckman says.

The AARP Foundation’s Property Tax Aide program, now in its fifth year, allows homeowners to research more than 140 programs in 50 states and Washington, D.C. Users can find details on eligibility, deadlines and where to get help. The average amount of relief provided through the program is $400, but some users have saved up to $1,000, Heckman says. Many states allow eligible homeowners to apply for up to three years of back tax relief, she says. “That can be a significant credit or refund.”

Some types of relief states and localities offer homeowners:

1. Tax credits and refunds

More than a dozen states offer property tax credits or refunds to eligible older adults in amounts ranging from $250 to $2,730. Pennsylvania provides rebates ranging from $380 to $1,000 for eligible older and disabled residents. Tennessee refunds all or a portion of property taxes paid by eligible residents.

Minnesota provides two types of property tax refunds: one based on homeowners’ income and the amount of their property taxes, and another based on how much residents’ property taxes have increased. (Some residents qualify for both, and the program isn’t limited to older adults.) Cindy Rieck, 68, of Pequot Lakes, Minn., whose home has nearly doubled in value since she purchased it in 2007, says she received a refund of $1,200 in 2024.

2. Expanded homestead exemption

Property taxes are based on the assessed value of your home, which may differ from its appraised or market value. A homestead exemption lowers the assessment, thus reducing your property tax bill. Most states offer some kind of homestead exemption for residents, but many states provide an additional homestead exemption for older adults.

Florida, for example, allows residents to exempt up to $50,000 of their home’s assessed value from property taxes (which will increase with the rate of inflation starting in 2025), but jurisdictions in the state have the option of providing an additional $50,000 exemption to eligible homeowners 65 and older.

Texas recently increased its homestead exemption to $140,000 for all residents. The state provides an additional $60,000 exemption for residents age 65 or older, for a total combined homestead exemption of $200,000. Texas now allows individual jurisdictions to add $3,000 to that amount.

3. Assessment freeze

In Arizona, homeowners ages 65 or older who have lived in their primary home for at least two years and meet income limits can have their property’s valuation frozen for three years. New Jersey has a “senior freeze” program that reimburses property tax increases for eligible residents who have owned their homes for at least three years.

4. Tax deferral

Illinois allows eligible homeowners 65 and older to defer up to $7,500 of property taxes on their principal residence. California, Maine, Minnesota, Vermont and Washington also allow eligible older adults to defer property taxes.

If you sign up for deferral, the state or locality will place a lien on your home; the taxes must be paid, usually with interest, after you die or sell the home. That’s important to consider when planning your estate. If your heirs sell the home, the back taxes will reduce the amount they’ll receive from the proceeds, and if they want to keep it, they’ll be on the hook for the taxes you deferred. “If you can afford it, you may decide you’d rather pay the tax now and not have something your heirs will have to worry about when they sell the property,” says Jared Walczak, vice president of state projects at the Tax Foundation in Washington, D.C., a tax-policy research organization.

Other options to cut your tax bill

Applying for property tax relief is just one way to lower your tax bill. Other options that may be available to you:

Claim a deduction
The One Big Beautiful Bill Act, signed into law in July, allows homeowners to deduct up to $40,000 in state and local taxes, up from a cap of $10,000. The provision takes effect in 2025 and expires in 2029. The legislation also expanded the standard deduction for eligible taxpayers 65 and older, so for many older adults, claiming the standard deduction will still provide the lower tax bill. However, if you live in a high-tax state and have other deductible expenses — large charitable contributions, for example — it’s worth running the numbers with your tax preparer or on a tax software program to determine whether you should itemize on your 2025 tax return.

Challenge your property tax bill
If you believe your assessment was inaccurate or outdated, you may be able to lower it by filing an appeal. Review your property’s record card, usually available on your locality’s website or by request. If you find an obvious error — four bedrooms instead of two, for example — your assessor may agree to lower the assessment on the spot.

If the information on your property’s record card is correct but you believe your assessment was higher than those for comparable homes in your neighborhood, you can use that information to file an appeal. Check your local government’s website for deadlines and procedures. Realtor.com offers a tool that will provide you with an estimate of the market value of your home, along with estimated values of other homes in your neighborhood. The tool is free but you must create an account to use it.

Note: This item first appeared in Kiplinger Retirement Report, our popular monthly periodical that covers key concerns of affluent older Americans who are retired or preparing for retirement. Subscribe for retirement advice that’s right on the money.

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However, Texas voters made a move of their own, approving Proposition 2. That amendment to their state constitution will solidify a ban on Texas capital gains taxes, including those on unrealized gains.

But wait: isn’t Texas already a state with no income tax? Why would voters need to prevent a tax on capital gains that has never been imposed? As you might expect, answers to these questions involve economic and political considerations.

So, here’s more of what you need to know, including what the Texas move could mean for other states.

Texas capital gains tax ban

The passage of Proposition 2 aligns with the Lone Star State's longstanding policy of not imposing a personal income tax (including capital gains taxes). However, once certified, the amendment will reinforce that by constitutionally prohibiting future taxes on capital gains, whether realized or unrealized.

Key Points:

• At first glance, the idea of banning capital gains taxes in Texas may seem unnecessary. (The state has never implemented taxes on capital gains, primarily because it does not have a personal income tax.)
• However, given the changing policies in other states without income taxes, along with proposals for a "wealth tax" discussed during the Biden administration, there are some floating concerns about potential future taxation of unrealized capital gains.
• Since no U.S. state or the federal government has yet introduced an unrealized gains tax, some view the actions being taken in Texas as symbolic and preemptive.

According to reports of unofficial numbers, approximately 65% (just under 2 million Texans) voted in favor of the ban, while 35% voted “no.”

Future plans to tax unrealized gains?

An unrealized gain occurs when the value of an asset you own increases, but you haven't sold the asset yet. So, the gains are what some refer to as “paper gains” since they haven’t been realized tangibly.

• Generally, only realized gains are taxed in the U.S. Some argue that this allows the already ultra-wealthy to accumulate more wealth while avoiding paying their “fair share” of taxes.
• (For instance, billionaires can typically avoid income taxes by living off loans secured by appreciated assets rather than selling those assets, which would trigger capital gains taxes.)

The Biden administration had proposed a 25% tax on unrealized gains for ultra-wealthy individuals holding $100 million or more in assets. Biden also floated taxing unrealized gains at death for gains exceeding $5 million for single filers and $10 million per married couple.

At the time, those ideas ignited political and policy debate about everything from practicality and fairness to economic impact. However, the most important thing to know now is that under current U.S. tax law, investors are generally taxed only on realized gains.

Still, the idea (or fear of the concept) has lingered in some state tax policy debates.

Washington capital gains tax controversy

Interestingly, Washington state also has no personal income tax, but it has had a controversial capital gains tax for the last few years.

• Washington’s capital gains tax initially imposed a 7% tax on long-term capital gains above an annual exemption ($270,000 for 2024, with inflation adjustments).
• The tax applies to profits from the sale of stocks, bonds, and other non-retirement assets, while exempting real estate, retirement accounts, and many small business sales.
• Now, under recent state legislation, a new 2.9% surcharge applies to net long-term capital gains exceeding $1 million above the exemption, effective retroactively from January 1, 2025.

Washington’s approach contrasts with the Texas constitutional ban, highlighting the different strategies states are adopting to fund public services and manage tax policy.

For example, during the 2024 election, Initiative 2109, a measure to repeal the capital gains tax, appeared on the Washington state ballot. But as Kiplinger reported, voters there rejected the repeal effort, with over 63% voting “no.”

The state uses the capital gains tax revenue to fund education (K-12 and early learning) and child care programs. According to Washington’s Department of Revenue, the levy has raised over $1 billion for education and school construction in its first three years

Missouri capital gains tax eliminated

On the other side, Missouri recently became the first state with an individual income tax to ban capital gains taxes.

As Kiplinger reported, on July 10, 2025, Missouri Gov. Mike Kehoe signed House Bill 594 into law. That legislation eliminates the state tax on capital gains for individuals, effective January 1, 2025.

In a statement regarding the bill’s passage, the governor described the tax changes as pro-growth — “keeping more money in the hands of Missouri families and less in government coffers.”

The measure is projected to cost Missouri around $350 million a year.

And speaking of revenue, while Texas voters favored locking in tax protections, some critics argued that bans like Proposition 2 could ultimately limit revenue streams essential for public services, including schools, infrastructure, and health care. There were also concerns that the measure could limit legislative flexibility in the future.

Supporters contend that low and predictable taxes foster economic growth, attract businesses, and encourage investment.

Worth noting: The Washington state capital gains tax sparked warnings of “wealth flight.” Some critics worried that high-income individuals and entrepreneurs would leave in favor of states with lower or no capital gains taxes.

However, data so far seems to tell a different story.

• In its first year, the Washington cap gains tax reportedly generated approximately $840 million — well above projections.
• A subsequent drop the next year, to about $418 million, was attributed to market volatility, rather than a mass exodus of wealthy residents, according to the state’s Department of Revenue.

Federal capital gains tax rates

For now, the fact is that at the federal level, the capital gains tax framework hasn’t changed since President Donald Trump’s second term began. His administration has essentially maintained lower rates from previous administrations without pursuing unrealized gains taxes.

• For 2025 (returns you’ll file early next year) and 2026 (returns typically filed in early 2027), the long-term capital gains tax rates remain at 0%, 15%, and 20%, but the income thresholds have shifted.
• Note: Remember that short-term capital gains (assets held for one year or less) are taxed at ordinary income tax rates, different from those for long-term capital gains.

For taxpayers and investors, the Texas amendment may reinforce the state’s reputation as a low-tax state. Although even low-tax states have their pros and cons.

For other states, moves like those in Texas and Missouri (or even Washington) could serve as reference points as they decide whether to consider new taxes or strengthen protections against them. Stay tuned.

Read More

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• Texas Property Tax Relief: What to Know Now
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Earlier this summer, Gov. Mike DeWine vetoed several budget-line items that would’ve provided property tax relief in the Buckeye State. DeWine reportedly vetoed the measures due to concerns about school funding, and instead formed a working group of local officials and former lawmakers to consider new proposals for relief.

However, the Ohio House overrode the veto on two of the provisions, and this month, the Ohio Senate followed. Now there’s a new property tax law for Ohio homeowners in 2026.

But what does all that mean for your next property tax bill? Read on.

Why are Ohio property taxes so high?

Ohio’s property tax rate is 1.3%, which is higher than the national average, according to the Tax Foundation. Yet that alone doesn’t account for extraordinarily high property tax bills in the Buckeye State. Home valuations also contribute to high Ohio property taxes:

• The median price of a single-family home has increased by 70% over the last five years, according to the most recent data from Redfin.
• That means a home that used to cost a buyer $196,000 now costs $278,900.
• The increase in Ohio home values is largely due to the post-pandemic housing boom and recent high inflation.

Unlike most states that reappraise home values every one to five years, Ohio properties are typically assessed only once every six years (though an update may be conducted the third year after a full assessment). Consequently, property tax bills often surge from one evaluation to the next, especially during housing booms.

Another way Ohio property tax bills may rise is through replacement or emergency levies — although these will soon be a thing of the past. A recently enacted law has eliminated new levies of this kind.

Ohio property tax relief may come in 2026

Just four months ago, DeWine vetoed several property tax reform measures in the state budget, reportedly voicing concern that the provisions could lead to financial instability for state schools.

After all, the Buckeye State collects roughly $19 billion in property taxes annually, with significant collections going into local government coffers.

Most of the struck-down provisions died on the governor’s desk. But the Ohio General Assembly recently overrode the veto on two measures, making the following law as of January 1, 2026, and later:

• Elimination of new replacement property tax levies. Localities (like school districts) can no longer ask voters to replace an expiring levy with a new one based on the current valuation of properties. This allows existing levies to be renewed based on historical (and typically lower) property tax rates.
• Elimination of new emergency property tax levies. Local officials are no longer able to ask voters to approve a fixed-year emergency levy to raise additional property taxes for school funding, even if a school district is experiencing a financial shortfall.

While neither measure will cut current property taxes, eliminating these two levies may provide future property tax relief to Ohioans over time.

Still, localities will most likely bear the brunt of the tax cuts. Data show 29% of Ohio's state and local revenue comes from property taxes. That makes Ohio slightly more reliant on property tax revenue compared to the national average.

Plus, with the Buckeye State’s recent cut to income taxes, localities might receive less income tax revenue than in years past, further pressuring school and local jurisdiction budgets.

Ohio property tax relief proposals on the way

Rather than endorsing specific budget items for property tax relief, DeWine recently formed a working group. This group, composed of county auditors, school superintendents, and former legislators, was tasked with identifying methods to reduce property taxes for Ohio residents.

Many Ohio property tax relief proposals came out of the working group on September 30. Here are a couple that focus on Ohio homeowners:

• Expanding the homestead exemption. The proposal would raise the income threshold to allow more Ohioans 65 and older (or disabled) to qualify for property tax relief. The proposal would also increase the tax break’s valuation amount.
• Implementing a new property tax “circuit breaker” program. This would provide relief to homeowners when their property tax bill exceeded a certain percentage of their income.

But that’s not all. Just a day after the working session concluded, an Ohio House committee held a hearing on two property tax bills. One of them, House Bill 186, proposes capping property tax increases at the rate of inflation. Supporters claim that Ohio homeowners could save $1.7 billion over the next three years if the bill is passed.

HB 186 is currently under review in the House Ways and Means Committee. The working group recommendations are awaiting legislative action from the General Assembly.

Stay tuned for further updates.

Read More

• How to Reduce Your Property Tax
• Ten Tax Breaks for Homeowners in 2025
• Ohio Tax Guide 2025

Just as noteworthy as the new rules are those that extend provisions from the 2017 Tax Cuts and Jobs Act (TCJA). The OBBBA makes permanent the reductions in federal income tax rates that the TCJA implemented. (Otherwise, those tax rates would have expired on December 31.)

In addition, the OBBBA increases the federal estate tax exemption from $13.99 million per person in 2025 to $15 million per person, or $30 million for a married couple, in 2026. It will be adjusted annually for inflation.

Without congressional action, the exemption would have dropped to about $7 million after 2025. Because of the exemption’s size, the vast majority of taxpayers don’t need to worry about paying federal estate taxes.

You may want to schedule an appointment with your financial planner or tax preparer to discuss how the bill will affect your 2025 tax liability.

“You’ve got to run the numbers, because there’s so much that’s changing,” says Tim Steffen, director of advanced planning at Baird.

To get you started, we have guidance here on how to get the most from some of the significant provisions in the OBBBA.

A BONUS DEDUCTION FOR OLDER ADULTS

Starting with the 2025 tax year, taxpayers who are 65 or older will be eligible for an additional standard deduction of $6,000. The bonus deduction, which is scheduled to expire at the end of 2028, comes on top of an existing extra standard deduction of $2,000 for single filers who are 65 or older or, for married couples who file jointly, $1,600 for each spouse who is 65 or older.

The expanded deduction means a single taxpayer who is 65 or older will be able to deduct up to $23,750 from taxable income, while a married couple who file jointly will qualify for a deduction of up to $46,700, assuming both are 65 or older.

That can translate to significant savings for older taxpayers. For example, an older married couple in the 22% tax bracket (for 2025, that includes income of $96,951 to $206,700) could see tax savings of $2,640 a year, says Marilou Davido, a certified financial planner in Milwaukee.

Older taxpayers in lower tax brackets could save $600 to $1,200 a year, she says.

The legislation won’t eliminate taxes on Social Security benefits. But because the taxability of benefits is based on a calculation involving your adjusted gross income, the OBBBA will reduce the number of beneficiaries who pay the taxes from 36% to 12%, according to the White House Council of Economic Advisers.

Now for the caveats: The bonus standard deduction will affect only eligible taxpayers whose income exceeds the amount of the deduction, so low-income people won’t benefit from this tax break.

At the other end of the spectrum, higher-income taxpayers could see the amount of the bonus deduction reduced or eliminated altogether.

The deduction starts to phase out for couples with modified adjusted gross income of more than $150,000 ($75,000 for single filers) and is fully phased out at MAGI of $250,000 ($175,000 for singles). Your modified adjusted gross income is your adjusted gross income with certain deductions added back.

The higher standard deduction won’t shield Medicare beneficiaries who pay a surcharge, known as the income-related monthly adjustment amount (IRMAA), on their Part B and Part D premiums. The surcharge is based on a version of your MAGI that’s specific to Medicare and is calculated before the standard deduction applies.

Taxpayers whose MAGI is close to surpassing the eligibility threshold for the bonus standard deduction should consider avoiding moves that could reduce this tax break’s value.

For example, converting funds in a traditional IRA to a Roth IRA could reduce or eliminate the bonus deduction by increasing your MAGI, says Davido.

If you want to convert to a Roth, consider spreading out the conversions over several years to keep your MAGI below the threshold, she says.

One argument in favor of doing a Roth conversion is that it protects your nest egg from future tax increases, because Roth withdrawals are tax-free as long as you’re 59½ or older and have owned the Roth for at least five years.

But now that the OBBBA has extended current tax rates, individuals can spread out conversions without fear of a tax increase, at least under the current presidential administration, Davido says.

Timing matters, too: Converting to a Roth before age 65 would avoid the potential loss of the bonus deduction.

Capital gains distributions and withdrawals from traditional IRAs will also increase your MAGI. But there are steps you can take to offset that income and preserve the bonus deduction.

If you’re still working, increasing pretax contributions to 401(k) plans and health savings accounts (HSAs), for example, will reduce your MAGI.

Individuals who are 70½ or older can reduce their MAGI by making qualified charitable distributions from their IRAs, says Todd Calamita, a CFP in Charlotte, N.C.

In 2025, taxpayers can make QCDs of up to $108,000 from their IRAs to qualifying charities. If you’re 73 or older, a QCD will also count toward your required minimum distribution (RMD). A QCD isn’t deductible, but it’s excluded from taxable income.

Davido recommends working with your tax preparer or financial planner before year-end to adjust income-tax withholding and estimated tax payments for 2026. The bonus standard deduction could enable you to reduce the amount of tax withheld from your Social Security benefits and IRA withdrawals; you may also be able to lower your quarterly estimated tax payments.

A BIGGER BREAK FOR HOMEOWNERS

The OBBBA contains a valuable tax break for homeowners who live in high-tax states, and like the bonus standard deduction, the change could affect your 2025 tax bill.

Starting in 2025, those who itemize will be able to deduct up to $40,000 in state and local taxes (SALT), up from a cap of $10,000. The cap will increase by one percentage point each year through 2029, then return to $10,000 in 2030.

The SALT deduction includes state income, property and sales taxes; it’s often most useful for property taxes, which have soared as home values have risen in recent years. The primary beneficiaries will be homeowners in states with high property taxes, such as New Jersey and New York.

The cap is gradually reduced for those with MAGI above $500,000 ($250,000 for a married individual filing separately), and taxpayers with MAGI of $600,000 or more will be limited to deducting $10,000 on their tax returns.

Consequently, homeowners who are eligible for the higher cap need to be even more mindful of their 2025 MAGI, says Robert Keebler, a CFP with Keebler and Associates in Green Bay, Wis. This phaseout is potentially more costly than the phaseout for the bonus standard deduction, he says.

Keebler offers this example: Suppose you’re married, file jointly and have a MAGI of $500,000. Your itemized deductions include $40,000 in state and local taxes. If you convert $100,000 from a traditional IRA or 401(k) to a Roth, your gross income rises to $600,000, and your state and local tax deduction is reduced to $10,000. While your gross income went up by $100,000, your taxable income rose by $130,000.

At a 35% marginal rate, your effective rate on the conversion is 45.5%.

As is the case with older taxpayers, homeowners who are eligible for the higher SALT cap should consider spreading out Roth conversions and taking other steps to keep their MAGI below the thresholds.

Homeowners in high-tax states may get even more out of the higher cap by bunching their itemized deductions.

For example, if you paid your 2025 property taxes earlier this year and receive a bill for 2026 in December, pay it before December 31 so you can deduct both payments on your 2025 tax return, Davido says.

Using the bunching strategy, you would claim the standard deduction in 2026 and make two property tax payments in 2027 so you can itemize in that year.

Bunching your charitable contributions is also an effective way to increase your itemized deductions and lower your tax bill.

A donor-advised fund is a useful tool for this strategy. These funds, offered by major financial institutions, allow you to make a large contribution, deduct the donation on the current year’s tax return, and decide later which charities you want to support.

However, there are other provisions in OBBBA that could reduce the effectiveness of this strategy, which we’ll discuss below.

NEW STRATEGIES FOR CHARITABLE CONTRIBUTIONS

As you consider your year-end charitable contributions, it’s important to understand new tax breaks for givers — along with new limits on how much some donors will be allowed to deduct.

Starting in 2026, taxpayers who don’t itemize can deduct up to $1,000 in charitable contributions, or up to $2,000 for married couples who file jointly. Donations to donor-advised funds and private foundations aren’t eligible for this new deduction.

If you don’t itemize and want to take advantage of this tax break, consider making the charitable contributions you’d ordinarily make by the end of this year in January 2026 instead.

Meanwhile, taxpayers who itemize on their tax returns and deduct charitable contributions will be subject to a new limit on the amount they can deduct. The maximum amount of cash gifts donors can deduct will remain at 60% of AGI.

However, starting in 2026, the deduction will be limited to the amount of charitable contributions that exceed 0.5% of adjusted gross income, Steffen says.

For example, a married couple with AGI of $100,000 who donate $700 to charity will be permitted to deduct only $200.

To avoid that new floor, itemizers may want to make their 2026 contributions in 2025, keeping in mind how that will affect other aspects of their tax bill.

Taxpayers in the top tax bracket (for 2025, that includes income higher than $626,350 for singles or $751,600 for joint filers) may also want to accelerate charitable contributions into 2025 because of a cap on all itemized deductions those taxpayers can claim.

Starting in 2026, the amount of itemized deductions taxpayers in the 37% tax bracket can claim will be limited to 35% of their taxable income.

MORE BENEFITS FOR HEALTH SAVINGS ACCOUNTS

A health savings account can be a valuable tool to set aside money for both current and future health care expenses. An HSA provides a triple tax break: Your contributions are tax-deductible (or pretax if made through your employer), the money grows tax-deferred, and you can use it tax-free for eligible medical expenses in any year.

After you turn 65, you can also withdraw money tax-free from the HSA for Medicare premiums, in addition to other out-of-pocket health care costs.

The new law has three HSA-related provisions. Starting on January 1, 2026, you can withdraw up to $150 per month ($300 for couples) from an HSA tax-free to pay monthly or annual fees for direct primary care arrangements (also known as concierge medicine), in which doctors provide services in exchange for a membership fee.

The law also clarifies that enrolling in a direct primary care arrangement does not disqualify someone from being able to contribute to an HSA if they also have an eligible high-deductible health policy.

Not all concierge practices qualify under the new law as direct primary care arrangements — there are limits to the types of services they can provide beyond primary care.

Additionally, the law permanently exempts telehealth services from the HSA-qualified plan deductible. Most medical care, except for some preventive care, must be subject to the deductible for a health insurance policy to be HSA-qualified.

During the COVID pandemic, you could receive some telehealth services without first paying the plan’s deductible — typically with a $5 or $10 co-payment — but that rule expired at the end of 2024. The OBBBA permanently exempts telehealth from the deductible requirements, retroactive to January 1, 2025.

Finally, bronze plans and catastrophic plans sold on the Affordable Care Act insurance marketplace will automatically be HSA-qualified, starting with the 2026 plan year.

Using an HSA-eligible bronze plan and making tax-free withdrawals from your HSA to pay for direct primary care could be a win-win, says Roy Ramthun, founder and president of HSA Consulting Services LLC in Silver Spring, Md.

You can sign up for direct primary care for your regular doctor’s visits but have a high-deductible bronze plan as a backstop if you end up needing expensive medical care. You’ll be eligible to contribute to an HSA, and you can also use HSA money tax-free to pay the monthly direct primary care fees.

Notably, the version of the OBBBA that originally passed the House of Representatives would have allowed people who sign up for Medicare Part A to contribute to an HSA. But that provision wasn’t included in the final law, so the current rules still stand: You can make HSA contributions only if you haven’t enrolled in either Medicare Part A or Part B.

If you or your spouse is still working and you have health insurance from an employer with 20 or more employees, you can delay signing up for Part A and Part B. But you must enroll within eight months of losing that coverage; otherwise, you could face a lifetime late-enrollment penalty for Part B.

If you sign up for Part A after you turn 65, that coverage takes effect up to six months retroactively. Keep that time frame in mind when calculating your HSA contribution.

CHANGES TO THE HEALTH INSURANCE MARKETPLACE

Several administrative changes are coming to Affordable Care Act marketplace coverage because of provisions in the OBBBA, as well as new rules from the Centers for Medicare & Medicaid Services.

The open-enrollment period to sign up for a marketplace plan will be shorter. Next year, open enrollment for the federal marketplace (HealthCare.gov) will run from November 1, 2026, to December 15, 2026. States that operate their own marketplaces won’t be allowed to extend open enrollment past December 31. Currently, open enrollment goes to January 15, and even longer in some states.

Before you enroll in a marketplace plan, you’ll need to provide evidence of income eligibility for tax credits for your premiums. (Currently, you have 90 days after you enroll to submit the information.)

If your income increases after you enroll and you don’t update your information with the marketplace, you may have to pay back the extra subsidy when you file your income tax return.

Under the previous rules, there were limits to how much you have to pay back if you underestimate your income.

Enhanced subsidies are scheduled to expire

Perhaps the most consequential outcome for ACA plan enrollees is that the OBBBA didn’t extend enhanced premium subsidies for marketplace coverage. The enhanced subsidies are set to expire at the end of 2025, and Congress probably won’t pass additional legislation to extend them.

So the size of the subsidies and the income levels to qualify are likely to shrink significantly on January 1, 2026. People who earn more than 400% of the federal poverty level will no longer be eligible for any subsidies after 2025. For 2026 marketplace plans, 400% of the poverty level is $62,600 for singles and $84,600 for couples.

If you have individual health insurance from the ACA marketplace and you plan to do Roth conversions, you may want to convert more money before the end of 2025 than in 2026, when the extra income may make you ineligible for the subsidy.

“For a retired client, we’ve been able to do about $100,000 of Roth conversions yearly with the enhanced premium tax credits,” says Mark Whitaker, a CFP and founder of Retirement Advice LLC, a fee-only financial planning firm in Provo, Utah.

“Going forward, to hit their ACA subsidy levels, they will only be able to do about $60,000 of Roth conversions a year.”

But be sure to consider other variables, too, such as your tax rate and other income cut-offs. (For more, see the section above on the bonus deduction for older people.)

UPDATES FOR FAMILIES

If you have kids at home, you may benefit from multiple provisions in the OBBBA.

More-generous tax credits for parents

The OBBBA permanently extends the child tax credit and increases it to $2,200 per child, up from $2,000. The credit phases out for singles with modified adjusted gross income of $200,000 or more and married couples who file jointly with MAGI of $400,000 or more.

The OBBBA also makes permanent a separate credit of up to $500 for families with other dependents, such as parents or adult relatives.

The adoption tax credit is more valuable, too. If you adopted a child this year, you can claim a credit for up to $17,280 in eligible expenses. Here’s what’s new: $5,000 of the tax credit will be refundable.

In other words, taxpayers with tax liability of less than $5,000 can still claim that portion of the credit, which means some of that amount could be returned to parents as a refund.

Starting in 2026, the maximum tax credit parents can claim for child and dependent care expenses, such as the cost of day care or a nanny, will increase to 50% of as much as $3,000 in expenses for one dependent and 50% of as much as $6,000 for two or more dependents (both up from 35%).

The credit decreases based on adjusted gross income to as little as 20% of expenses, but OBBBA increased the income thresholds. For married couples with AGI between $150,000 and $210,000, the credit ranges from 35% to 20%. Couples with AGI of $210,000 or more are eligible for a credit of 20% of expenses.

Expanded uses for 529s

Originally designed as a tax-advantaged way to save for college, 529 plans have been expanded over the past several years to permit tax-free withdrawals for certain non-college expenses, too. The OBBBA extends these uses even further.

“The new rules allow up to $20,000 per year to be used for elementary and secondary school tuition, course materials, tutoring, fees for standardized tests, and more,” says Robert Farrington, founder of the website The College Investor.

Previously, tax-free withdrawals of 529 money for K-12 students were limited to tuition, up to $10,000 annually.

The legislation also permits tax-free 529 withdrawals for certain other expenses, such as non-degree credential programs for plumbing, electrical, HVAC and some other trades; certification and licensing expenses; and continuing education required to maintain those licenses.

That means beneficiaries who don’t go to college will have additional ways to benefit from tax-advantaged 529s.

The law permanently allows rollovers from 529 plans to ABLE accounts, where the money can continue to grow tax-deferred for people with disabilities who may not go to college.

Most of the changes related to 529 distributions took effect as soon as the law was signed on July 4, although the increased, $20,000 annual limit for K-12 expenses doesn’t apply until the 2026 tax year.

Keep in mind that not all states have altered their rules to follow the federal expansion. “For example, California doesn’t allow 529 plans to be used for elementary or secondary school expenses,” says Farrington.

Trump accounts for kids

The OBBBA introduces a new investment account — known as a Trump account — for kids younger than 18, and the government will seed the account with $1,000 for children born between January 1, 2025, and December 31, 2028.

Parents and others can contribute up to $5,000 a year to the account until the child turns 18. Contributions are invested in a fund that tracks a broad U.S. stock index, and they grow tax-deferred.

You may have better options for your child’s long-term savings. Annual contributions are not tax-deductible, and earnings are taxed at the beneficiary’s income tax rates when withdrawn.

Unless the money is used for certain expenses, such as education or up to $10,000 for a first-time home purchase, you’ll have to pay a 10% early-withdrawal penalty before age 59½.

“The only advantage of Trump accounts is the $1,000 birthday gift for newborn children. Families should, of course, accept the free money,” says Mark Kantrowitz, a college-savings expert and author of How to Appeal for More Financial Aid.

But for your child’s future college expenses, you’re better off contributing to a 529 plan, because withdrawals for qualified educational expenses are tax-free.

LAST CHANCE TO CLAIM TAX CREDITS FOR THESE ENERGY-SAVING MOVES

The OBBBA speeds up the deadlines to take advantage of certain tax credits related to saving energy.

The Energy Efficient Home Improvement Credit, which provides a 30% tax credit toward the cost of energy-efficient windows, home energy audits, heat pumps and other energy-saving home improvements, was previously scheduled to phase out in 2033. (The law imposed annual limits for certain projects, such as $600 for exterior windows and skylights.)

But now, the credit expires at the end of 2025. The Residential Clean Energy Credit, which provides a tax credit of up to 30% for more-ambitious projects, such as solar electric panels and solar water heaters, will also expire on December 31. The equipment must be installed and operational by year-end to qualify for the credit.

Additionally, the $7,500 EV tax credit to buy or lease qualified electric vehicles, along with the $4,000 credit for eligible used EVs, ends September 30, 2025.

At the same time, however, the OBBBA provides a new tax break for car buyers: a deduction of up to $10,000 in interest on loans for cars purchased between 2025 and 2028.

You don’t have to itemize to claim this deduction, but it’s available only for loans taken out to buy new cars assembled in the U.S., which rules out many popular models. The deduction phases out for individuals earning more than $100,000 or married couples making more than $200,000.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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Gov. Ron DeSantis has repeatedly called for a “concrete proposal” on the state’s 2026 ballot to reduce or eliminate property taxes. Voters must approve any major changes to the Florida property tax system with a 60% “yes” vote.

However, some local officials argue that eliminating the property tax in Florida is problematic, particularly since jurisdictions rely heavily on property taxes to fund school, health and other public service programs.

Here’s more of what you need to know about where things stand with Florida property taxes.

Property tax relief proposals in Florida

As Kiplinger reported, DeSantis first proposed eliminating Florida property taxes in February of this year. Even though the proposal is facing legal hurdles and disagreements, a demand for some form of property tax relief has gained enough public interest to justify the formation of a legislative committee.

The Florida House Select Committee on Property Taxes has been tasked with reviewing property tax relief proposals for the upcoming year.

Among the considered proposals for Florida property tax relief:

• Eliminating the state’s property taxes. This is perhaps the most highly debated proposal, as a significant alternative funding source would have to be found (more on that below).
• Broadening the “portability” provision for an existing tax break. Although homeowners can already transfer their Save Our Homes (SOH) (PDF) tax savings from a former homestead to a new one when they move, a potential proposal would increase the allowable transfer amount.

Earlier this year, state lawmakers proposed bills that would raise the recently increased Florida homestead exemption from $50,000 to $75,000 (and one bill proposed raising it to $100,000). Another idea from DeSantis was to offer Florida residents a $1,000 property tax rebate. Yet, all three proposals failed to pass.

Florida property taxes: Necessary or a ‘waste?'

The property tax reform committee has heard objections from some Florida city and county officials against proposed property tax breaks.

During a hearing in September, Casey Cook, chief of legislative affairs at the Florida League of Cities, stated, "Waste is in the eye of the beholder. Nobody likes paying taxes, but safe isn't free. Clean isn't free."

Cook’s remark was in response to DeSantis and other top state officials, who have levied allegations of “waste, fraud and abuse” against Florida localities in recent months. DeSantis claims local spending waste is contributing to soaring property taxes in the Sunshine State.

Many local officials, however, note that increased property tax bills are a result of inflation and higher property values, rather than increased tax rates.

Other locals are reportedly concerned about a "one size fits all" mentality when it comes to state property tax relief.

Cragin Mosteller of the Florida Association of Counties shared with ABC7 News that counties are willing to work with lawmakers on property tax relief, but that reform should consider the unique needs of each community.

Mosteller added, “If you think about the things, whether that’s public safety, fire service, libraries … all of those things are paid for with your property taxes.”

Florida property tax cut funding

Florida collects roughly $43 billion annually in property tax revenue. This funding covers essential taxpayer services, such as public safety, schools, infrastructure and parks.

To make a large-scale property tax cut work, an alternative funding source must be found. The 2025 Florida property tax relief debate has led to several proposals to fund tax cuts:

• An initial state budget draft suggested diverting Florida’s “bed tax” to compensate for property tax cuts. But the proposal wasn't incorporated into the 2025-2026 budget due to potential harm to tourism marketing and promotion efforts.
• Another proposal suggested hiking the state’s sales tax to compensate for lost property tax revenue. However, Florida would need to double its sales tax rate to 12%, according to the Florida Policy Institute.

The next state House hearing is this month. Lawmakers will actively pursue a formal property tax relief proposal with a target goal by November or December 2025. If formalized, the proposed legislation could appear on Florida’s November 2026 ballot.

Stay tuned.

Read More

• 10 Cheapest Places to Live in Florida
• How to Reduce Your Property Tax
• Ten Tax Breaks for Homeowners in 2025
• Florida Tax Guide

The event is not because of any special program, like how STAR payments are issued. Instead, New York is providing one-time relief checks to help offset higher sales taxes due to increased inflation.

“This is your money and we're putting it back in your pockets,” Governor Kathy Hochul said in a press release.

However, not everyone’s pockets will qualify for a check — especially if you’re new to the area or make too much money.

NYS inflation check 2025

The inflation refund checks are for eligible New Yorkers who have lived and paid taxes in the Big Apple State. These one-time payments are part of a 2025-2026 state budget provision designed to provide residents with some relief from increased inflationary costs.

In total, 8.2 million payouts will be mailed over the coming weeks, according to Hochul’s office.

Here’s who qualifies for a NY inflation refund check

Eligibility for New York inflation refund checks is based on 2023 state income tax information. For that tax year, you must have met the following criteria:

• You were a full-time New York resident and filed a state income tax return (Form IT-201).
• You were not claimed as a dependent on another taxpayer’s return.
• Your reported income fell within the specified inflation check thresholds (more on that later).

New York inflation tax refund income amounts

To receive an inflation relief payment, your 2023 New York adjusted gross income (AGI) must meet the following requirements.

• Single filers must have $150,000 AGI or less to qualify.
• Joint filers must earn $300,000 AGI or less to qualify.

Heads of household and married individuals filing separately must have made $150,000 AGI or less to qualify for a New York inflation refund. Qualifying surviving spouses may receive one if they earned no more than $300,000 AGI.

Inflation refund check amounts

The amount you receive from the New York inflation check payout will vary based on your AGI and how it compares to specific thresholds and filing statuses. Here’s a schedule below:

You can’t check the status of the NY inflation relief check

Per the New York Department of Taxation and Finance:

• No delivery schedule for inflation refund payments, and
• Contact center representatives (state call centers) will not be able to provide the status of your check.

Plus, payouts won't be issued based on zip code. That means you may receive your check sooner than your neighbor, or vice versa, according to state officials.

But on the bright side, New York inflation refund checks are expected to be distributed quickly. The first batch will be mailed at the end of September, with continual mailouts happening throughout the fall season and into November 2025.

How do I apply for a NY State inflation refund?

There’s no need to apply for a New York inflation relief check. The payments will be automatically mailed if you meet the eligibility criteria outlined above.

Your check will also be sent to the address on your most recently filed state tax return. So, if your current address doesn’t match your 2024 income return (or earlier, if you didn’t file a return last filing season), you should update your address now via your individual online services account.

New York inflation relief checks will be mailed

New York inflation refund checks will be mailed to your address. Even if you chose direct deposit for your last tax refund, the state will not honor electronic methods of payment for inflation relief refunds.

But if you owe the state tax money, your inflation refund check won’t be on the hook for that, at least. That’s because inflation relief payments will not be applied to any outstanding balances with New York.

More on New York

• New Yorkers to Receive STAR School District Property Tax Relief
• 10 Cheapest Places to Live in New York
• New York Tax Guide

But tax planning while investing is crucial. Not only can you minimize federal taxes through strategies like tax-loss harvesting, but if you live in a low-tax state, you might reduce investment taxes on your passive income.

So here are two states that could give investors a “tax-friendly” edge in the marketplace — should you decide to move.

The most tax-friendly states for investing

To determine the “most tax-friendly states for investing,” Kiplinger first ranked each state based on three key factors.

First, only states that don’t tax capital gains, income taxes, interest, or dividends were considered. Of those eight, Kiplinger selected the two states with the lowest effective property tax rates.

Property taxes were based on the most recent data provided by ATTOM Data Solutions, which surveyed property tax rates from 84.9 million U.S. single-family homes.

Lastly, state and local sales tax rates were referenced from the most recent dataset issued by the Tax Foundation.

But no matter where you move, federal income taxes will still apply.

Best states for investors who hate paying taxes in 2025

Nevada and Tennessee.

Many types of state taxes are either low or nonexistent in Tennessee and Nevada, making these two the most tax-friendly for investing in 2025.

Here are just a few reasons why Nevada and Tennessee topped our list:

• There are no individual income taxes in either state. (That includes wages, retirement distributions, and investment income on capital gains, interest, or dividends.)
• Property taxes are about half the national average of .90%. Both Tennessee and Nevada have relatively low effective property tax rates of .44% and .48%, respectively, according to ATTOM.
• Neither Tennessee nor Nevada has state-level inheritance or estate taxes. Without paying so-called state “death taxes,” you could pass on more investment wealth to your heirs.

Best low-tax states to invest in real estate, rental property, and other investment buys

However, choosing the state that offers the most potential tax benefit may depend on the type of investments you hold. For example, many types of investments generally reap similar state tax benefits regardless of whether you live in Tennessee or Nevada.

So, when it comes to naming the “most tax-friendly states for investing,” Kiplinger selected two primary types of investments: real estate and collectibles.

Your investment choices and the duration of those investments might lead you to prefer one state over another as the most "tax-friendly" for your specific investment strategy.

For instance:

• Tennessee could offer more state tax benefits to landlords than Nevada. Not only does Tennessee have a slightly lower property tax rate compared to Nevada, but the Volunteer State also has a lower overall median property tax bill of $1,695 (Nevada’s is $2,660), as reported by Kiplinger.
• This means you might save on state property taxes when renting out long-term properties (more than 180 days). (Depending on the specific geographic area, of course.)
• However, Tennessee is also one of the states with the highest sales tax rates in the U.S. Investors could pay up to 9.75% in combined state and local sales taxes, per the Tax Foundation. This includes large investments such as boats, cars, short-term rentals, and even some essential living expenses, like clothing.
• On the flip side, Nevada's maximum sales tax rate is 8.375%. This translates to potential savings of up to $1.37 per $100 spent on purchases in Nevada compared to those in Tennessee. Plus, Nevada has no statewide short-term rental tax, meaning state taxes on vacation rentals can be lower compared to Tennessee.*

*Note: While there is no statewide short-term rental tax in Nevada, counties and cities may enact local tax rates and fees.

Is Nevada or Tennessee a good place to live?

Before you pack your bags for a move to Tennessee or Nevada, there are other important factors to consider.

Kiplinger’s ranking considered state tax burdens for investors; however, you may want to research other key considerations like cost of living, crime rates, and political climate before relocating.

• For example, Nevada is generally considered a “business-friendly” environment, with no corporate income tax rate, which may appeal to entrepreneurs. At the same time, the state faces challenges in healthcare access, quality, and outcomes. Nevada recently ranked 46th in a national report released by The Commonwealth Fund.
• Meanwhile, Tennessee has a generally low cost of groceries, housing, and transportation compared to national averages. However, the Volunteer State has struggled with higher-than-average poverty rates in recent years, according to the U.S. Census Bureau.

Of course, you can live in your home state and buy an investment (like property) in another. But if you do that, you’ll likely need to file two state tax returns, which could increase the cost of your tax return and make your financial situation more complicated.

Overall, it’s important to consider your unique financial and lifestyle circumstances when planning a move to another state.

Because even if Nevada or Tennessee is the most tax-friendly for your investments, if those places don’t work for your family, your home state may be the perfect fit after all.

Read More

• What is the Net Investment Income Tax (NIIT) and Who Pays It?
• How High-Yield Savings Accounts are Taxed
• Capital Gains Tax on Real Estate and Home Sales
• States With Low and No Capital Gains Tax in 2025

On its own, that tax might not get a lot of attention. However, the new levy, which supporters say would help address housing shortages and fund affordable housing programs, has been trending on social media, after being nicknamed the “Taylor Swift tax.”

Just to be clear: Swift is not directly involved with the tax, but reportedly owns a sprawling $17 million mansion in the upscale Watch Hill area of Rhode Island, which would be subject to the new measure.

As a result, the property tax fee puts the Ocean State at the forefront of a growing movement to tax owners of high-end vacation properties.

So the question on some homeowners’ minds is: Could a similar so-called "Taylor Swift Tax" be coming to your property in another state? Here’s more to know.

What the ‘Taylor Swift Tax’ means for vacation homes in 2026

Under what is officially called the Non-Owner Property Tax Act, the following will take effect in Rhode Island as of July 1, 2026:

• Rhode Island’s new tax will impact second homes valued at $1 million or more as of Dec. 31st of the tax year and not used as a primary residence or rented out for at least 183 days per year.
• The surcharge applies to every $500 of assessed value above $1 million at a rate of $2.50 per $500.
• So, a $3 million second-home owner could face a surcharge of approximately $10,000 annually, in addition to regular property taxes.

The surcharge is designed to encourage owners to either use their properties more frequently or make them available for rent, reducing the number of empty houses. According to state officials, the tax base will adjust annually for inflation starting in 2027.

While the tax targets all non-owner-occupied properties over $1 million, the association with Swift’s beachfront estate has made the nickname stick in headlines.

For example, for Swift’s Watch Hill mansion, the tax will add approximately $136,000 annually, reportedly nearly doubling the current property tax bill for that property.

Why Rhode Island is leading the way

In Rhode Island, coastal towns have experienced soaring home prices and a shortage of affordable housing. Some say wealthy absentee owners contribute to this by buying second homes, which have driven prices up, leaving homes vacant for large parts of the year.

Some lawmakers see the “Taylor Swift tax” as a win-win approach: generate new revenue to invest in affordable housing and nudge absentee owners to either use or rent their properties more regularly.

But not everyone is on board. Some real estate agents and some residents say that the tax unfairly penalizes people who already pay substantial property taxes and contribute significantly to local economies.

• The argument is that many of these second homeowners, including long-time families and investors, are vital patrons of local businesses, restaurants, and services, even if they don’t live there year-round.
• Critics also worry that the surcharge could chill the market, forcing some owners to sell and potentially harming towns that rely on second-home tourism revenue.

Will other states follow and increase property taxes on vacation homes?

Rhode Island isn’t alone on this. Similar surcharges on expensive vacation homes and second homes have been proposed or enacted in states like Montana and localities in California and Massachusetts.

Montana: Starting in 2025, Montana implemented a graduated property tax system that increases rates on luxury homes and non-primary residences. Homes valued above $1.5 million face a tax rate of 2.2%, higher than the lower brackets for more modest homes. This new structure was signed into law by Gov. Greg Gianforte.

Cape Cod: Cape Cod is considering a 2% transfer fee on luxury home sales over $2 million to help fund affordable housing. The proposal, backed by local leaders and housing advocates, is currently under review by the Barnstable County Assembly of Delegates. If approved, the fee could generate up to $56 million annually to support year-round housing for working families, seniors, and young people.

L.A. “mansion tax”: As Kiplinger has reported, Los Angeles’ Measure ULA in California, the so-called “mansion tax,” was approved by voters in 2022 and took effect in April 2023. As of July 1, 2025, it imposes a 4% transfer tax on property sales between $5.3 million and $10.6 million, and a 5.5% tax on sales above $10.6 million, reportedly generating hundreds of millions of dollars for affordable housing and homelessness programs.

As state and local governments look for new revenue streams, these models could offer a framework for states looking to balance tax fairness and affordability in the housing market.

Rhode Island ‘Taylor Swift Tax’: What homeowners need to know

If you own a second home in Rhode Island — or are considering buying — take note of this tax change. Owners planning to keep their properties mostly empty may face a steep surcharge starting in mid-2026.

To avoid the tax, owners may have to either make the home their primary residence (spending at least half the year there) or rent it out for the majority of the time.

Whether the so-called “Taylor Swift Tax” succeeds will be a story that “Swifties,” homeowners, and policymakers will watch.

In the meantime, pay attention to key tax changes in your state and consult a trusted tax professional to understand how any changes might impact your bottom line.

Read More

• The Mansion Tax: Do You Need to Worry About It This Year?
• Most Expensive States to Live in for Homeowners
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Hawaii is slated to impose a so-called “green fee” tax next year, which will impact the nightly lodging charges for hotels and vacation rentals. The fee, designed to mitigate climate change in the Aloha State, could impact as many as 300,000 cruise ship passengers annually.

That’s because for the first time, the levies will also target cruise ships docking in Hawaii ports.

Opponents of the proposed 2026 Hawaii tourism tax argue that the additional charges could deter tourists from booking cruises to the islands. They suggest that visitors might choose alternative destinations for significant life events like weddings, family holidays, retirements, and honeymoons.

Before the tax kicks in, some opponents are taking legal action.

Cruise Lines International Association filed a complaint on Aug. 27, arguing that the climate impact fees imposed on cruise ships violate federal law in three ways — conflicting with the Tonnage Clause of the U.S. Constitution, freedom of speech protections, and federal navigation laws.

Meanwhile, the state counters that the “green tax” imposed on tourists' nightly lodging accommodations will fund necessary climate and conservation projects, which are “critical” to the health and safety of locals and visitors.

Here’s what you need to know about Hawaii’s planned tourism tax, and how it may impact your 2026 vacation.

What is Hawaii’s tourism tax?

Hawaii's new "green fee" tax, slated to take effect in 2026, expands the transient accommodations tax (TAT) charged on your nightly lodging at a hotel or vacation rental. For the first time, the levies will also target cruise ships that port in the Aloha State.

The tax, as reported by Kiplinger, aims to create a consistent funding source for conservation and rebuilding initiatives in Hawaii.

The measure (Act 96) was signed into law by Hawaii Gov. Josh Green this spring and raises the TAT by 0.75% to 11% beginning in 2026. In 2027, the fee is expected to increase again to 12%.

That’s not all, Hawaii’s four counties can add an extra tax on top of the state TAT. All of them have decided to add the maximum possible, which is another 3%. Overall, tourists could be charged a total tax of 14% per nightly accommodation next year.

According to the governor's office, the green fee is projected to generate $100 million annually. As mentioned, the measure will fund projects including environmental stewardship, climate and hazard resiliency, and sustainable tourism.

For more information: Hawaii Approves First-of-its-Kind ‘Green Fee’ for Tourists.

Cruise operators and local businesses challenge Hawaii tourism tax

A new lawsuit challenges Hawaii's expanded transient accommodations tax, with a major cruise industry group and local tourism businesses claiming the measure is unconstitutional.

Opponents of the tax seek to prevent the so-called “green fee” from taking effect in 2026.

The plaintiffs, led by Cruise Lines International Association, a global advocacy group representing most cruise lines, note the law would also authorize Hawaii counties to collect an additional 3% surcharge, bringing the total tourism tax to 14%.

• Gov. Green says the fee will translate to visitors paying an additional $3 per night on a $400 room stay in a Hawaii hotel, cruise ship, or other rental vacation lodging.
• You may want to keep that in mind if you’re planning to book a popular trip like the Hawaii Disney Cruise Line adventure for you and your loved ones next year.

One of the main concerns of those challenging Hawaii’s new green fee tax is that the new charge may “cause many potential visitors to vacation elsewhere.”

According to the lawsuit, the cruise industry brings in thousands of visitors to Hawaii each year, supporting thousands of local jobs and contributing to an annual economic growth of over $600 million.

The plaintiffs argue that the new tax could have a “devastating” impact on cruise ship operators and local businesses.

As reported first by the Associated Press, the plaintiffs are seeking a preliminary injunction to declare Act 96’s cruise-related provisions unconstitutional and block its enactment on January 1, 2026.

If they are successful in blocking the measure, that could potentially save tourists a couple of hundred dollars in vacation taxes next year.

“No other State imposes comparable fees — and for good reason,” wrote attorneys representing the Cruise Lines International Association in a motion, the AP reported. They added that ports shouldn’t be used by states for their own “revenue-raising interests.”

The defendants, which include state and county finance officials and the Hawaii Department of Taxation, have yet to release a statement on the pending litigation.

For now, stay tuned for developments as we cover how this may impact your travel plans to the Aloha State next year.

Related

• Hawaii Tax Guide
• Key State Tax Changes to Know for 2025
• Hawaii Approves First-of-its-Kind ‘Green Fee’ for Tourists: What to Know

1. How did the OBBB affect the SALT deduction?

Question: What changes did the “One Big Beautiful Bill” (OBBB) make to the state and local tax (SALT) deduction?

Joy Taylor: The 2017 Tax Cuts and Jobs Act (TCJA) imposed a $10,000 federal cap on the deduction for state and local taxes claimed by itemizers on Schedule A of Form 1040. Specifically, under the TCJA, filers could deduct on Schedule A any combination of state and local property taxes, and income or sales taxes, up to a total of $10,000. Married couples filing separate federal tax returns could deduct only up to $5,000 apiece. The cap was temporary and was set to expire at the end of 2025.

The OBBB increased the SALT deduction cap to $40,000 for five years (2025-2029). It goes back down to $10,000, beginning in 2030, unless Congress otherwise acts to raise it again at that time. The cap for married couples who file separate returns is $20,000 apiece for 2025-2029.

There is also an income limit. For 2025, the SALT write-off begins to phase out, but not below $10,000, for filers with modified adjusted gross incomes (modified AGI) over $500,000 ($250,000 for married couples who file separate returns). More specifically, the $40,000 cap is reduced by 30% of the excess of the taxpayer’s modified AGI over the $500,000/$250,000 levels. When modified AGI reaches $600,000 or higher, the $10,000 SALT deduction cap applies.

Modified AGI for this purpose is AGI plus any foreign earned income exclusion, foreign housing exclusion, and certain income excluded from gross income because it was received from sources in Puerto Rico, American Samoa, Guam or the Northern Mariana Islands.

The $40,000 cap and $500,000 modified AGI threshold will increase 1% each year through 2029. For example, for 2026 returns, the SALT deduction cap will be $40,400 and the income limit at which the deduction will begin to phase out will be modified AGI over $505,000.

2. When does the new cap apply?

Question: When does the $40,000 cap on deducting state and local taxes kick in? Can I deduct it on my 2025 Form 1040 if I itemize?

Joy Taylor: As discussed in the first question, the $40,000 cap is for 2025-2029. That means that the higher limit will apply to your 2025 federal tax return that you file next year, provided you itemize on Schedule A of Form 1040.

3. Can I claim the standard deduction and SALT?

Question: Can people who claim the standard deduction on Form 1040 also deduct their state and local taxes that they pay?

Joy Taylor: Generally, no. If you claim the standard deduction on your Form 1040, then you can’t also itemize and deduct your state and local taxes. Note, however, that if you are self-employed, you can deduct your property and sales taxes in full on Schedule C. Farmers can fully deduct state and local property taxes on Schedule F. And landlords can deduct on Schedule E the property taxes they pay on real estate.

4. How does the OBBB affect state workarounds?

Question: Did the OBBB restrict state workarounds for owners of partnerships, LLCs and other pass-through entities?

Joy Taylor: No. Most states enacted workarounds after 2017 to help lawyers, accountants, doctors and other individuals who are partners in partnerships, members of LLCs or shareholders in S corporations, circumvent the then-$10,000 SALT deduction cap. These workarounds, commonly known as the pass-through entity tax (PTET) regime, allow partnerships and other pass-through entities to elect to pay an entity-level state income tax instead of having the entity’s owners pay state tax on the entity’s income that is passed through to them. The owners then get a state tax break for their pro-rata share of tax paid by the firm. When an election is made, state income tax payments shift from the business owners, who are subject to the SALT cap, to the pass-through entities, which are not.

The House version of the OBBB included language that would have ended these popular state PTET workarounds. The Senate version, which ultimately became law, removed that language.

5. SALT write-off and AMT

Question: How does the SALT deduction claimed on Schedule A interact with the alternative minimum tax (AMT)?

Joy Taylor: AMT is due to the extent it exceeds regular federal income tax liability. Prior to 2018, many upper-income individuals who were subject to AMT did not get a tax benefit from SALT write-offs. That's because in figuring alternative minimum taxable income, taxpayers have to add back in SALT deductions taken on Schedule A. The 2017 TCJA temporarily defanged much of the AMT through 2025, resulting in far fewer taxpayers paying AMT now, compared with pre-2018 years.

The OBBB made the 2017 easings to the AMT permanent — with some changes. This means that the vast majority of taxpayers will not be subject to the AMT. However, since the SALT deduction is still not allowed for AMT purposes, taxpayers who claim the up to $40,000 SALT deduction on Schedule A and who are subject to the AMT might owe more AMT than in 2018-2024. But the new modified AGI phaseout rules for deducting state and local taxes on Schedule A will more likely adversely impact upper-income taxpayers than the interaction of the SALT deduction and AMT.

About Ask the Editor, Tax Edition

Subscribers of The Kiplinger Tax Letter, The Kiplinger Letter and The Kiplinger Retirement Report can ask Joy questions about tax topics. You'll find full details of how to submit questions in each publication.
Subscribe to The Kiplinger Tax Letter, The Kiplinger Letter or The Kiplinger Retirement Report.

We have already received many questions from readers on topics related to tax changes in the OBBB and more. We will continue to answer these in future Ask the Editor round-ups. So keep those questions coming!

Not all questions submitted will be published, and some may be condensed and/or combined with other similar questions and answers, as required editorially. The answers provided by our editors and experts, in this Q&A series, are for general informational purposes only. While we take reasonable precautions to ensure we provide accurate answers to your questions, this information does not and is not intended to, constitute independent financial, legal, or tax advice. You should not act, or refrain from acting, based on any information provided in this feature. You should consult with a financial or tax advisor regarding any questions you may have in relation to the matters discussed in this article.

More Reader Questions Answered

• All Ask the Editor Q&As
• Ask the Editor: Questions on the New Tax Law
• Ask the Editor: Questions on the $6,000 Senior Deduction
• Ask the Editor: Questions on home sales and taxes
• Ask the Editor: Questions on Inherited IRAs

Well, actually, some state lawmakers are already looking for ways to avoid some of the policy revisions enacted in the OBBB — and they might do so as early as their next state legislative session.

For instance, while the OBBB phases out the federal electric vehicle (EV) tax credit very soon, California officials are trying to enact a state EV tax break that could help counteract the elimination.

Meanwhile, many states have passed workarounds to the federal state and local tax (SALT) deduction cap, and still others may never accept the OBBB as part of their state tax code.

What does all of this mean for you and your tax bill? Here’s more of what you need to know.

Related: Emergency Tax Bill Ends $6,000 Senior Deduction and Tip, Overtime Tax Breaks in D.C.

Gavin Newsom calls for EV tax credit replacement

The latest challenge to the new Trump tax law began before the OBBB was officially signed into law on July 4, 2025.

In June, President Trump enacted three resolutions preventing California from setting stricter emissions standards than those established by the federal government.

Governor Gavin Newsom issued an executive order in response (in addition to a lawsuit), directing California agencies to devise strategies for promoting zero-emission vehicles. And late last month, the California Air Resources Board (CARB) delivered on that directive.

CARB, which is tasked with the state’s public welfare and ecological resources, has outlined a strategy to support clean transportation production. The report includes:

• Backfilling federal tax credits. CARB intends to sustain sales of new and used zero-emission electric vehicles by utilizing state funds for point-of-sale rebates, vouchers, and other credits.
• Developing more educational pathways to EV jobs. The plan also aims to facilitate equitable access to college courses, apprenticeships, and certification programs within the clean transportation sector.

If accomplished, the items outlined in the CARB report could counteract the expiring EV tax credits in the OBBB. So even when the federal EV tax credit goes away, California residents may still reap the benefits of a state tax break if it becomes law.

SALT deduction cap: State workarounds

The OBBB temporarily raises the SALT deduction cap to $40,000 from $10,000. This means itemizing eligible taxpayers below a certain income limit may only deduct up to this amount on their federal income tax return until 2029 (with an annual 1% increase beginning in 2026).

After that time, the cap reverts to the Tax Cuts and Jobs Act (TCJA) cap of just $10,000.

However, many states have sought strategies to circumvent the SALT cap ever since the TCJA set a limit. The principal avoidance method is through Pass-Through Entity Taxes (PTETs).

• PTETs enable businesses like limited liability companies, S corporations, and partnerships to pay state taxes at the entity level instead of at the individual level.
• This effectively bypasses the SALT cap of $10,000, as this limit does not apply to entity-level returns.
• According to the Tax Foundation, 36 states have adopted PTETs since 2018, the year the TCJA was enacted.

As reported by Kiplinger, taxpayers in high-property tax states are often hit the hardest by a SALT deduction cap. And as property taxes are one of the top hidden home costs among buyers with regrets, states may continue to search for ways to circumvent the federal SALT limit.

Does my state have to accept Trump’s tax law?

Even though the OBBB is federal law, it doesn’t have to be part of state tax laws. That’s because states have three options when it comes to adopting current federal tax policy:

• Rolling conformity. States can automatically follow the latest federal rules for the current tax year. There are approximately 20 states and the District of Columbia that follow this standard.
• Static conformity. About 17 states currently conform to federal tax law as of a specific date, according to the Tax Foundation. Typically, static states update their conformity date every year through legislation.
• Selective conformity. Four states can choose to have selective conformity, meaning they can “pick and choose” which parts of the federal tax law to follow, rather than adopting the tax code in its entirety.

The states with selective conformity — Arkansas, Mississippi, New Jersey, and Pennsylvania — have the most relative leeway in determining how much of the federal tax code to accept in their state individual income tax codes. They may choose “the best parts” of the OBBB for their constituents, while leaving the rest on the table.

And although most state legislature sessions had closed by the time OBBB was passed, that hasn’t stopped some states, like Colorado and Louisiana, from calling special sessions to discuss the implications of the new federal tax law on state taxpayers.

During state legislative special sessions, lawmakers can enact new laws to sometimes lessen the impact of new federal legislation.

With many states having depleted COVID-era federal aid, and the OBBB potentially lowering state revenue projections, 2026 could be an interesting (and perhaps tumultuous) year for state tax legislation. Stay tuned.

Read More

• Five States Are Worse Off After Trump’s Cuts to SNAP and Medicaid
• Could Tax on Overtime End for Your State This Year?
• New SALT Deduction Could Save Californians Thousands
• States Considering Elimination of Taxes on Tips

Unfortunately, the wide selection of music and entertainment in the Volunteer State can come with a hefty price tag, particularly when it comes to property taxes.

For instance, Davidson County (where Nashville is located) has a median annual property tax bill of $2,390 according to the U.S. Census Bureau — nearly five times the lowest bill in the state.

Yet several places in Tennessee have relatively low property taxes, which might help you and your wallet. Here they are.

Cheapest places to live in Tennessee

After Kiplinger ranked property tax bills from highest to lowest per county in Tennessee, one trend jumped out: Rural areas are the cheapest. You’ll typically find a more affordable lifestyle in the country than in metropolitan areas.

If you’re ready to see rushing rivers and quaint small towns and are willing to travel to a city for other amusements, look into these places in Tennessee.

Note: Kiplinger used 2025 data presented by the Tax Foundation (sourced from the U.S. Census Bureau) to find the cheapest counties in Tennessee to live.

Perry County

Median Property Tax Bill: $660

Median Home Price: $113,800

Home prices can be relatively low in Perry, with the median price around $113,800. Property taxes, too, might be quite cheap, as the median property tax bill is just $660, according to the Tax Foundation.

Perry County is characterized by its rustic charm and population density of about 20 people per square mile. But that’s because there’s a lot of wilderness to explore.

The county’s prime location between the Buffalo and Tennessee Rivers makes it an ideal spot for local fishing, canoeing, and kayaking. County residents can also traverse 1,247 acres in Mousetail Landing State Park and check out a 30-foot-tall hand-carved furnace built in the 1800s.

You might just find yourself moving to historic and charming Perry, Tennessee, if you want to save a buck on your next property tax bill.

Decatur County

Median Property Tax Bill: $654

Median Home Price: $133,900

Decatur County is only a few dollars cheaper than Perry in terms of property taxes, with a median property tax bill is roughly $654.

Home prices, however, can be a little more expensive than in Perry, with a median of around $133,900, according to the latest U.S. Census Bureau data.

Decatur might be considered “river country” and a sportsman’s paradise.

Residents can boat, waterski, even go golfing along the Tennessee River, as the county has many marinas and outdoor adventures from which to choose. Residents can access Beech Bend Park, which offers 11 campgrounds for family fun.

If you’re searching for outdoor living along the river, look into Decatur — it might be your new affordable home in Tennessee.

Campbell County

Median Property Tax Bill: $651

Median Home Price: $169,500

The median property tax bill in Campbell is cheap, at slightly more than $650. Home prices can also be relatively inexpensive, with a median of about $169,500, per the Tax Foundation.

While Campbell is considered to have a small-town vibe, it's actually part of Knoxville’s greater metropolitan area (about an hour away by car). If you become a future resident, you might get the best of both worlds.

For instance, you could access the airport and other amenities within the “Marble City” during the week, then on weekends, stay home with plenty to do in Campbell. The county has three state parks, boating on Norris Lake, and a variety of music and arts festivals.

Campbell is also known as the “Elk Capital of Tennessee” for its Hatfield Knob Elk Viewing Tower, which could be fun for the kids.

If you like the hustle and bustle of the city, but also prefer the peaceful lifestyle of a quaint town, Campbell County might be where you save on property tax bills.

Scott County

Median Property Tax Bill: $616

Median Home Price: $116,800

Scott County has the second-cheapest median home price on this list, at just under $117,000. Property taxes are also relatively affordable, with the median barely above $615, according to the U.S. Census Bureau.

History buffs might fall in love with Scott. The county is famous for having left Tennessee in protest of the state’s decision to join the Confederacy during the Civil War. Although the secession was only symbolic, some residents might still feel a sense of pride for having come from the “Free and Independent State of Scott.”

Another surprising thing about Scott is that it has a residential airpark.

That means you can buy a homesite with hangar access in the county’s Big South Fork.

What’s more, Big South National River is home to a local hiking spot. It includes Twin Arches, one of the largest natural land bridges in the eastern U.S. Nearby recreation areas also offer access to around 200 miles of horseback riding paths and 300 miles of ATV trails.

If you want to live in a bit of history, ride a horse, even fly a plane, Scott could be your ticket for more affordable Tennessee living.

Pickett County

Median Property Tax Bill: $606

Median Home Price: $162,200

Pickett County property taxes are relatively inexpensive, since the annual median bill is barely above $600. Median home prices can also be cheap, at around $162,200, per the latest Tax Foundation data.

Pickett has a population size of around 5,000 people, making it the least populous county in Tennessee. But don’t let that reputation fool you — the area has quite the rapport with lake-goers.

Every year, thousands of tourists flock to resorts in the region for easier access to Dale Hollow Lake, Tennessee, and Lake Cumberland, Kentucky.

If you’re not a lake fan, there’s still plenty to do in Pickett. For instance, you can enjoy camping or perfect stargazing at a certifiable “dark sky” state park.

Looking to disconnect from the constant “go-go” of city life and reconnect with nature? Pickett County might be the option for you and your wallet.

Van Buren County

Median Property Tax Bill: $596

Median Home Price: $149,200

Van Buren County’s median property tax bill is less than $600, making its property taxes generally cheaper than neighboring counties. The median home price is also relatively low, at $149,200, according to the U.S. Census Bureau.

Positioned in “Middle Tennessee,” Van Buren is known for its rolling hills and scenic views. Fall Creek Falls State Park is the largest and most visited park in Tennessee, boasting the highest free-fall waterfall in the eastern U.S. Outdoor enthusiasts can also tour Big Bone Cave along the historic Cumberland Plateau.

Come and explore majestic mountain views, fishing and kayaking in Van Buren. Stay for the low annual property tax bill.

McNairy County

Median Property Tax Bill: $589

Median Home Price: $151,100

Located along the Mississippi border, McNairy County has a low median property tax bill of $589 and a relatively affordable median home price of $151,100, per the latest data released by the Tax Foundation.

Music fans are in luck. McNairy helped develop rockabilly through connections to music legends Carl Perkins and Dewey Phillips. Elvis Presley’s first documented performance outside Memphis, Tennessee, was also in McNairy County, which reportedly helped shape Perkins’ musical career.

As part of the Rockabilly Highway, McNairy hosts live performances such as the Highway Revival Festival and Park Music Festival. Plus, residents might enjoy camping and other outdoor excursions at Big Hill Pond State Park.

If you want to get lost in the rhythm and pay a low property tax bill, McNairy might be the affordable place for you.

Grundy County

Median Property Tax Bill: $563

Median Home Price: $133,400

Home prices in Grundy sit comfortably at $133,400, with a median property tax bill around $560, according to the Tax Foundation. Like other counties on this list, Grundy has a low effective property tax rate, at about .42% — which is way under the national average of .90%.

Grundy has rugged terrain and deep gorges, due to its location on the Cumberland Plateau. Features of the area include steep canyons, high-rising cliffs and, of course, caves to check out.

Interestingly, Grundy features live musical performances in a cave. The Caverns is a subterranean venue known for its colorful concerts and caving tours held throughout the year.

The county also has roots in Swiss culture. The City of Gruetli-Laager throws a festival every summer, celebrating its unique cultural heritage and offering traditional crafts, cheese and wine tastings and German Polka music.

Do you like going off the beaten path? Grundy might be the place for you — and your next property tax bill.

Hancock County

Median Property Tax Bill: $533

Median Home Price: $118,000

Hancock County property tax bills are generally low, with the median at $533. The median home prices in the area, too, can be cheap, at a flat $118,000 per the U.S. Census Bureau. This gives Hancock the cheapest median property tax bill compared to all its surrounding counties.

In addition to being perhaps more affordable, Hancock has a close-knit and vibrant community.

Key attractions such as the Appalachian Quilt Trail showcase the skills of people who have lived in the area for generations. Residents can spot colorful quilt patterns painted on barns, homes, and other structures throughout the county.

Additionally, Hancock holds music events throughout the year, including the Fall Festival in Sneedville, where bluegrass legend Jimmy Martin was born.

Like many other cheap places in Tennessee, you can explore natural waterfalls, enjoy outdoor recreational activities and discover historic sites in Hancock County.

Fentress County

Median Property Tax Bill: $519

Median Home Price: $151,800

Fentress County is the cheapest place to live in Tennessee. The median property tax bill is only $519, and home prices are around $151,800, per the most recent Tax Foundation data.

Known as the “Trail Riding Capital of the Southeast,” Fentress residents enjoy horseback riding, mountain biking, and hiking around the Big South Fork National River and Recreation Area.

Fentress, and the county seat, Jamestown, can be described as having a “hometown feel.” Historic buildings line the streets in downtown Jamestown. The county is home to Tennessee’s oldest winery.

The tranquil, nature-focused atmosphere of Fentress — coupled with the strong neighborhood vibe — might have you saying “yes” to the cheapest place to live in Tennessee.

More Cheap Places

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• Live in Texas in these 10 Most Affordable Places
• Virginia Living in One of Ten Cheap Places
• The Cheapest Places to Live in New York

The new program is designed to assist eligible homeowners age 65 or older (or those with disabilities) with their property taxes. Payouts are expected to roll out as early as next year. The relief might just be in the nick of time.

A recent AARP report shows that 41% of New Jerseyans age 50 or older have considered leaving the state, with 83% of respondents stating they’d likely do so for lower state taxes and cost of living elsewhere.

Stay NJ is supposed to encourage older homeowners to maintain roots in New Jersey. Will it motivate you to “stay?" Read on for eligibility requirements, the application process and how much you could receive if you don’t miss the deadline.

Key Points

• The New Jersey Stay NJ program is designed to provide property tax relief for eligible homeowners.
• You can apply for Stay NJ with the PAS-1 application (PDF).
• The application deadline for Stay NJ is in October 2025.

FAQs

Stay NJ program: Who is eligible for property tax relief in New Jersey?

New Jersey’s Stay NJ property tax relief program is intended to help eligible homeowners with their property tax bills.

Here are the eligibility requirements for residents to meet for Stay NJ:

• Homeowners must be at least age 65 (mobile homeowners and renters don't qualify).
• You must have lived and owned your home for 12 months of the tax year.
• Your income can’t be more than $500,000.

Suppose you made Payments-in-Lieu-of-Tax (PILOT) (PDF) (payments made when the property is partially or fully tax-exempt) to your municipality. Those would also count toward eligibility for the Stay NJ benefit.

How do you submit the Stay NJ application?

Eligible homeowners must fill out the PAS-1 application to receive a Stay NJ payout.

PAS-1 is the new streamlined process for applying to various New Jersey property tax relief programs (if you are 65 or older or on Social Security disability).

Here are the steps for applying to Stay NJ using the PAS-1 application:

• Go to the New Jersey State Division of Taxation website to fill out an application online.
• You’ll need to verify your identity using your driver’s license, state ID or passport.
• Have on hand your latest property tax bill or property information from the state Tax Assessor’s office.
• Have your gross income from your most recent state income tax return.
• If you prefer to complete the application process by mail, you can print a paper PAS-1 application (PDF) and mail it to the New Jersey Division of Taxation.

New Jersey residents who are eligible for PAS-1 might use the application for ANCHOR, “Senior Freeze,” and Stay NJ in 2025.

However, applicants under age 65 or those who aren’t receiving Social Security Disability benefits (PDF) can't use PAS-1 and are not eligible for Stay NJ.

How much is Stay NJ?

Stay NJ reimburses eligible applicants up to 50% on their property tax bills, with a maximum of $13,000. This means you could get a rebate worth up to $6,500 for your property taxes paid during the tax year.

However, there’s one important caveat to the Stay NJ amount:

• Stay NJ payouts are determined after calculating ANCHOR and “Senior Freeze” benefits.
• This means the amount you could receive is the net of any relief you already gained from other New Jersey property tax programs.

When will I get my Stay NJ payment?

Stay NJ checks are expected to go out in early 2026. This is typically after the “Senior Freeze” and ANCHOR program payments have been sent.

To check the status of your Stay NJ payment or for general New Jersey property tax relief questions, call 1-888-238-1233. You can also visit one of the state’s Regional Information Centers in person for more information.

More on New Jersey

• New Jersey ANCHOR Benefit Letters Are Out Now
• How to Apply for NJ ‘Senior Freeze’ Property Tax Program
• New Jersey Gas Tax Increase: What to Know
• What's Going on With New Jersey Property Tax Programs?

But one state has changed its tax policy to help its residents keep more of their hard-earned profits.

On July 10, 2025, Missouri Gov. Mike Kehoe signed House Bill 594 into law. The legislation eliminates the state tax on capital gains for individuals as of January 1, 2025.

In a statement regarding the bill’s passage, the governor described the tax changes as pro-growth — “keeping more money in the hands of Missouri families and less in government coffers.”

The change, projected to cost around $350 million a year, makes Missouri the first U.S. state with an individual income tax to eliminate capital gains taxes for individuals. But will other states follow?

New capital gains tax exemption in Missouri

• Beginning with the 2025 tax year, Missouri residents won’t pay state income tax on capital gains from stocks, bonds, real estate, and other assets, regardless of the holding period.
• Taxpayers can deduct 100% of the capital gains they report federally from their Missouri taxable income.
• The exemption broadly applies to gains from the sale of a home, farmland, business ownership transfers, and investment portfolios.

The capital gains tax change is part of a broader state tax reform package.

Other elements include expanded property tax credits for older adults and new sales tax exemptions on essential products like diapers and feminine hygiene items.

The legislation also contains provisions for corporate taxpayers. If Missouri’s top individual income tax rate falls to 4.5% or below, corporations will be eligible to deduct 100% of their federally reported capital gains from Missouri taxable income beginning the following tax year.

Some policy analysts argue that the policy raises questions about tax equity. That’s because the primary beneficiaries of capital gains exemptions tend to be wealthier households with substantial investment incomes.

However, supporters say the capital gains tax policy will make Missouri more competitive by encouraging capital retention and potentially attracting high-net-worth individuals.

What about the federal capital gains tax rate?

It is important to note that Missouri’s capital gains exemption applies only at the state level and does not affect federal tax obligations.

Capital gains taxes are levied on profits from the sale of assets like stocks, mutual funds, and real estate. The rate at which those gains are taxed depends on your taxable income and how long you've held the asset. But keep in mind that capital gains tax rates are generally lower than the tax rates for ordinary income like wages.

• Federal capital gains tax rates haven’t changed for 2025. Those range from 0% to 20% depending on income.
• This means taxpayers in Missouri will continue to comply with federal requirements.

Interestingly, there has been some chatter about a new proposal to eliminate the federal capital gains tax on home sales.

Under current federal tax rules, eligible homeowners can exclude up to $250,000 (or $500,000 for married couples) in gains when selling a primary residence. Amounts above those exclusion limits are generally taxed at normal capital gains rates.

However, in recent years, more people across the United States have triggered capital gains taxes when selling their primary homes, since the home sale exclusion limits have remained unchanged since 1997, despite soaring home values in many areas.

Rep. Marjorie Taylor Greene (R-Ga.) has introduced the No Tax on Home Sales Act, which, if eventually passed and signed into law, would generally eliminate capital gains taxes on home sales.

For more information, see: No Capital Gains Tax on Home Sales Coming Soon?

States with no capital gains tax: Will more follow?

Missouri’s move to eliminate the state capital gains tax could catch the attention of other states considering how to tax investment income.

Currently, several states have no capital gains tax because they don’t have a state income tax at all. These include Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, and Wyoming.

However, not all states are moving toward eliminating capital gains taxes.

For example, as Kiplinger has reported, Washington state, which does not have a traditional income tax, recently imposed a capital gains tax on high earners.

The takeaway? Stay tuned. As Missouri’s new policy takes effect, its impact on the state’s economy and budget could provide a model for others.

Related

• Federal Capital Gains Tax Rates for 2025
• More Homeowners Face Capital Gains Tax Bills
• Missouri Tax Guide 2025
• Washington Approves Capital Gains Tax Increase: Who Pays?

Back-to-school shopping is no joke, and this year it might be more expensive than ever.

A recent Savings.com report has shown that parents will spend a record-high of $628 per child this summer on school essentials.

But there was some welcome relief for Texas residents: The state’s 26th annual sales tax holiday for back-to-school shopping.

This tax-free weekend exempted certain articles of clothing, electronics, and school supplies from state sales tax.

Find out how Texas’s 2025 tax holiday might've helped you save on back-to-school items.

Did Texas have a tax-free weekend?

The back-to-school holiday is one of the three sales tax holidays Texas offers. It began Friday, August 8, and ended at midnight on Sunday, August 10.

During that time, many school supplies and clothing were exempt from the state’s 6.25% sales tax rate.

List of tax-free items in the Texas tax holiday: What was included in the tax-free weekend

Like its fellow no-income tax state, Tennessee, Texas had a similar guideline for tax-exempt clothing. Clothes must've been $100 or less to qualify for the tax holiday. School supplies also needed to be $100 or less.

Many tax-free items fell under these two categories, but here were a few of our favorites:

• Writing tablets and calculators
• Lunch boxes and book bags (though there’s a special rule regarding book bags, more on that below)
• Shirts, skirts, coats and dresses
• Shorts, pants and jeans
• Hats, sneakers and socks
• Crayons, scissors, notebooks and paper
• Workout clothes, diapers and underwear

While the Comptroller’s office estimated $133.2 million in savings for shoppers, many items were not included in the Texas back-to-school tax-free weekend.

Items that were not tax-exempt during the Texas back-to-school holiday 2025

Unlike the back-to-school sales tax holiday in Florida, Texas had much stricter guidelines on electronics. Items such as computers and printers were not included in the sale.

Below, you’ll find a list of many other items that remained taxable during the 2025 Texas tax-free weekend:

• Textbooks and software
• Jewelry, wallets and watches
• Hair accessories (including clips, bows, barrettes and headbands)
• Handbags, purses, briefcases, luggage and umbrellas
• Items used to make or repair clothing, such as fabric, thread, yarn, patterns, etc.
• Athletic gear (including cleated shoes, gloves, helmets and protective pads)
• Non-prescription sunglasses

Note: For a complete list of included and excluded items, visit the Texas Comptroller of Public Accounts website.

Texas backpack sale and limits on school supply kits

Book bags were tax-exempt if they were not framed backpacks or athletic, duffle or gym bags.

Backpacks with wheels and messenger bags were eligible for the tax exemption, but even then, you could not purchase more than 10 qualifying book bags tax-free during the holiday.

Another key item of consideration was school kits. Teachers and homeschool parents could purchase school supply kits during the back-to-school sale. Whether these kits were taxable depended on the value of the items inside:

• If the value of the tax-exempt items was more than the value of the taxable items, the kit was exempt.
• Otherwise, the kit was taxable.

Could you buy online for the Texas tax-free weekend?

Online purchases might have qualified for the sales tax holiday, but delivery to a Texas address was required.

Online retailers such as Amazon honor state sales tax holidays. However, the retailer explains on its website that "tax may still be calculated on items if they do not qualify, including threshold limits, bundles, orders placed before the holiday starts, or specific items that are not included in the holiday.”

Read More

• Ten Cheapest Places to Live in Texas
• Texas Tax Guide
• Are No-Income-Tax States Better to Live In?

The major tax cuts and spending package is projected to increase the national deficit by $3.4 trillion over the next decade, according to the Congressional Budget Office (CBO). To fund the new tax cuts, the legislation cuts funding for key programs, including Medicaid and the Supplemental Nutrition Assistance Program (SNAP).

Hundreds of rural hospitals that depend on Medicaid are warning of reduced services or potential forced closures.

At the same time, millions of people who depend on food stamps to put food on the table are at risk of losing SNAP benefits altogether. At the same time, others are slated to get a smaller amount each month.

Here’s how Trump’s funding cuts to Medicaid and SNAP will impact some states more than others.

1. California

California SNAP benefits lawsuit

More than 3,000 families are projected to lose all of their SNAP benefits in California, according to the Urban Institute, the highest figure in the nation.

New rules for the SNAP, the federally funded and state-administered public food assistance program formerly known as food stamps, require beneficiaries to have a Social Security Number (SSN) to receive food stamps.

The Trump administration is demanding that states hand over personal and sensitive information for millions of SNAP recipients, including their home addresses and SSNs dating back five years.

California Attorney General Rob Bonta and 20 attorneys general announced on July 28 that they are suing the U.S. Department of Agriculture (USDA) over this demand. They say it violates state and federal privacy laws and that it’s part of the Trump administration’s latest attempt to “collect unrelated, protected data to fuel mass deportation.”

“We will not comply with this illegal demand. We’ll see the President in court,” AG Bonta said in a joint statement.

Individuals who lack an SSN won’t be the only ones impacted by the new SNAP funding cut and rule changes.

• A little over 900 households could see an average monthly benefit reduction of $190, while just under 400 families would see their benefits reduced by $88 a month.
• As many as 516 working households would see a monthly reduction in food stamp benefits of $146.

2. New York

In New York, nearly 60% of rural hospitals are at risk of closure

Another state that will suffer the impact of Trump’s cuts to public programs is New York.

Trump’s significant funding cuts to Medicaid put already struggling rural hospitals and clinics in the Big Apple at risk of service reductions and closures.

• New York currently has 50 open rural inpatient hospitals, and 31 are estimated to lose services due to new Medicaid cuts, according to the Center for Healthcare Quality & Payment Reform. That represents 62% of rural hospitals, which would be forced to reduce essential services, such as obstetrics care (OB).
• Additionally, nearly 60% of rural hospitals and clinics are at risk of closing. A total of 18 hospitals are now under immediate risk of closure.

According to the American Hospital Association, Trump’s tax bill will result in 1.8 million people in rural communities losing their Medicaid coverage by 2034. In other words, rural hospitals and clinics nationwide would see a $50.4 billion reduction in federal Medicaid spending over the next decade.

As a note, New York is also involved in the lawsuit against the Trump administration over turning over personal and sensitive data from SNAP recipients to the USDA.

• New York would be the second-largest state to see the most beneficiaries losing SNAP due to Trump’s new SSN rules.
• Approximately 1,700 individuals in New York are projected to lose all access to food stamps.

3. Florida

Florida SNAP would get reduced

Florida’s state attorney general is not among the coalition of 21 states that are challenging the Trump administration’s demand to hand over personal data of people enrolled in SNAP.

However, residents in the Sunshine State are projected to be the third hardest hit by the new requirements for the food assistance program.

Once again, it’s not only folks without a SSN in Florida who will be impacted by Trump’s new rules for food stamp beneficiaries.

The law increases the work requirement from 54 to 64 for able-bodied adults without dependents. Meanwhile, beneficiaries with children over 10 must also work. Lastly, as of 2027, states will be responsible for 75% of SNAP administrative program costs.

The Florida Policy Institute warns that the changes could cost the state over one billion dollars just to keep food stamps running. Here’s a breakdown of what that could mean.

• A total of 1,653 families are expected to lose all of their SNAP benefits.
• That’s followed by 320 households losing a $114 a month in benefits, and 252 families losing an average $79.
• Some 252 working families would see their benefits reduced by $90 a month.

4. Texas

In Texas, nearly 70% of rural hospitals may reduce services

Residents living in rural areas of Texas could see their access to quality healthcare change significantly over the course of the next few years.

Texas has seen 20 rural hospitals close down since 2010, according to the Texas Organization of Rural & Community Hospitals (TORCH), and due to Trump’s latest Medicaid cuts, even more are expected to shut their doors.

• A total of 108 rural hospitals are projected to reduce or eliminate essential services. That’s equal to 69% of rural hospitals in the state.
• That’s followed by 87 (56%) rural hospitals now at risk of closing.
• As for immediate concerns, 22 hospitals are now under imminent risk of closure.

Overall, Texas only has 156 rural inpatient hospitals. According to Texas State Rep. Gary VanDeaver, rural hospitals in the state face financial instability, which has led to closures and reduced services.

“Factors such as low patient volumes, regulatory burdens, and insufficient Medicaid reimbursement exacerbate these challenges,” VanDeaver wrote in a statement.

The American Hospital Association projects that Trump’s Medicaid cuts will result in $19.9K

loss of rural Medicaid coverage in Texas through 2034. That would cause a $1.047 million loss of federal funds allocated to rural hospitals over the next decade.

Texans who depend on food stamps also have something to worry about: This state would be the fourth-largest state to be impacted by new food stamp rules. As many as 1,514 individuals are expected to lose all access to SNAP benefits, according to the Urban Institute.

5. Illinois

Illinois food stamps would dwindle for working families

Illinois is joining the coalition of attorneys general that are suing the Trump administration for its demand to hand over sensitive data from SNAP recipients.

• After Texas, the state of Illinois rounds out our list of the top five states to feel the impacts of the new SNAP regulations.
• According to Gov. JB Pritzker’s office, changes to the SNAP program will reduce benefits for more than 360,000 low-income households in Illinois.

“SNAP has been a crucial federal resource for families trying to put food on the table for more than 60 years, but Trump and Republicans would rather children go hungry so their friends can receive tax cuts,” Pritzker said in a statement.

As mentioned, the new law requires people under age 64 to prove they work 20 hours a week, raising the working age from 54. It also makes an exception for parents with children under 14.

Pritzker says the new rules mean that as many as 23,000 unhoused people, veterans, and youth who have aged out of foster care may lose access to food stamps. Additionally, under the new cost-share rules, Illinois will be required to contribute $705 million annually — up from $0 (currently).

Separately, the Urban Institute estimates that a total of 1,102 Illinois families could lose all SNAP benefits.

Meanwhile, others will see their monthly food stamp funds shrink.

• An estimated 297 households could see an average monthly benefit reduction of $184.
• Some 137 families are expected to see their monthly benefits shrink by $83.
• As for working families, 176 are projected to see their monthly benefits reduce by $143.

Some states are suing the Trump administration

As Kiplinger has reported, Trump’s major tax cuts and spending package includes a series of new tax breaks and enhancements that benefit some individuals.

However, the price of implementing these carveouts means defunding crucial public programs like Medicaid and SNAP.

According to the Urban Institute, approximately 22.3 million U.S. families would be affected by SNAP changes alone, potentially losing some or all of their access to food stamps. New changes, which require beneficiaries to have a SSN, are also causing problems at the state level.

As mentioned, the Trump administration is also demanding that states hand over private data, including the home addresses and SSNs for all SNAP recipients dating back five years, as a condition to send federal funding for food stamps. Some states are taking legal action in what is a developing story.

Stay tuned for more information.

Related Content

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While some states have no income taxes, they may have high tax rates in other areas, like sales tax, for example. Knowing a state’s tax landscape (and not just its taxes on retirement income) might give you a better sense of where to save on taxes as a retiree.

And there’s one state that might fit the bill for a “tax-friendly” retirement. Here it is.

The most tax-friendly state for retirement

To determine the “most tax-friendly state for retirees,” Kiplinger first ranked each state based on two key factors.

First, only states that don’t tax retirement benefits were chosen. Of those 13 states, the one with the lowest median property taxes paid was selected. Property tax bills were based on the most recent 5-year estimate available from the U.S. Census Bureau.

Note: No matter where you move, federal income taxes still apply.

Best state for retirement taxes

Mississippi.

Many forms of retirement income are exempt from Mississippi taxes, making it the most tax-friendly state for retirement.

A few examples of tax-exempt income in the Hospitality State include:

• Social Security benefits.
• Pensions (private and governmental).
• Distributions from retirement accounts, like 401(k)s, 403(b)s, and individual retirement accounts (IRAs). This includes both traditional and Roth.
• Military retirement pay.

Note: Early or excess withdrawals from retirement accounts may still be taxable.

If you receive other types of income, you’ll still pay a flat income tax of 4.4% over $10,000. But that’ll soon change.

Mississippi’s income tax rate is due for a reduction in 2026 to just 4%.

Plus, Mississippi has no estate or inheritance tax, meaning you could pass on more wealth to your heirs.

When you combine that with the state’s overall low median property tax bill of just $1,189 (compared to the national average), you can see how Mississippi earned its ranking as the most tax-friendly U.S. state for retirement.

And there may be one more special tax rule that sweetens the pot.

At what age do you stop paying property taxes in Mississippi?

You may stop paying property taxes in Mississippi at a certain age. How? Well, that depends on your property’s value. Mississippi has a homestead exemption if you meet certain eligibility requirements:

• You must be a homeowner who is 65 and older (or totally disabled).
• You must own and occupy your property as a primary residence.
• You must be a resident of Mississippi.
• You must have submitted an application for exemption to your county tax assessor’s office between January 1st and April 1st.

The total benefit of the Mississippi “senior homestead exemption” is $7,500 of assessed value. This means if your property has a value of $75,000 or less, you may be completely exempt from paying property taxes.

However, like all states, there may be a few tax drawbacks to retiring in Mississippi.

Let’s explore a few.

Mississippi retirement tax cons

Although Mississippi has some low taxes compared to other states, there are a few areas where the Hospitality State may be less tax-friendly for retirees. For instance:

• The sales tax rate in Mississippi is 7%, which can be high depending on where you live now. Yet Mississippi still isn’t one of the ten states with the highest sales taxes.
• Mississippi is also a state that taxes groceries. However, as of July of this year, the rate dropped from 7% to 5%.

Despite potentially higher sales taxes on food and other essentials, Mississippi is one of the states with the lowest gas taxes.

So, if you enjoy going for a Sunday drive, you may take advantage of the state’s gas tax rate.

Is Mississippi a good state to retire in?

Of course, before you’re ready for retirement in Mississippi, there are other important factors to consider.

While Kiplinger’s ranking considered state tax burdens, you may want to research other key considerations, like cost of living, political climate, and crime rates, before deciding to move.

• For instance, Mississippi has mild winters and hot summers, which may be idyllic for some retirees. But the state also experiences about 30 to 100 tornadoes per year, plus other natural disasters, due to its location along the Gulf Coast.
• The cost of daily essentials, including internet and energy bills, is reportedly generally low in Mississippi compared to the national average.
• Though at the same time, receiving healthcare in Mississippi could be challenging. The state consistently ranks low in national rankings that compare healthcare access, quality, and outcomes.

Overall, it’s important to consider your unique financial and lifestyle needs if considering a move in retirement.

Even though Mississippi is the most tax-friendly state for retiring, it may (or may not be) the most retirement-friendly state for you.

Read More

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The popular event returns for a three-day run from August 1 through August 3, 2025.

The Old Dominion State tax relief follows a trend in more than 17 states this summer, offering sales tax holidays for back-to-school shopping and other essentials.

And after some confusion in recent years, the timing and format of this year's event will be typical for VA shoppers.

And that’s not the only good news for Virginia residents this year. The Commonwealth is also doling out one-time tax rebates of up to $400 to qualifying residents.

Here's more of what you need to know.

Virginia tax-free weekend sales tax holiday: What's included?

From Friday, August 1, 12:01 a.m. to 11:59 p.m. Sunday, August 3, Virginians can purchase a wide range of items without paying the usual state and local sales tax.

The sales tax holiday in Virginia covers:

• School supplies priced at $20 or less per item
• Clothing and footwear priced at $100 or less per item

But the Virginia sales tax holiday doesn’t only apply to school supplies and clothing.

This weekend, from Aug. 1-3, you can also save on big-ticket items, including Energy Star™ and WaterSense™ products for home or personal use ($2,500 or less), gas-powered chainsaws ($350 or less), and portable generators ($1,000 or less).

Hurricane and emergency/disaster preparedness products are also tax-exempt during the Virginia tax-free weekend. Generally, these should cost $60 or less per item.

Whether you’re stocking up on spiral notebooks and lunch boxes, upgrading to an energy-efficient washer, or investing in emergency supplies, eligible purchases are all tax-free during the allotted time — if they meet Virginia’s price and product guidelines.

However, it's also important to note that not everything qualifies. For example, accessories, protective sports gear, and high-end electronics are excluded from the tax holiday.

The Virginia Department of Taxation provides detailed lists and answers to FAQs to help shoppers and businesses navigate what is, and isn’t, included.

What is the Virginia sales tax rate?

Virginia's sales tax rate is normally 5.3%. Localities can add to that, bringing the combined sales tax rate to 7% in some areas of the Commonwealth.

Note: Virginia applies a 1% sales tax to most foods for home consumption and certain essential personal hygiene products, including diapers and feminine hygiene items.

Hot prepared foods, alcohol, tobacco, and foods sold by some vendors (like caterers or food trucks) do not qualify for this reduced rate

Virginia tax rebates coming soon?

The sales tax break isn’t the only way Virginia is putting money back in residents’ pockets this year.

As Kiplinger has reported, in a move driven by budget surpluses, the Commonwealth will once again issue one-time VA tax rebates of up to $200 for single filers and up to $400 for married couples filing jointly.

• To be eligible for the 2025 rebate, you must file your 2024 Virginia income tax return by November 3, 2025.
• The actual amount will depend on how much you owe in state taxes. If your liability was lower than the maximum rebate, that’s the amount you’ll receive.

According to the Virginia Department of Taxation, those who file early, by July 1, could begin seeing rebates as soon as late July, while the majority of payments are expected to be distributed by mid-October.

This rebate follows similar relief efforts from the state in recent years and comes amid increased attention to rising costs for families.

Related

• Ten Cheapest Places to Live in Virginia
• Virginia Will Send 2025 Tax Rebate Checks
• Federal Income Tax Brackets and Rates for 2025

The popular event returns for a three-day run from August 1 through August 3, 2025.

The Old Dominion State tax relief follows a trend in more than 17 states this summer, offering sales tax holidays for back-to-school shopping and other essentials.

And after some confusion in recent years, the timing and format of this year's event will be typical for VA shoppers.

And that’s not the only good news for Virginia residents this year. The Commonwealth is also doling out one-time tax rebates of up to $400 to qualifying residents.

Here's more of what you need to know.

Virginia tax-free weekend sales tax holiday: What's included?

From Friday, August 1, 12:01 a.m. to 11:59 p.m. Sunday, August 3, Virginians can purchase a wide range of items without paying the usual state and local sales tax.

The sales tax holiday in Virginia covers:

• School supplies priced at $20 or less per item
• Clothing and footwear priced at $100 or less per item

But the Virginia sales tax holiday doesn’t only apply to school supplies and clothing.

This weekend, from Aug. 1-3, you can also save on big-ticket items, including Energy Star™ and WaterSense™ products for home or personal use ($2,500 or less), gas-powered chainsaws ($350 or less), and portable generators ($1,000 or less).

Hurricane and emergency/disaster preparedness products are also tax-exempt during the Virginia tax-free weekend. Generally, these should cost $60 or less per item.

Whether you’re stocking up on spiral notebooks and lunch boxes, upgrading to an energy-efficient washer, or investing in emergency supplies, eligible purchases are all tax-free during the allotted time — if they meet Virginia’s price and product guidelines.

However, it's also important to note that not everything qualifies. For example, accessories, protective sports gear, and high-end electronics are excluded from the tax holiday.

The Virginia Department of Taxation provides detailed lists and answers to FAQs to help shoppers and businesses navigate what is, and isn’t, included.

What is the Virginia sales tax rate?

Virginia's sales tax rate is normally 5.3%. Localities can add to that, bringing the combined sales tax rate to 7% in some areas of the Commonwealth.

Note: Virginia applies a 1% sales tax to most foods for home consumption and certain essential personal hygiene products, including diapers and feminine hygiene items.

Hot prepared foods, alcohol, tobacco, and foods sold by some vendors (like caterers or food trucks) do not qualify for this reduced rate

Virginia tax rebates coming soon?

The sales tax break isn’t the only way Virginia is putting money back in residents’ pockets this year.

As Kiplinger has reported, in a move driven by budget surpluses, the Commonwealth will once again issue one-time VA tax rebates of up to $200 for single filers and up to $400 for married couples filing jointly.

• To be eligible for the 2025 rebate, you must file your 2024 Virginia income tax return by November 3, 2025.
• The actual amount will depend on how much you owe in state taxes. If your liability was lower than the maximum rebate, that’s the amount you’ll receive.

According to the Virginia Department of Taxation, those who file early, by July 1, could begin seeing rebates as soon as late July, while the majority of payments are expected to be distributed by mid-October.

This rebate follows similar relief efforts from the state in recent years and comes amid increased attention to rising costs for families.

Related

• Ten Cheapest Places to Live in Virginia
• Virginia Will Send 2025 Tax Rebate Checks
• Federal Income Tax Brackets and Rates for 2025

While Georgia is already on a set schedule to gradually reduce its income tax rate over the next several years, a recent announcement by Lt. Gov. Burt Jones’ office has stirred discussion about eliminating the Peach State's income taxes — permanently.

“If we wish to remain the number one state for business and keep our state competitive, we must expand on the progress made over the past four years to eliminate Georgia’s income tax,” wrote Jones in the press release.

Yet while Georgia and other southern states cut their tax rates this year, some studies suggest reductions in state income taxes could disproportionately affect certain taxpayers more than others.

Here’s what to know.

New income tax law in Georgia and ‘end to income taxes’ proposal

Lt. Gov. Jones has created a bipartisan state Senate committee that will discuss potential ways to eliminate Georgia’s income tax. State lawmakers will meet several times in the coming months.

However, along with issuing rebate checks, Georgia has already cut its income tax rate this year. The rate dropped from 5.39% to 5.19% in 2025, following an earlier reduction last year.

• Each subsequent year, the rate will decrease by .10%.
• The final flat income tax rate of 4.99% could be reached by 2028.

However, the final rate reduction will not be as low as some neighboring states. While Florida and Tennessee have no state income tax, North Carolina’s flat rate is just 4.25%.

By the time Georgia reaches 4.99% in 2028, it’ll be barely below Alabama’s top rate of 5%, and about 1% less than South Carolina’s. Yet that’s assuming neither of those states cuts income taxes.

This year alone has seen six southern states reduce income tax rates, and Lt. Gov. Jones’ plan may have sparked discussion in yet another about reducing state income tax.

South Carolina, Louisiana, and other southern states cut income taxes

Several news outlets are reporting on the possibility of Alabama cutting its income tax rate after Georgia lawmakers announced their plan to consider eliminating the state’s income taxes.

However, the elimination of the Alabama income tax may be unlikely.

The Cotton State recently allowed its state’s ‘no tax on overtime’ exemption to expire due to budgetary concerns. A complete elimination of Alabama’s income tax would cost significantly more in state revenue.

But just because Alabama isn’t getting an income tax rate reduction, doesn’t mean other southern states aren’t getting one this summer (or have already received an income tax rate reduction in 2025):

• South Carolina temporarily dropped the top marginal income tax rate from 6.2% to 6% in July. Further cuts are possible.
• Louisiana switched to a flat income tax of just 3% in 2025.
• Mississippi, too, reduced its flat income tax to only 4.4% with another cut planned for 2026.
• Missouri cuts its top income tax rate by .10%, with future reductions planned.
• North Carolina lowered its 2025 flat rate from 4.5% to 4.25%.
• West Virginia dropped its top income tax rate from 5.12% to 4.82% this year.

Note: Kentucky will lower its income tax rate on January 1, 2026. Similarly, Oklahoma will receive an income tax cut of .25%.

What are the negative effects of tax cuts?

The ‘cutting state income tax’ trend might come at a price. According to the Center on Budget and Policy Priorities, lower income tax rates can lead to state budget cuts in key areas, like education, healthcare, and infrastructure.

• In an analysis of 26 states that cut income taxes between 2021 and 2023, the Center reported a 3.6% drop in state revenue, an amount equivalent to more than a third of what the states’ general fund spent on higher education.
• Rate cuts in states like Arizona, North Carolina, and West Virginia were particularly large, potentially shrinking the general funds of those state budgets by 11% over five years.
• Overall, permanent rate cuts were reported to be “especially harmful” to state balance sheets compared to temporary or one-time tax cuts.

Tax rate cuts may also disproportionately affect low-income households that rely more heavily on state-funded public services.

However, supporters of income tax rate reductions argue that they increase state competitiveness and attract more businesses to the area. More money in residents’ pockets might also encourage increased spending in the local economy.

Georgia Sen. Blake Tillery (R-Vidalia), chairman of the Senate committee on eliminating the state income tax, has announced plans to file legislation to phase out the Georgia income tax. The committee is expected to release its recommendations by December 15, 2025.

But whether Georgia residents will see an elimination of state income taxes remains to be seen.

Read More

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• Georgia Has a New Income Tax Rate: What You Should Know
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Sales tax holidays, which start as early as this month (July) and last through August, can give shoppers a chance to purchase select items tax-free. These generally include school supplies, clothing, electronics, and food. Some states even exempt sales taxes on furniture, plants, and other household items, which is ideal for those going back to college.

Planning to shop during a sales tax weekend can be a good idea this summer, particularly as tariffs are driving up inflation.

Some major retailers like Walmart and Apple are simplifying the shopping experience for folks in participating states with a tax-free holiday by offering an online catalogue of qualifying items.

Here’s what you need to know about upcoming sales tax holidays in your state.

Apple back-to-school 2025 tax-free holiday

This summer, 17 states are celebrating sales tax holidays. However, not all will let you get a tax break on electronics for back-to-school or personal use.

Only ten states are offering a tax exemption on computers and related electronic accessories this summer, so you can jump into the new school year fully equipped.

Each state has different rules when it comes to which electronic items qualify for the sales tax holiday, and some have price limits on the items you can purchase under the exemption.

If you’re a fan of Apple, and your state is participating in a tax-free holiday this summer, you can shop online or in-store to purchase at a bargain price during the following select dates.

Snag deals tax-free at Walmart this summer

If you’re looking to purchase items other than electronics tax-free this summer, Walmart can be a good place to shop for school supplies, snacks, and clothing to get ready for the back-to-school season.

• A composition notebook worth $0.97 will cost you 50 cents.
• You’ll save a $1 on a box of Crayola colored pencils, and pay just 97 cents.
• Dry erase markers are worth $13.23, saving you $8.12.

You can purchase qualifying items during your state’s tax-free weekends, and Walmart will automatically apply the sales tax exemption whether you shop online or in-store.

Shoppers in 17 states, plus Puerto Rico, should keep track of the following dates so they don’t miss out on potential savings.

Participating states during Walmart’s tax-free holiday savings include Alabama, Arkansas, Connecticut, Florida, Iowa, Maryland, Massachusetts, Mississippi, Missouri, New Mexico, Ohio, Oklahoma, South Carolina, Tennessee, Texas, Virginia, and West Virginia.

For more information, see our guide on Sales Tax Holidays in 2025.

Why shop during a tax holiday

Sales tax holidays offer shoppers an opportunity to purchase a wide range of products free of tax. That can make a huge difference, since some participating states have among the highest sales tax rates in the country.

For example, in Tennessee, the statewide sales tax averages 7%, but average local taxes increase the combined sales tax rate to 9.556%. The state also imposes a grocery tax, so any break on taxes is a good reason to shop at a bargain.

Target, Walmart, and other major retailers are bracing for potential price hikes this summer, given that the Trump administration’s sweeping tariff pause is set to end mid-August. Now could be the right time to buy before prices soar.

Most tax-free holidays start as soon as late July, so don’t miss out on some potential savings at checkout as you get ready for the back-to-school season.

Related

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Gov. Ron DeSantis signed House Bill 7031 into law on June 30, 2025, with a $1.3 billion tax package within the state’s $117 billion budget.

Among other things, the new law updates and changes the usual sales tax holidays and introduces some permanent sales tax exemptions.

Curious about what this means for your shopping experience in the Sunshine State this year? Here’s more to know.

Florida sales tax holidays 2025

As mentioned, Florida’s FY 2025-26 state budget ushers in some notable changes to how residents receive sales tax relief.

Last year, Florida offered several short-term sales tax holidays, including a two-week back-to-school holiday in January and another in late summer, as well as other themed exemptions, like "Freedom Month" in July and a disaster preparedness period.

Those holidays were scattered throughout the year and each lasted only a few days to a couple of weeks.

For 2025, the state has adopted a simpler approach. Instead of multiple brief holidays, there are just two major ones.

Some key points:

• Florida’s new tax law restructures the state’s tax holidays, making the popular back-to-school tax-free holiday permanent each August and introducing a new sales tax holiday for hunting, fishing, and camping gear.
• The legislation also creates several year-round exemptions on essential items. As of July 1, 2025, products like select disaster preparedness supplies, safety equipment, sunscreen, insect repellent, and even state park admissions are no longer subject to sales tax. (More on all of that below.)
• A change for the business community is the elimination of state sales tax on commercial property leases, effective October 1, 2025.

Longer Florida back-to-school tax-free holiday

You may remember that last year, Florida offered an additional back-to-school sales tax holiday in January. That holiday won't return for 2025.

Instead, the summer back-to-school sales tax holiday in Florida has been made permanent. Lawmakers also expanded the tax-free shopping period to cover an entire month each year: from August 1st through August 31st.

So, families no longer need to squeeze their shopping into a single week or weekend. But, per usual, tax savings extend to a range of items.

• This includes clothing and footwear priced at $100 or less per item, school supplies at $50 or less each, learning aids and puzzles at up to $30, and personal computers for non-business use at up to $1,500.
• Items above those limits or intended for commercial use remain taxable.

State officials say the broader window allows shoppers to plan purchases and relieve some financial strain as the back-to-school season begins.

*For more information on the newly expanded back-to-school tax-free month, check out Kiplinger's report, Florida Back-to-School Tax-Free Holiday 2025.

New sales tax break for outdoor gear

For the first time, Florida introduces a dedicated Hunting, Fishing & Camping Sales Tax Holiday, stretching from September 8 through December 31, 2025.

• Eligible items include tents priced up to $200, sleeping bags, hammocks, collapsible chairs, and stoves priced up to $50 each, as well as lanterns and flashlights priced up to $30.
• Fishing rods, reels, tackle, and some combinations are subject to specific caps, while many hunting supplies, including firearms, bows, and ammunition, are also tax-free without a fixed price limit.

The nearly four-month duration can allow families and enthusiasts to stock up for outdoor activities and storm season.

Permanent Florida sales tax exemption for select items

Alongside changes to the timing of sales tax holidays, the new Florida tax bill introduces several year-round exemptions designed to lower the cost of everyday essentials.

• As of July 1, 2025, various disaster preparedness items, including select batteries, portable generators, fuel containers, tarps, and tie-down kits, are exempt from Florida sales tax.
• Safety-related products like fire extinguishers, smoke detectors, life jackets, bicycle helmets, sunscreen, and insect repellent are now permanently sales tax-free.
• Access to Florida’s state parks is also now tax-free, as are (as of August 2025) sales of gold, silver, or platinum bullion.

These measures are part of a broader strategy by lawmakers to offer Floridians more consistent, practical savings on everyday purchases throughout the year.

Florida sales tax: Is it 7%?

As of July 2025, the statewide sales tax rate in Florida is 6%, with some exceptions.

However, on top of that, most counties impose a local surtax — often around 1% — which brings the typical combined sales tax rate in many areas just above 7%.

Although in some cases, like Hillsborough County, for example, a 1.5% discretionary tax pushes the total rate to as high as 7.5%.

The statewide rate hasn’t changed for 2025, but you may notice higher overall totals depending on where you shop in the state.

Read More

• Florida Tax Guide 2025
• These 2025 Back-to-School Sales Tax Holiday Are Starting Now
• Teacher Expense Tax Deduction for 2025
• Ten Cheapest Places to Live in Florida

President Donald Trump recently signed the so-called “One Big Beautiful Bill” into law, and one provision allows taxpayers with incomes under $500,000 to deduct up to $40,000 in state and local taxes (SALT) when they file taxes in early 2026.

The temporary increase is effective tax years 2025 through 2029, and will gradually tick up by 1% each year.

By that measure, some California homeowners could potentially deduct the full cost of their property tax when they file their federal tax return early next year. The previous tax law capped the SALT deduction at $10,000.

That’s a big deal, particularly for homeowners in expensive cities like San Jose and San Francisco, where over 40% of households pay more than $10,000 in property taxes, according to Realtor.com.

The increased cap offers much-needed relief to middle-income California families and homeowners, and could give prospective homebuyers a major incentive.

Here’s what you need to know about the new SALT cap and what it means for California homeowners.

SALT deduction 2025: How much is it?

Californians, who are no strangers to high taxes, will be able to save more money in the upcoming years thanks to the new SALT deduction limit.

Trump’s Tax Cuts and Jobs Act of 2017 (TCJA) previously set the state and local tax deduction cap at $10,000 ($5,000 for married individuals filing separately) from 2018 through 2025. Before 2018, there was no limit on the amount that could be deducted.

As mentioned, the Trump administration’s new tax cuts and spending legislation temporarily raises that limit to $40,000 for taxpayers making $500,000 annually or less.

The law also increases the $40,000 SALT cap and $500,0000 income threshold by 1% each year from 2026 to 2029, with the cap reset to $10,000 as of 2030.

"The cap has been raised to $40,000, which means if your state-level taxes, and that includes things like income and property taxes, exceed the (prior) $10,000 cap, you can actually remove them from your taxable income," Danielle Hale, chief economist at Realtor.com told Kiplinger. "In essence, you're not paying federal taxes on money that you've already paid state or local taxes up to $40,000."

How much can you expect to deduct over the next five years? Up to $41,624 by 2029 for households earning $520,302 or less.

The winners: Homeowners in expensive markets

Homeowners in expensive California neighborhoods will finally get some property tax relief.

Some folks may even be able to deduct the entire amount of the property taxes they paid due to the new higher state and local tax deduction cap.

• Under the $10,000 cap, an estimated 20.2% of California homeowners were unable to deduct their full property tax burden.
• The new $40,000 SALT cap drops that figure to 1.8%, according to an analysis by Realtor.com.

For some homeowners, the property tax relief has been a long time coming. Of the ten cities with the highest percentage of homeowners paying over $10,000 in property taxes, three are located in California.

In San Jose, 47.9% of homeowners pay over $10,000 in property taxes, Realtor.com found. That’s followed by San Francisco at 40.9%, and Santa Cruz at 28.1%. In each of these cities, over 1% of homeowners still surpass the new $40,000 cap.

According to Hale, those likely to benefit the most from the new SALT deduction amount will be middle-income households rather than wealthier families as the tax phases out at a certain income point.

"It's going to be a mix, probably middle class, in some cases, upper middle class, and wealthier families who pay significantly in local taxes," Hale said. "The tax does have a phase-out provision."

The tax savings with the new SALT limit could still be significant.

In Santa Cruz, only 17% of tax filers claimed a SALT deduction in 2022. According to the Tax Policy Center, the average SALT deduction was $9,100.

That means, under the new $40,000 SALT cap, those homeowners can deduct all of their property tax burden. That’s if they don’t already qualify for other popular tax breaks for homeowners.

More wins: First-time buyers gain 'equal footing'

While homeowners catch a break from skyrocketing property taxes, prospective homebuyers may have a fairer shot at the market.

The new SALT cap may not be enough to lure more competition to the market from investors, who are a major obstacle for would-be buyers.

"I don't think it could join investors, because the default tax doesn't really change for them," said Hale. "The cap applies to individuals already."

Hale noted that investors, who generally run their real estate as a business, already deduct state and local taxes from the income they make as rent, so they only pay taxes on the net revenue.

"In a way, this puts individuals on somewhat equal footing with investors," Hale added.

That will not only impact California, a high-tax state, but also other expensive states for homeowners, like New Jersey, Connecticut, and Washington.

Just take New Jersey as an example. For many homeowners, climbing property taxes in the Garden State are a pain to live with.

• The average homeowner paid a median property tax of $9,137 last year for a property worth $531,559, according to Realtor.com.
• Within the Garden State, residents in some counties like Essex and Bergen paid the highest property tax rates.

A potential buyer, who may have been deterred by high property taxes in New Jersey, could now be incentivized to purchase in the Garden State knowing that those property taxes can be deducted.

Big savings even if you aren’t a homeowner

Why is raising the SALT cap such a big deal?

As reported by Kiplinger, the SALT deduction allows taxpayers who itemize to subtract certain state and local taxes from their federal taxable income. These may include property taxes, income taxes, and sales taxes.

A bigger SALT deduction is good news for Californians, who also face some of the highest sales taxes in the country. So, if you’re not a homeowner, you may be able to save in other ways.

That will come in handy, given shoppers are already feeling their summer budget get tighter as tariffs pushed up inflation in June.

Retail giants like Walmart, Amazon, and Target warned that Trump’s tariffs would force businesses to raise consumer prices, and buyers are seeing the effect in time for back-to-school shopping season.

Stay tuned as we cover how Trump’s ‘one big beautiful bill’ is changing the tax landscape and how you can plan your finances for the best outcome.

Related Content

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• SALT Deduction 2025: Three Things to Know Now
• Most Expensive States to Live in for Homeowners
• How to Reduce Your Property Tax

These tax-free holidays — generally held between July and August — offer shoppers the chance to purchase school supplies, clothing, computers, and other essentials, helping families save cash as students prepare for the new year.

That’s a sweet deal, given that some states on this list levy the highest sales taxes in the nation.

This year, back-to-school shoppers are getting an early start as rising prices remain a top concern.

President Donald Trump’s tariffs are slated to come into effect in early August, and major retailers like Walmart have warned that price hikes are likely.

Stay ahead of potential price increases by checking your state’s specific sales tax holiday dates and qualifying items, so you can shop and save this back-to-school season.

Here are summer tax-free sales events you don’t want to miss in 2025.

How to shop: Sales tax-free weekends in 2025

If you want to maximize your savings during your state’s sales tax holiday, it’s best to go prepared.

Before you go shopping for back-to-school items, you should know that some localities in certain states may charge local taxes on items that qualify for the state tax holiday. To bypass the tax, you can opt to shop online.

Online orders typically qualify for sales tax holidays, but the orders must be paid for during the tax holiday period, and items must be shipped to an address within the state.

Some major retailers simplify the process for you:

• Apple: You can purchase select products in certain states tax-free with Apple, both in-store and online. See if your state qualifies for a tax break this summer.
• Walmart: Shop online or in person for a complete or reduced tax break during a limited time. The major retailer offers an online guide allowing you to select your participating state.

Does your state have a sales tax holiday in 2025?

To date, 17 states offer a tax exemption on back-to-school items and other necessities every summer. If you plan during the summer, you can benefit from some real savings before the upcoming school season kicks off.

Here’s a tip: While the District of Columbia does not have a sales tax holiday, shoppers can visit Virginia or Maryland to take advantage of savings for back-to-school.

Also, stay tuned to Kiplinger. We will provide details on each back-to-school holiday listed here closer to the start of each offering.

Snag some more savings:

• Shopping Online? Watch Out for Sales Tax and Tariffs That Increase Your Cost
• Ten States With the Highest Sales Tax
• Only Five States Have No Sales Tax
• Can Homeschoolers Save on Expenses With 529 Plans?

Alabama shoppers had something to look forward to in July: Back-to-school savings. Savvy shoppers could purchase school supplies, computers, and clothing free from the state’s sales tax. This was a big deal since Alabama has one of the highest sales tax rates in the U.S.

Of course, the tax holiday was just one of the ways the Cotton State is cutting back on sales tax this year.

You may have heard about the recent state tax exemption on diapers, or that Alabama’s grocery tax is due for another reduction in September.

Here’s what you need to know about the Alabama tax-free weekend and the state’s sales tax laws in the coming months.

When was tax-free weekend in Alabama?

The annual back-to-school Alabama sales tax holiday ran from 12:01 AM on Friday, July 18 until midnight on Sunday, July 20.

During this time, many types of school supplies (including computers and tablets) and clothing were exempt from Alabama’s usual 4% sales tax rate.

What was included in the Alabama tax-free weekend?

The Alabama tax-free weekend included clothing, school supplies, books, and electronics, like computers.

Clothing was tax-free during the Alabama sales tax holiday as long as each piece did not exceed $100.

Tax-exempt clothing items included jackets, jeans, shoes, belts, hats, and diapers (though diapers are about to be made temporarily state sales tax-free for a longer period — more on that later).

What clothing was not tax-free? A few items were not considered clothing. Here are a few examples of items you still had to pay tax on during the Alabama tax-free weekend:

• Athletic gear (shin guards, shoulder pads, roller skates, athletic shoes, or sports gloves).
• Jewelry, watches, and hair accessories.
• Handbags and briefcases.
• Cosmetics (including makeup).
• Sunglasses, eyeglasses, and contacts (prescription or nonprescription).
• Belt buckles.

A few eligible electronics and other school supplies were tax-exempt during the tax-free weekend.

However, non-educational video games and computer parts that were sold separately did not qualify.

Alabama had a tax-free holiday on electronics. Eligible purchases included computers and printer supplies (printer paper, printer ink) as well as flash drives and tablets.

• Purchases could not exceed $750.
• Items produced solely for recreation did not qualify.

School supplies were eligible for the Alabama tax-free weekend.

Almost all school supplies were fair game during the Alabama sales tax holiday.

To qualify, each item must have cost $50 or less.

• Art supplies (paints, clay, drawing pads, scissors, etc.).
• Book bags, lunch boxes, binders, notebooks, and folders.
• Calculators and writing tablets.
• Many books with a sales price of $30 or less per book.
• Required textbooks on an official school book list, with a sales price of more than $30 and less than $50.

Note: Although many school supplies were tax-free, some are not. Items used for “clean room apparel and equipment” were not tax-free, including cleaning supplies, paper towels, and hand sanitizer.

For a full list of qualifying items, visit the state’s Department of Revenue website.

Alabama tax-free diapers plus savings on baby products and more

You could purchase diapers tax-exempt during Alabama’s tax-free weekend. Soon you won’t have to wait for a tax holiday, though.

That’s because Alabama recently passed legislation that will temporarily eliminate state sales tax on popular family essentials. In addition to diapers, other items will soon be state sales tax-exempt:

• Baby formula and bottles.
• Pump equipment and baby wipes.
• Maternity clothing and feminine hygiene products.

Alabama will exempt these products and diapers from state sales tax beginning September 1, 2025. However, the sales tax exemption is temporary and will expire on August 31, 2028, unless future legislation extends the provision.

Alabama grocery tax cut: Food taxes

Alabama is one of the states that still taxes groceries. Yet the Cotton State recently passed legislation to reduce the sales tax on grocery items in the coming months.

Beginning September 1, 2025, the Alabama grocery tax rate will reduce from 3% to 2%. But the Alabama grocery tax cut may have come at a price.

As reported by Kiplinger, a prior Alabama law made income earned from overtime (hours exceeding 40 per week) exempt from state taxes. The law, which went into effect last year, expired earlier in 2025.

According to the Institute on Taxation and Economic Policy (ITEP), the “no tax on overtime” provision was initially expected to cost Alabama $34 million in revenue. However, the total cost grew to be about 10 times as much.

“For this reason, Alabama lawmakers chose not to renew [no tax on overtime],” reports ITEP, “Instead using the savings to reduce the state’s grocery tax and fund other priorities.”

Meanwhile, with a sales tax cut on groceries from 3% to 2%, Alabama residents will see a $1 reduction for every $100 spent on eligible grocery items.

Read More

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• Summer Activities That Can Impact Your Taxes
• Tax-Friendly Summer Ideas for Your Backyard
• All the Tax-Free Back-to-School Sales Tax Holidays for 2025

It was time once again for Mississippi residents to save some cash: The state’s annual back-to-school tax holiday was July 11 through July 13, 2025. Savvy shoppers could buy clothing, school supplies, and other qualifying items while forgoing the state’s 7% sales tax rate during the holiday.

And this year, there was an added incentive to start shopping — Amazon Prime Day overlapped with Mississippi’s sales tax-free weekend.

Read on for what was included in the Mississippi tax holiday for 2025.

When was the Mississippi tax-free weekend?

Mississippi celebrated its 17th annual back-to-school tax holiday from Friday, July 11th, through Sunday, July 13th.

During this time, many school supplies and articles of clothing were exempt from Mississippi’s 7% sales tax rate. This meant that, for every $100 you spent, you saved roughly $7 in state taxes on eligible items.

What did the Mississippi tax-free weekend include?

The sales tax holiday included many back-to-school items, like clothing and supplies, under a specific dollar amount. Qualifying purchases of $100 (per item) were exempt from Mississippi state taxes during the holiday.

Here is a sample list of eligible items included in the Mississippi back-to-school tax-free weekend:

• Backpacks, book bags, and lunch boxes.
• Writing tablets and calculators.
• Textbooks, notebooks, pencils, and pens.
• Shirts, shorts, jeans, and pants.
• Most shoes, dresses, jackets, and sweaters.
• Work clothes, workout clothes, and gym uniforms.
• Scout uniforms and children’s novelty costumes (for a school play, Halloween dress up, etc.).

What wasn't included in the Mississippi tax-free weekend 2025?

While many eligible items were included in the upcoming state tax holiday in Mississippi, several were excluded.

Here are a few items you could not buy state tax-free during the 2025 Mississippi tax-free weekend:

• Most electronics, including computers, printers, and phones.
• Makeup and hair accessories, like headbands, bows, and clips.
• Belt buckles, jewelry, and watches.
• Briefcases, luggage, wallets, and purses.
• Diapers and baby bibs.
• Sports equipment like helmets, sports pads, shin guards, and cleats.
• Items used for creating clothes, including cloth, lace, knitting yarns, fabrics, thread, buttons, etc.

For a full list of eligible and ineligible items, see the state’s Department of Revenue website.

When did Amazon Prime Day end in Mississippi?

Online purchases may have qualified for Mississippi’s sales tax holiday weekend but generally must have been shipped to a Mississippi address to qualify. Additionally, the purchases must have been made during the tax-free period (July 11th through July 13th).

Online retailers like Amazon honor state sales tax holidays. However, the retailer explains on its website that "tax may still be calculated on items if they do not qualify, which can include items over a certain threshold, bundles, or specific items that are not included in the holiday."

Amazon Prime Day 2025 ended on July 11th. This left one day of overlap for Mississippi customers who shopped the state sales tax holiday to buy Amazon Prime Day deals.

*Note: Shipping and handling charges were not included in the $100 threshold.

2025 Back-to-school sales and deals

Store sales and discounts may have been eligible for the tax-free weekend in Mississippi, but there were strict rules governing which items were eligible.

For instance, the following circumstances would not allow you to purchase items state sales tax free during the Mississippi tax holiday:

• “Buy one, get one” sales — you could not average two items together to qualify for the $100 total. For instance, if you bought one item for $110 and another item for half off, at $55, sales tax was still due on the first item.
• Manufacturers’ coupons that reduced an item’s price below the $100 limit didn't qualify for the sales tax holiday.
• Items put on layaway couldn't be purchased exempt from state taxes during the Mississippi tax holiday weekend.

However, other sales and store discounts may have been eligible for tax-exempt status. For instance, if you purchased an item at 50% off for $60, that purchase would have been exempt from state taxes.

Read More

• Five States With No Sales Tax
• Summer Activities That Can Impact Your Taxes
• Tax-Friendly Summer Ideas for Your Backyard

The Trump administration's so-called "One Big Beautiful Bill" (OBBB), signed into law on July 4, will slash Medicaid spending by an estimated $1.02 trillion to offset tax cuts. The expensive measure adds over $3 trillion to the national debt over the next decade.

Now, over 300 rural hospitals are bracing for immediate closure. That might include your local hospital.

Some experts predict that cuts to Medicaid will impact nearly every state, with most expected to see more than 25% of their hospitals shut down. In 11 states, the risk is even higher, with 50% or more of hospitals at risk.

That’s because rural hospitals often have lower financial reserves, meaning any reduction in revenue could lead to closures or force some to roll back essential services.

President Donald Trump’s tax overhaul legislation represents the largest federal rollback to Medicaid to date.

Here are three things you need to know about what Trump’s Medicaid cuts could mean for you in 2025.

1. Are hospitals closing due to Medicaid cuts?

Overall, more than 700 rural hospitals could close due to Medicaid cuts, which translates to one-third of all rural hospitals in the country. As noted, an estimated 300 are at immediate risk of shutting down.

The most at-risk hospitals are located in isolated rural communities, which would force residents to travel long distances for inpatient or emergency care.

These hospitals may also be reliant on Medicaid reimbursements, as studies show that adults and children in small towns and rural communities are more likely to have Medicaid or the Children’s Health Insurance Program (CHIP).

The top five states that could see the most closures are so-called "red states," led by Kansas.

• In Kansas, an estimated 66 rural hospitals could be on the chopping block, according to the Center for Healthcare Quality & Payment Reform, with 89 facing service cuts.
• Researchers project that 28 rural hospitals in Kansas are at immediate risk of closing due to Medicaid cuts.
• This would be followed by Oklahoma, Alabama, Texas, and Mississippi.
• As a snapshot, in Texas, as many as 108 (or 69%) of rural hospitals would face losses in services. An estimated 66 hospitals are at risk of closing, with 29 flagged under immediate risk.

2. Many rural hospitals rely on Medicaid

Rural hospitals face unique challenges with funding that are aggravated by insufficient health insurance reimbursements and unstable revenue streams from local taxes or government grants.

Many rural and frontier hospitals also face closure risks because private insurance plans pay them less than what it costs to deliver services to patients. These often offset hospital losses on services delivered to uninsured and Medicaid patients.

The major funding cut for Medicaid spending in the OBBB will be a significant loss for struggling facilities.

According to estimates from Manatt Health, rural hospitals stand to lose $70 billion over the next decade as a result of Trump’s tax cuts and spending legislation. Put it another way: Hospitals are projected to lose 21 cents from every Medicaid dollar received.

• In Kansas, where more than half of rural hospitals are at risk of closing, facilities will see an estimated 15% reduction in Medicaid reimbursement.
• Missouri, where one-third of rural hospitals could close, can expect a 29% reduction.
• In West Virginia, the reductions in Medicaid funding could translate to a 22% loss in reimbursement.

“Medicaid is a substantial source of federal funds in rural communities across the country,” said Alan Morgan, CEO of the National Rural Health Association (NRHA). “It’s very clear that Medicaid cuts will result in rural hospital closures, resulting in loss of access to care for those living in rural America.”

3. Rural hospitals closing: Trump’s stop-gap won’t last

The final version of Trump’s megabill includes $50 billion in relief funding over six-year period to keep rural hospitals and frontier hospitals afloat.

The financial cushion to be administered by a newly created Rural Health Transformation Program would still come up short to filling the $1.02 trillion budget gap in Medicaid spending, according to tax policy analysts.

According to the OBBB, the $50 billion in funds is to be delivered in two ways to rural health care facilities:

1. Half will be delivered to states that apply to the Rural Health Transformation Program, with a detailed "rural health transformation plan" explaining how rural hospitals will improve access to facilities, other health care providers, and services to their residents, among other strategies.

2. The other 50% of the funds will be distributed to states in a process yet to be determined.

3. The U.S. Treasury Department will provide an allotted amount of $10 billion per year to rural health care providers, starting on fiscal year 2026 through 2030.

4. These funds include rural hospitals, rural health clinics, community mental health centers, and federally qualified health centers.

5. States must apply no later than December 31, 2025, to be considered for the allotted funding.

As part of the detailed “rural health transformation plan,” rural hospitals that apply for funding must identify specific causes driving the accelerating rate of stand-alone rural hospitals becoming at risk of closure, conversion, or service reduction.

Medicaid cuts in the 'Big Beautiful Bill': What you can do to prepare

Approximately 60 million people in the U.S. rely on rural hospitals and health care facilities, according to the Bipartisan Policy Center, representing 20% of the population.

The Trump administration’s major budget rollback for Medicaid will inevitably be a source of financial strain for rural health care facilities that are already struggling. The Center for Healthcare Quality & Payment Reform, estimates that more than 700 rural hospitals could face closures due to the newly enacted tax policy.

As ruled by the OBBB, states can apply for allocated funding for rural hospitals and health care facilities via the Rural Health Transformation Program. State governments may also come up with different revenue sources to streamline funds to these essential providers.

These developments should happen in the upcoming months, so stay tuned to your local authorities and how they respond the new tax landscape.

Other 2025 Tax Changes

• What's Wrong With Trump's Pledge to End Taxes on SS Benefits?
• 2025 Tax Deduction Change for Those Over Age 65
• Social Security Email About Trump's Big Beautiful Bill Sparks Confusion

Dozens of states have implemented taxes and registration fees targeting EV owners. That way, commuters can contribute what some lawmakers see as their “fair share” of highway funding, which is often collected via gas (motor fuel) taxes.

The latest addition to that list is Hawaii, which just launched its new state road usage charge program on July 1 for light-duty passenger electric vehicles.

Eligible EV owners in the Aloha State can opt to pay a state per-mile road usage charge of $8 per 1,000 miles, which is capped at $50 per year, or pay a flat annual state road user charge (RUC) of $50.

Both of these options replace the state’s current $50 EV registration surcharge, according to Hawaii’s Department of Transportation. By 2028, the state-per-mile RUC will become mandatory for EVs, and by 2033, it should include all light-duty vehicles.

“Instead of paying based on what type of car you drive — or can afford — a road usage charge means vehicle owners will pay only for how much they actually drive,” said Ed Sniffen, Hawaii’s Department of Transportation (DOT) Director.

While opting for an electric vehicle may come with higher annual fees or taxes, getting a federal EV tax credit worth up to $7,500 was a popular incentive.

Here’s the problem: The federal tax credit for clean vehicles is likely going away under President Donald Trump’s so-called “big beautiful bill” which Republicans aim to pass by the Fourth of July.

Read on to see if switching to an electric vehicle will still be a worthwhile investment for you.

Road taxes for EV drivers

As you may have guessed, road infrastructure and maintenance are paid for by federal, state, and local government revenue.

The funding to keep roads safe is gathered through a combination of taxes on motor fuel, fees on vehicles like registration and licensure, and tolls.

As more people switch to EVs, some states have implemented added fees to make up for lost gas tax revenue. These include:

• Higher registration fees compared to gasoline-powered vehicles
• Imposing pay-per-mile programs or an annual road usage fee so EV and hybrid drivers can contribute to road infrastructure
• Taxing electric vehicle drivers at higher rates

How high can EV registration fees go? In Colorado, you can expect to pay $50 if you’re registering an electric vehicle. However, in New Jersey, you’ll pay a registration fee as high as $290 starting in 2028. These fees vary depending on where you live.

Does your state have EV registration fees?

There are currently 39 states that require additional registration fees from electric vehicle drivers. If you’re in the market for an EV, some of these fees can make you think twice.

High upfront charges: In Texas, you’ll have to pay $400 for the registration of a new EV on top of standard registration fees. This initial payment covers the first two years of registration. For each subsequent year, you’ll have to pay a $200 annual fee. These fees are directed to the state’s highway funding.

Inflation adjustments: Folks in Pennsylvania who want to purchase an electric vehicle will also be hit by a $200 annual EV registration fee, which will increase to $250 in 2026. The registration fee will be indexed to inflation for subsequent years. Likewise, annual plug-in hybrid registration models will cost you $50 in 2025 and $62.50 next year, which is also adjusted for inflation.

Pay upon weight: In Oklahoma, the amount you pay on annual registration fees is based on the weight of your EV or hybrid vehicle. An EV vehicle under 6,000 lbs. will set you back $110, while a vehicle over 26,000 lbs. can cost you $2,250.

Trump’s bill kills EV tax credit

To encourage commuters to purchase electric vehicles and promote clean energy, the Biden administration’s Inflation Reduction Act (IRA) included a federal tax credit worth up to $7,500 for qualifying “clean vehicles.

The EV tax credit, which is also eligible for some used electric cars, was supposed to be in place until December 2032. However, it's now on the GOP chopping block under Trump’s newly enacted legislative tax package known as the “One Big Beautiful Bill Act.”

As reported by Kiplinger, the megabill will eliminate the EV tax credit for new, used, and leased vehicles. What does that look like?

• Republican lawmakers will eliminate the $7,500 tax credit for the purchase or lease of a new EV.
• The $4,000 tax break for the purchase of a used EV will also end.
• The EV tax credit will sunset after September 2025.

That means if you’d like to purchase an EV and still get a tax break, this year (the coming months) will be your last chance to snag that tax incentive before it's gone.

Stay tuned to Kiplinger’s coverage on Trump's "big, beautiful bill," as some of the measures in it will impact everyday choices from major purchases that promote clean energy, like your vehicle or solar panels, to crucial tax breaks for families and your access to healthcare.

Read More

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But overall, property taxes in the Old Dominion State are below the national average.

This can be advantageous for Virginia residents, particularly since property tax rates nationally are on the rise. If you’re looking to relocate somewhere cheaper, or are searching for more scenic living, here are Virginia’s top 10 cheapest places to live.

Related: Virginia Tax Rebates 2025: What You Need to Know

Cheapest places to live in Virginia

After ranking property tax bills from highest to lowest per county in Virginia, one thing’s for certain: Rural places prevailed. You’ll typically find more affordable living in the countryside than, say, Virginia Beach or the capital city of Richmond.

But if you’d like a more relaxed pace of life, panoramic mountaintop views and a close-knit community feel, check out these places.

Note: Kiplinger used 2025 data presented by the Tax Foundation (sourced from the U.S. Census Bureau) to find the cheapest counties in Virginia to live.

Brunswick County

Median property tax bill: $718

Median home price: $132,700

Brunswick County is home to some pretty cheap property tax bills, with a median of $718. Home prices are typically around $132,700, according to the latest data from the Tax Foundation.

Although Brunswick is located along the North Carolina border, it’s in a passionate debate with Brunswick County, Georgia, about who created the classic Southern dish, “Brunswick Stew.” Each year, Brunswick, Virginia, has a festival claiming to be the birthplace of the meal’s origin. But the county is more than just food.

Brunswick also has National Treasures in the two Rosenwald Schools, which were built to serve African-American students in the early 1900s. Other historic sites in the county include Lake Gaston and the Meherrin River, where residents can enjoy fishing, boating and other water activities.

If you want to be a part of rich cultural heritage — and maybe a friendly competition over stew — Brunswick might be the perfect place for you and your wallet.

Tazewell County

Median property tax bill: $718

Median home price: $116,100

Tazewell technically ties with Brunswick in the median property tax bill, but claims a slightly higher rank on this list due to its lower median property prices, at $116,100 (per U.S. Census Bureau data).

Tazewell is well-suited for outdoor recreationalists, as its nickname, “Scenic Gateway to the Heart of the Appalachians,” implies. The county boasts the highest valley in Virginia, Burke’s Garden, as well as the Clinch River, home to the world’s largest collection of rare freshwater species.

Residents can also enjoy breathtaking views on a popular motorcycle route dubbed the “Back of the Dragon” and explore the local lake in Cavitt’s Creek Park.

Come for the adventure in Tazewell, but stay for the cheap property taxes.

Wise County

Median property tax bill: $658

Median home price: $116,500

Home prices in Wise sit comfortably at $116,500 while median property tax bills are just under $660, according to the Tax Foundation. However, Wise’s property taxes can be slightly more expensive than several adjacent counties in Virginia and Kentucky.

Don’t let that scare you off. While slightly pricier than other counties on this list, Wise makes up for it with educational opportunities and parks.

Home to the University of Virginia’s College at Wise (UVA Wise), the county offers beautiful Appalachian Mountain scenery and rich history. Residents can explore parts of the George Washington and Jefferson National Forests, and drive about an hour out to see Breaks Interstate Park — locally known as the “Grand Canyon of the South.”

If you’re looking for a beautiful (and inexpensive) college town in the mountains, Wise might be the move for you.

Russell County

Median property tax bill: $644

Median home price: $119,600

Home prices are relatively low in Russell, as the median price tag on single and multifamily homes is $119,600.

While not the cheapest on this list, it certainly isn’t the most expensive. The median property tax bill is also affordable at less than $650, according to U.S. Census Bureau data.

Russell County has lots of local charm. Towns such as Lebanon, Rosedale and Castlewood offer cozy cafes and attractive scenery. Festivals in Russell are common, too, with the Russell County Fair and Horse Show being the most popular.

Residents can also enjoy typical Virginia amenities, such as visits to waterfalls and hikes through picturesque mountain trails.

If you’re digging a “small town vibe” in the mountains, Russell might be a great place to save on property tax.

Lunenburg County

Median property tax bill: $635

Median home price: $145,500

Boasting the highest median home price on this list, at $145,500, is Lunenburg County. While housing prices are relatively “high” compared with the rest of the rankings, median property tax bills in the county aren’t, at just $635.

Lunenburg is home to rustic flair. You might enjoy relocating to the county if you like camping, canoeing or horseback riding. In addition to state park access, the area is about a 40-minute drive from a local winery and a distillery. Residents enjoy tasting a wide variety of drinks while also learning about the winemaking process and touring the grounds in these areas.

Foodies who want to enjoy the outdoors or those seeking a slower pace of life might find a home for a reasonable price in Lunenburg County.

Covington City

Median property tax bill: $629

Median home price: $80,200

Although not a “county,” Covington City is included on this list because it's a self-governing entity. It has the lowest median housing price on our list at $80,200, while property taxes are just shy of $630, per the Tax Foundation housing data.

Covington City is the second-least populous city in Virginia, but its uncrowded vibe could be perfect for remote workers. Such activities as kayaking, tubing and rafting are not uncommon on the scenic Jackson River, and the area also offers lake access and an impressive 80-foot waterfall, named “Falling Spring Falls.”

If you’re looking for some downtime on the cheap, you might make Covington City your next destination.

Henry County

Median property tax bill: $604

Median home price: $120,300

Henry County property taxes are generally less expensive than all surrounding counties, and it’s no wonder. The median property tax bill is barely above $600, while home prices are around $120,300, according to the U.S. Census Bureau.

Steeped in a rich history of textiles and furniture making, Henry County's seat has a prominent NASCAR track. Race weekends can attract tens of thousands of fans for events.

Outside of racing, the county is known for being one of the last engagements in the Civil War. History buffs can also learn more about local geological features and wildlife at the Commonwealth’s Museum of Natural History.

Move to Henry County if you’d like to pay low property taxes, enjoy the track on the weekends and want a chance to live in a historic town.

Lee County

Median property tax bill: $586

Median home price: $98,700

As the westernmost county in Virginia, Lee ranks third in the cheapest places to live, due to median property tax bills being just under $590. House prices, too, can be relatively cheap, at barely below $99,000 per the Tax Foundation.

Part of the allure of Lee is its natural beauty. A portion of the Cumberland Gap is in the county. There, residents can go on a ranger-guided tour of Gap Cave, check out a 20th-century settlement, and take plenty of photos of waterfalls.

Lee is also famous for a relaxed atmosphere, with such crafts as quilting, which has been passed down through families for generations and preserved in guilds and other associations in the area. However, the county is “partially dry,” meaning you can't buy distilled spirits at a retail store.

Artists who want to take stunning photographs, work in textiles and save on taxes might fall in love with Lee County.

Dickenson County

Median property tax bill: $503

Median home price: $101,100

Right on the Kentucky border is Dickenson County, with property taxes around $500. Median home prices are also relatively low, barely above $101,000, according to Tax Foundation data.

Dickenson residents are nestled in the Appalachian Mountains, so they can explore numerous ATV trails and check out stunning vistas.

For example, a clear day on the Birch Knob Observation Tower can allow you to see parts of Kentucky, West Virginia, North Carolina, Tennessee, even Ohio.

The county also celebrates the folklore and culture of Appalachia through multiple live events and mountain music festivals.

If you’re ready to experience a strong connection to the region’s local heritage and want to save a buck or two, Dickenson might be the place for you.

Buchanan County

Median property tax bill: $404

Median home price: $91,400

Buchanan is the cheapest place to live in Virginia per the U.S. Census Bureau, with home prices around $91,400 and median property tax bills just over $400.

Not only does Buchanan have the lowest property taxes on this list, but the county also boasts the lowest effective property tax rate, at 0.44% — very cheap, considering the national average is about .90%!

Apart from being affordable, it's the only Virginia county to border both West Virginia and Kentucky in a very rural area. Consequently, the county has a wildlife-centered focus, promoting itself as “The Elk Capital of Virginia.”

A 45-minute drive takes you to Breaks Interstate Park, which offers guided tours of elk, wild turkeys, and black bears. Residents can also enjoy fishing, canoeing and hiking.

Like Lee County, Buchanan County prohibits the retail sale of distilled spirits.

Come to Buchanan for the cheap property taxes, and stay for the wildlife explorations.

More Cheap Places

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The budget is nearly $59 billion, the largest amount ever in the state’s history. Meanwhile, increased taxes — such as the ‘mansion tax’ — may cost New Jersey homeowners more.

And while record-high spending on schools is in the budget, other programs designed to provide tax relief to older adults, such as Stay NJ, could face an uncertain future.

So what might you expect in the New Jersey 2026 budget? Read on.

What is NJ trying to tax now?

As previously reported by Kiplinger, eligible New Jersey residents will receive property tax relief under the 2026 budget. However, a lot has changed since Gov. Murphy’s initial budget bill in February.

Here are a few of the tax increases slated in the state’s 2026 budget:

• Higher taxes on vapes and cigarettes. The vape tax rate would increase by as much as 200%, and the cigarette tax would increase by over 10%.
• Higher tax rates on online gambling (15%) and sports wagers (13%). The new state budget increases both tax rates to 19.75%, instead of Murphy’s 25%.
• Higher “millionaire’s tax” on high-value homes. (More on that below).

New Jersey ‘Millionaire mansion tax’

New Jerseyans with high-value homes didn’t get out of bill negotiations scot-free. Contained in a tangential bill was a New Jersey “mansion tax.”

• A 2% tax on properties sold between $2 million and $2.5 million.
• An additional 0.5% for every $500,000 in home value above $2.5 million.
• A 3.5% cap for homes worth $3.5 million or more.

However, sellers will pay the fee, not the buyers, which is a significant change from Gov. Murphy’s initial proposal. The change may help buyer affordability, but could harm affected sellers looking to move within or out of the Garden State.

New Jersey property tax relief: Stay NJ

Despite record spending, the governor’s office estimates that New Jersey is anticipated to end the 2026 fiscal year with a surplus of approximately $6.7 billion.

Yet that might not be enough to fund Stay NJ — a new property tax program for older adults that is expected to pay out every year.

• The new budget sets aside $600 million for Stay NJ payouts in 2026.
• However, this amount has been accumulated in three years.
• This means the next governor will need to find an additional $600 million in one year to keep the program funded for 2027, which may be a hard task, considering the uncertain future of federal funding.

New Jersey governor election: Budget woes?

Since Gov. Murphy is not eligible for a third term, a new governor will be elected this fall.

According to a press release, Murphy “inherited a $409 million surplus from his predecessor…[and] will leave his successor with a surplus 16 times greater than that amount.”

However, that might not be enough for the new governor during an unusual tax year.

The GOP-controlled U.S. Congress is currently considering major tax cuts in funding for state programs, like Medicaid. Like many other states, New Jersey is expected to be affected by variability in this funding, with the state’s Department of Human Services predicting a $3.6 billion annual cost to Garden State Medicaid programs.

In addition, New Jersey’s new budget is expected to have a nearly $1.5 billion structural deficit, per the New Jersey Office of Legislative Services (OLS). All these budget woes could prove challenging for the new governor come election time.

Keep informed and stay tuned for more updates.

Read More

• How Do I Apply For New Jersey ANCHOR Benefits?
• New Jersey Property Tax Programs: What to Know
• ‘Senior Freeze’ Program Checks in New Jersey
• New Jersey Tax Guide

But the financial costs of homeownership can be a nightmare.

The average annual cost of owning and maintaining a single-family home in the U.S. is over $21,000 a year, according to a 2025 Bankrate study.* Property taxes, maintenance fees, and other so-called “hidden home costs” have some homeowners paying over $34,000 annually in their state.

Not to mention, recent political movements could make things challenging for American homeowners. The highly debated state and local tax (SALT) deduction could exacerbate home costs and lead to more expensive federal tax bills in 2026. Here’s what to know.

*Bankrate’s ‘hidden home cost of homeownership study’ included 49 out of the 50 U.S. states. New York was excluded due to data limitations.

Property tax among top home costs

As home prices have skyrocketed 197% in the last twenty-five years, hidden home costs are also on the rise. Here’s the pricetag for several items you might not expect when buying a home, according to Bankrate’s survey:

• Home maintenance. The average cost of maintaining a home is over $8,800 per year.
• Utilities and energy. The average annual bill for these services is nearly $4,500.
• Property taxes. Homeowners can expect to pay an average $4,316, if not higher, annually.
• Home insurance. Insuring a single-family home can cost almost $2,300 per year.
• Internet and cable. Homeowners pay an average of $1,515 annually for cable and internet services.

*These numbers come from one survey, costs and averages can vary widely by state and coverage amounts in the case of home insurance.

Another Bankrate survey revealed that nearly half of homeowners with buying regrets cited maintenance and other hidden costs as being “more expensive than expected.” Unanticipated costs, which can include property taxes, were the most common source of buyer regret.

SALT deduction cap could make property taxes more expensive

The SALT deduction has allowed taxpayers who itemize to claim state and local taxes on their federal return for over one hundred years.

But the $10,000 “cap” on SALT — limiting how much of a deduction for state and local taxes taxpayers may claim — has only been in place for about 7-8 years as of 2025. And has just been raised (temporarily) under Trump's new mega tax bill, often called the "One Big Beautiful Bill" (OBBB).

Created to offset the Tax Cuts and Jobs Act (TCJA) tax cuts, the “SALT cap” in the OBBB:

• Temporarily raises the SALT cap from $10,000 to $40,000 starting in 2025.
• Phases out for incomes above $500,000 (married filing jointly). (Incomes above $500,000 would still be subject to the $10,000 cap.)
• Will increase by 1% each year through the end of 2029.
• Reverts to the $10,000 cap for 2030 and beyond.

So what does this have to do with property taxes?

Well, a big part of your state and local tax (SALT) deduction may come from your property tax bill.

When the SALT cap hinders how much you can claim, that could be problematic for your property tax bill, particularly in states with high property taxes.

Worst states for SALT Cap

While taxpayers in all states can be affected by a sustained SALT cap, seven could be hit the hardest when looking at the state and local tax collections per capita from the Tax Foundation:

• District of Columbia (D.C.), where taxpayers pay an average of $14,974 in annual state and local taxes.
• New York with an average of $12,685 per capita.
• California, at $10,319 per capita.
• Connecticut with $9,718 per capita.
• Hawaii, with $9,503 per capita.
• New Jersey at $9,366 per capita.
• Massachusetts, with $9,341 per capita.

Although the above figures may have some state and local taxes that aren’t SALT deductions, per capita figures include property taxes, income taxes, and sales taxes — all of which may be included in SALT.

And keep in mind, the per capita numbers are just averages. SALT caps can significantly impact taxpayers who pay more in state and local taxes, especially as property tax rates soar.

Bottom line: Property tax rates are on the rise

Property taxes on single-family homes have risen nearly 7% in recent years, per ATTOM, a real estate data company.

• That’s almost double what the rate was the year before, and the largest in the last five years.
• If property taxes continue to rise, and the SALT cap remains, taxpayers could be sandwiched between having to pay higher property tax bills and being unable to claim a full deduction on those increased costs.

You may want to consult with a tax professional to prepare for legislative outcomes. Many families choose mid-year to get some tax planning done, and staying ahead of the curve can help you best respond to changes made on Capitol Hill.

Read More

• SALT Deduction: Three Things to Know
• States With the Lowest Property Tax
• Ten Tax Breaks for Homeowners and Homebuyers

Virginia is sending one-time tax rebates to residents in 2025. This continues the Commonwealth's practice of returning surplus funds directly to taxpayers as a form of financial relief.

The Youngkin administration states that Virginia has generated over $10 billion in surplus revenues over the past four years.

“Virginia’s strong job growth, bolstered by business investment commitments of $140 billion, has driven a total of $10 billion in surplus revenue and enabled a record $9 billion in tax relief,” Gov. Glenn Youngkin stated in a release regarding the rebates. “This fall’s tax rebate reflects a simple truth: it’s your money, not the government’s."

The move aligns with a trend where many states send residents so-called “stimulus" checks and tax rebate payments. However, this year, rebates come amid concerns across the country about inflation, tariffs, and the rising cost of living.

Here's more of what you need to know.

Virginia rebate checks for fall 2025

The 2025 Virginia tax rebate program is designed to provide direct financial relief to Virginians who had a state income tax liability for the 2024 tax year.

• To be eligible, taxpayers must file their Virginia state income tax returns by November 3, 2025
• The rebate amounts are set to be up to $200 for single filers and up to $400 for married couples filing jointly.
• However, the rebate cannot exceed the taxpayer’s actual state tax liability after all deductions and credits are applied. For example, if a single filer owes $150 in Virginia income tax, their rebate will be limited to that amount rather than the full $200.

Here is a summary of the 2025 rebate details:

*Those who file/filed before July 1 can reportedly look forward to receiving their rebate as early as mid-October 2025.

When Virginia tax rebates will be sent

• Payments started to be distributed in mid-October 2025 and continue to be issued, usually in the order in which returns were first filed.
• The Commonwealth typically issues payments via direct deposit for taxpayers who have previously set up this method; otherwise, rebates are sent by paper check.

You'll soon be able to check your rebate eligibility, track the status of your rebate, and update banking information if needed.

Note: Virginia has safeguards in place to address outstanding debts owed to state agencies. Under the Setoff Debt Collection Act, any rebate owed to a taxpayer with outstanding state debts may be applied to those debts first.

So, if your debts exceed the rebate amount, you will receive a notification explaining how the rebate was allocated.

Virginia tax changes for 2025

The rebates are part of a wider set of tax changes that will affect Virginia taxpayers in 2025.

Standard Deduction: One of the most notable adjustments is the increase in the Virginia standard deduction.

For tax years beginning January 1, 2025, through December 31, 2026, the standard deduction rises to $8,750 for single filers and $17,500 for married couples filing jointly. (That's up from $85,00 and $17,000 respectively.)

Note: The federal standard deduction has also increased for 2025.

Earned Income Tax Credit (EITC): Virginia is also enhancing its EITC. The refundable portion of the Commonwealth's EITC will increase to 20% of the federal credit, up from 15%.

The expansion is designed to provide additional support to working families with low- and moderate-income. You might also be eligible for the federal EITC.

Estimated Tax Payments: For self-employed individuals, freelancers, and small business owners, the threshold in Virginia for making estimated tax payments will increase from $150 to $1,000 starting with the 2025 tax year.

This change is supposed to reduce the administrative burden on taxpayers who previously had to make quarterly state payments on relatively small amounts of tax due.

Note: Virginia tax brackets didn’t change from 2024 to 2025. Income tax rates range from 2% to 5.75%, depending on income level.

Virginia governor election

Virginia tax policy is a topic this year, not only because of the rebates and tax changes but also due to the high-profile 2025 governor’s race.

This year’s election is historic, with both major party nominees being women: former U.S. Rep. Spanberger for the Democrats and current Lieutenant Gov. Winsome Earle-Sears for the Republicans.

Gov. Youngkin, who is ineligible to run for re-election due to Virginia’s prohibition on consecutive gubernatorial terms, has emphasized tax relief as a central theme of his administration.

Both Spanberger and Earle-Sears have made tax policy a point in their campaigns.

• For example, the car tax, which has been in place since 1782, remains a significant revenue source for local governments, funding schools, public safety, and other essential services.
• Local governments assess the car tax annually based on a vehicle’s value as of January 1. Vehicle owners receive a bill from their locality and pay the tax directly to the local government, typically twice a year in May and October.
• Eliminating the tax would reportedly require the state to compensate localities for lost revenue, with estimates ranging from $2.5 to $3 billion annually, according to various state budget analyses.

Earle-Sears has reportedly said the state can use its rainy day and reserve funds, along with recent budget surpluses, to compensate for the $2.5 to $3 billion local governments would lose each year. She has noted that Virginia’s healthy savings make that possible.

According to Axios, a spokesperson for Spanberger told reporters that the candidate also supports ending the car tax and would employ a bipartisan approach to evaluate ways to eliminate it.

Virginia taxes: What you can do now

If you haven’t already and are otherwise eligible, file your 2024 state income tax returns by the November 3 deadline to qualify for the tax rebate.

Stay informed about ongoing legislative discussions regarding potential reforms.

Also, remember: the November gubernatorial election outcome will impact tax and other policies in the Commonwealth.

Related

• Ten Cheapest Places to Live in Virginia
• Virginia Tax Guide
• States Sending Stimulus, Tax Rebate Checks This Year
• What's in Trump's 'One Big Beautiful' Tax Bill?

A new analysis warns that electricity bills for households in California could increase 7.2%, while business utility bills would spike as much as 8.5% over the next decade if Congress repeals clean-energy tax credits created by the Inflation Reduction Act (IRA).

That’s because tucked within the partisan reconciliation bill are provisions that call for the construction of energy-related projects to begin within 60 days of the bill’s passage to receive a credit. Developments must produce electricity by the end of 2028 to be eligible for certain energy credits.

The tight deadline couldn’t come at a worse time for the Golden State.

California utility bills have skyrocketed in recent years, with some residential areas seeing energy costs climb as much as 67%. Most of the approved rate hikes are intended to help investor-owned utilities build underground power lines and mitigate wildfire damage.

It also comes as many Californians impacted by the Eaton and Palisades fires are still in the thick of rebuilding their communities. While the 100th day mark of the fires was in April, homeowners and business owners are still struggling to recover.

Higher electric bills are just the tip of the iceberg.

As California Gov. Gavin Newsom and the Trump administration clash over the Golden State’s federal funding. Here’s what else is on the line when it comes to your finances.

GOP proposes energy tax credit changes

Senate Republicans plan to release their version of Trump’s major tax cuts and spending bill dubbed the ‘big, beautiful bill’ soon, but some GOP lawmakers are showing signs of regret.

Thirteen House Republicans in support of the megabill are urging Senate Republicans to roll back some provisions tied to clean energy credits. The internal political pushback could signal that the major 1,000-plus page reconciliation bill passed through the House floor in a rush.

“While we were proud to have worked to ensure that the bill did not include a full repeal of the clean energy tax credits, we remain deeply concerned by several provisions,” said Republicans in a letter, led by Rep. Jen Kiggans, (R-VA).

House GOP lawmakers pointed to provisions they would reconsider, “including those which would abruptly terminate several credits just 60 days after enactment for projects that have not yet begun construction,” as well as “restrictions to transferability.”

The concerns allude to certain amendments passed by the House version of the reconciliation bill, which would target the investment tax credit (ITC) under Section 48E and production tax credit (PTC) under Section 45Y.

In brief, they would:

• Make these credits unavailable for solar, wind, battery, and other technology projects that begin 60 days after the bill is enacted.
• The measure would impose a placed-in-service deadline of Dec. 31, 2028, or else no credit would be available.

“This approach jeopardizes ongoing development, discourages long-term investment and could significantly delay or cancel energy infrastructure projects across the country,” the representatives wrote.

It’s important to note that the energy tax credits could still face revisions as they move through the Senate.

California’s electricity prices could rise further

The proposed legislative changes to the Inflation Reduction Act (IRA) ‘technology-neutral’ tax credits would lead to higher electricity and natural gas prices, job losses, and a significant economic slowdown in California over the next decade.

If these federal tax credits are repealed, higher utility bills are just one pressure point Californians will have to face, according to the National Economic Research Associates (NERA) study.

• Job loss: The economic impact would result in 44,200 fewer jobs between 2026 and 2032, and a $4.78 billion decrease in the state’s gross domestic product.
• Gas prices: Natural gas prices would increase in households and businesses by 2.3% and 3.5%, respectively.
• Electricity bills: Meanwhile, electricity bills would climb by 7.2% for households and 8.5% for businesses within the next decade.

According to the Center for American Progress (CAP), federal investments from the IRA helped stimulate job creation in manufacturing clean energy projects, building electrification, and other tech across the country.

Newsom threatens withholding tax money from the federal government

Adding to the economic uncertainty in California are ever-growing tensions between Gov. Gavin Newsom and the Trump administration.

• The Trump administration announced plans to claw back a large portion of federal spending in California, according to CNN.
• This would include the “full termination” of major grants for the University of California and California State University Systems, which would begin as soon as this month.

The Democratic governor was quick to bite back, threatening to boycott federal tax payments.

“Californians pay the bills for the federal government. We pay over $80 BILLION more in taxes than we get back,” Newsom wrote in a social media post. “Maybe it’s time to cut that off.”

Californian residents and businesses contributed about $83 billion more in federal taxes in 2022 than they received from the federal government, a recent study showed. That was after the state paid $692 billion in federal taxes and received $609 billion in federal funding.

The Golden State is the largest donor state in the nation, far outpacing New Jersey, which contributed about $28.9 billion, and Massachusetts at $27 billion.

U.S. Treasury Secretary Scott Bessent responded in a post on X that Gov. Newsom was “threatening to commit criminal tax evasion” and “leave California residents on the hook for unpaid federal taxes.”

What’s next for California

Higher electricity bills may be the last issue Californians want to deal with right now.

Utility bills in the Golden State have skyrocketed nearly 50% for residential customers in recent years, surpassing inflation and the national average, according to the state’s nonpartisan fiscal and policy advisor.

The sharp increase in electricity bills is due to the growing threat of wildfires, the state’s Legislative Analyst’s office said. Higher rates allow utility companies to work on wildfire mitigation projects, like building underground powerlines.

Senate Republicans still have the opportunity to revise amendments on the GOP version of Trump’s ‘one big beautiful bill’ before the bill reaches a vote. Potential changes to energy tax credits can impact your everyday utility bills, so stay tuned.

Related Content

• Trump’s ‘One Big, Beautiful Bill’ With Trillions in Tax Cuts: What to Know
• California Tax Deadline Extension: What to Know for 2025
• California Fires: How to Recover Tax Records and Other Important Documents
• Save More with Tax Credits for Energy-Efficient Home Improvements While You Still Can

But thanks to three Texas property tax bills passed this fall, more relief is on the way.

Among the Texas property tax relief measures are two increased homestead exemptions as well as a property tax cut for businesses. Homeowners and business owners may expect to receive $10 billion in tax relief funds.

“Never before has the Texas Legislature allocated more funds to provide property tax relief than they did this session,” said Texas Gov. Greg Abbott in a press release before the package was approved by voters on the November ballot.

However, not every Texan is on board with the financial relief, which will dip into budget surpluses despite future uncertainty surrounding federal funding. Plus, localities could foot the bill for the tax cuts.

Here’s a breakdown of the property tax relief in Texas and how much you can expect to save.

Texas property tax relief passed for homeowners

Part of the many provisions approved by Texas voters on the November ballot was raising the homestead exemption for Texan homeowners.

• This is a big deal because two years ago, the exemption amount more than doubled, from $40,000 to $100,000.
• The new Texas homestead exemption increases that amount to $140,000.
• As a result, 5.7 million homesteads in Texas may see a lower property tax bill this year.

Texas Lt. Gov. Dan Patrick, a major advocate of property tax relief, stated that homeowners under age 65 could see their school taxes cut by “almost 50%.” Raising the exemption amount to $40,000 of a property’s taxable value makes that amount exempt from property taxes.

But that’s not all — homeowners age 65 and older or those with disabilities will save even more on property taxes in Texas.

The Texas older adult homestead exemption

Not only will the state pick up the tab for homeowners under age 65, but those 65 and older also gain more Texas property tax relief:

• The former homestead exemption for those age 65 and older or with disabilities was $110,000.
• That was an increase from $50,000 two years ago.
• With the new package, the exemption jumps to $160,000, or a total of $200,000 combined with the standard homestead exemption.
• At least two million Texan households are expected to see reduced property tax bills from this provision.

On average, the Texas Senate estimates that older or disabled homeowners will see annual savings of $454.30.

Combined with the first homestead exemption and school tax rate “compression” (more on that below), homeowners age 65 and older could receive $938.72 in property tax savings every year.

Texas business tax exemption

State businesses will also see a huge tax break under the new property tax relief approved in November.

Formerly, Texas law allowed businesses to exempt up to $2,500 of income-producing property from tax. This includes equipment such as computers, printers, or specialized vehicles.

The new law boosts the exemption to $125,000, dramatically reducing the amount of property taxes paid by businesses on personal business property.

The initiative is expected to save business owners an average of $2,499 per year, according to a post on X by Sen. Paul Bettencourt (R-Houston), author and proponent of Texas property tax relief.

Texas tax cuts: Localities could bear the brunt

All tax relief bills come with a cost. The Texas property tax cuts approved by voters will use “compression” to make up for lost revenue.

This means the state will provide more funding to school districts so schools can cut taxes for homeowners. But missed revenue at the county or municipal level will be the responsibility of local governments.

“If we have to raise [the rate] to recoup some of this lost money, it’s going to make us look like the bad guys,” McLennan County Commissioner Jim Smith told a local news outlet. He was specifically referring to the business tax exemption, which may force localities to raise rates to break even.

Others have raised concerns about increasing state-level spending amid federal budget uncertainties.

As the GOP’s so-called “Big, Beautiful Bill” has been signed into law, the Federal Reserve Bank of Dallas is reporting a softened, uncertain economy in Texas. Tariff policies coupled with federal spending cuts could complicate future budget planning in the Lone Star State. Stay tuned.

Read More

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However, property taxes in the state can be a bit high, at 1.47%, compared to the national average effective rate of about .90%. But that’s a general rule of thumb, and certainly not the case for every county.

So, if you’re considering a move to Texas or simply want to relocate to a cheaper area for remote work, here are the top ten cheapest places to live in the state.

Cheapest places to live in Texas

Kiplinger ranked Texas property tax bills from highest to lowest per county, and rural areas generally won out as the cheapest places to live in the state. You will typically find more affordable living in the countryside than in larger metropolitan areas like Houston, San Antonio, or Dallas.

But if you’re ready to enjoy state parks, historical sites, and annual festivals (and maybe want to commute for urban enjoyments), check out these cheapest places to live in Texas.

Note: Kiplinger used 2025 data presented by the Tax Foundation (sourced from the U.S. Census Bureau) to find the cheapest counties in Texas to live. Counties with a population size of 600 or fewer were excluded from the list.

Ward County

Median Property Tax Bill: $833

Median Home Price: $138,800

Home prices can be quite low in Ward County, with the median price tag just under $139,000. Property tax bills, too, can be cheap (less than $850) according to the latest data from the Tax Foundation. Although not the cheapest place on this list, Ward is significantly less expensive than most surrounding counties.

Located just three hours from the Mexican border, Ward is known as “The Oasis of the Texas Desert” on account of the Pecos River flowing through its western side. Residents enjoy fishing, camping, and picnicking along the picturesque river banks. And with Monahans Sandhills State Park nearby, adventure seekers can hike or “sand surf” down the ancient dunes.

So if you’re a budget-conscious outdoor enthusiast who enjoys dry and wet land adventures, Ward may be your next destination.

Edwards County

Median Property Tax Bill: $823

Median Home Price: $78,300

About three hours out from San Antonio is Edwards County, Texas. But home prices are more affordable in Edwards than in the “Alamo City.” The median house price is $78,000, and property tax bills, too, can be quite cheap. Residents pay a median bill of $823, according to the U.S. Census Bureau.

Edwards may appeal to textile hobby makers who want to take a ride on the wild side. Starting in the 20th century, the County was called the “Top-of-the-World” in wool and mohair production, with about 700,000 sheep and goats. Today, some of that fiber is processed nearby, allowing hobbyists to create clothing, rugs, and upholstery worldwide.

The region is also home to the Edwards Plateau, known for its caves and limestone hills, as well as the Kickapoo Cavern State Park, where you can bird-watch, mountain bike, and even view bat flights.

Ergo, if you’re searching for a place to settle down that has both hobbies and excitement, Edwards might be your next choice for a move.

Stonewall County

Median Property Tax Bill: $744

Median Home Price: $54,700

Stonewall County has one of the cheapest median home prices on this list, at just $54,700, and a median property tax bill of less than $750, per the 2025 data from the Tax Foundation. About three hours west of Fort Worth, Stonewall is an agricultural community with just 1,245 people, per a census taken five years ago.

But don’t let the uncrowded area deter you. If you like a slower pace of life, you might be right at home in the Double Mountains. Just southwest of Aspermont, residents of Stonewall enjoy hunting, hiking, and exploring the county’s history in the mountains. Other enjoyments include kayaking, canoeing, or tubing in the Brazos River. Either way, both experiences are ripe with cultural history.

History buffs looking to take a trip on the wild side might choose Stonewall County as a perfect place for them and their budget.

Culberson County

Median Property Tax Bill: $726

Median Home Price: $84,500

The southwest tip of Culberson falls just short of the Mexican border, and the median property tax bill is just shy of $730. Home prices, too, can be relatively inexpensive, at only $84,500, according to the Tax Foundation.

Hikers are probably the happiest residents in Culberson, as the county is widely known for the Guadalupe Mountains National Park and its major tourist attraction, Guadalupe Peak. The Peak is the highest point in Texas, offering grandiose views and serving 240,000 recreational enthusiasts per year. The National Park Service has reported that most weekends see hundreds of hikers ascending the Peak, so an optimal time to go would be weekdays (ideal for residents).

Culberson County also offers a unique time zone split between Central and Mountain Time, plenty of historical significance regarding indigenous habitations, and, of course, a thriving ranching industry.

So if you’re looking for weekday hikes on a budget, Culberson might be a great move for you and your family.

Cochran County

Median Property Tax Bill: $684

Median Home Price: $57,700

Nestled along the border of New Mexico, Cochran’s median property tax bill is just under $690. This is probably due to the low median home prices in the area, which sit barely above $57,500.

Since it’s pretty far west, Cochran was one of the last settled counties in the Lone Star State, earning the nickname “Texas’ Last Frontier.” Cochran also has roots in ranching, but its economy today is mainly driven by crops like cotton.

Farmers can appreciate Cochran’s expansive natural beauty, peppered with historic sites like the Cochran County Museum, as well as cultural events, like an annual rodeo and the Last Frontier Days, held every July.

Whether you’re wanting to start a farm or would like a quiet place for remote work, Cochran may be the place for you — and your budget.

San Augustine County

Median Property Tax Bill: $681

Median Home Price: $83,500

About an hour out from the Louisiana border is the quaint county of San Augustine. Home prices are relatively low, compared to the rest of the country, at just $83,500. Property tax bills are also comfortable at around $680 annually. However, that may be due to the low effective property tax rate, which is just .82%, according to the U.S. Census Bureau.

Known for its Southern charm, San Augustine is home to historic sites like Mission Dolores, outdoor scenery like Angelina National Forest, and local events like the San Augustine Rodeo and Sassafras Festival. So if you want to be part of a historic community and save a little on property taxes, a move to San Augustine County could be your next move.

Hudspeth County

Median Property Tax Bill: $677

Median Home Price: $57,400

Hudspeth County home prices are relatively cheap, just under $57,500, per the latest released Tax Foundation data. The median property tax bill can also be low at just $677 per year. This makes the property tax bill in Hudspeth cheaper than the surrounding Texas counties.

Hudspeth is known for its unique blend of tourism and ranching. Like Culberson, the county is home to Guadalupe Mountains National Park, where residents can go horseback riding in addition to hiking the trails of the Guadalupes. Also, land is relatively affordable in Hudspeth, making it a potentially attractive option for homesteaders. However, be warned: much of the land for sale can be far from amenities like water tanks and wells, which may come with a hefty price tag.

But if you’re looking to ditch the 9-5 for a new adventure in the Lone Star State, Hudspeth County may be the choice for you and your property tax bill.

Cottle County

Median Property Tax Bill: $623

Median Home Price: $54,100

Cottle has the lowest median home price on the list, at $54,100. Property taxes are cheap as well since the median bill is only $623, according to the latest available U.S. Census Bureau data.

Located near the Oklahoma border, Cottle is for wildlife enthusiasts. The Matador Wildlife Management Area sprawls over 28,000 acres and features canyons and rolling plains with wild turkeys, deer, and quail. Campers can either choose a nature tour or explore the area via a scenic drive or hike.

Cottle is also home to annual cultural events, like the Fiesta Patria in September and the Horse and Colt Show in April. Plus, it’s about an hour drive from attractions like the Commanche Springs Astronomy Campus and Caprock Canyons, making it a perfect place for conservation enthusiasts looking to live cheap in Texas.

Borden County

Median Property Tax Bill: $493

Median Home Price: $105,400

Borden County home prices are typically low, with the median just above $105,000. Property tax bills are also inexpensive, at $493 annually, according to the Tax Foundation. This might be due to the low effective property tax rate in the area, which is just .47%, compared to the national average of about .90%.

Borden is a rural county. You might enjoy living in the area if you enjoy rural pastures, a slower pace of life, and outdoor activities like hunting and fishing. Interestingly, Borden is a “dry” county, meaning it prohibits the sale of alcohol within county lines. It’s one of the few remaining counties in all of Texas that is completely dry.

Ergo, if you want a leisurely atmosphere with comparatively low property taxes, you might give Borden a try.

Crockett County

Median Property Tax Bill: $466

Median Home Price: $140,000

Crockett County is the cheapest place to live in Texas, with a median property tax bill of only $466 and median home prices around $140,000 for 2025.

While being “low-cost,” Crockett has plenty to offer. Named after the famous frontiersman Davy Crockett, the county is home to the Crockett County Museum and Fort Lancaster State Historic Site, the former of which details the county’s connection with the Alamo, and the latter the migrant path from Texas to California.

Crockett is also home to Ozona, nicknamed “The Biggest Little Town in the World,” known for its ranching and oil production. Residents can go hiking, bird watching, and even off-roading at nearby sites like the Crockett County Interpretive Trail.

So if you’re a history buff with a sense of adventure, the cheapest place to live in Texas may be up your alley.

More Cheap Places

• Ten Cheapest Places to Live in Virginia
• Cheap Places to Live in Florida
• Places to Live in New York — For Cheap
• The 10 Cheapest Places to Live in Tennessee

Prices for back-to-school and college supplies have been on the rise, and made worse by the Trump administration’s sweeping tariffs on imported goods. To soften the blow of rising costs, Ohio Gov. Mike DeWine announced that the state sales-tax holiday will once again run for two full weeks.

“Ohio’s sales tax holiday is a practical way we can help working families keep more of their hard-earned dollars,” said House Speaker Matt Huffman. “Whether it’s back-to-school shopping or everyday essentials, this is an opportunity for Ohioans to get more value for their money.”

Ohio’s 2025 sales tax holiday will start on Friday, August 1, and end on Thursday, August 14, at midnight. Shoppers can get tangible personal property items priced at $500 or less tax-free.

The expanded timeframe will allow families to plan and save money on such items as books, electronics, home goods and plants, to name a few examples.

Food and beverages, including dine-in food, will also be tax-free during this period. Many other items will also be exempt, both in-store and online.

Here’s what else you need to know about the upcoming sales tax holiday in Ohio.

Ohio tax free weeks 2025

We’re barely done with graduation and prom season, but it’s never too early to start planning for the upcoming school year, especially if your child is heading to college.

While most states celebrate their sales tax holidays for a weekend, Ohio is hosting its tax-free holiday for 10 full days for the second year in a row.

Last year, the Buckeye State expanded its sales tax holiday from three days to two weeks and included a wide range of items up to $500 in addition to just school supplies to be eligible for the tax break. The tradition continues in 2025.

As noted, some tax-exempt items you can purchase in Ohio this August include, but are not limited to:

• Electronics: Computers, tablets, televisions, other gadgets
• Clothing: Apparel, footwear
• Books: Textbooks, novels; books don't have to be school-related
• Food and beverages: Soft drinks, dietary supplements, dine-in food

If you want to purchase items for your home, or your kid’s first dorm at college, you’re in luck. The sales tax holiday also includes furniture, kitchen supplies and home decor. Even indoor and outdoor plants are examples of tax-free items you can purchase during the break.

That’s a pretty sweet deal, given that the cost of clothing, toys and other essentials has been rising. Last year, the National Retail Federation reported that back-to-school spending amounted to an average of $874 per household.

For families, taking advantage of the sales tax holiday can save money. Ohio’s sales tax is 5.75%. Counties and local transit authorities can add their own sales taxes, for a combined state and local tax rate of 7.24%.

That being said, some items such as motor vehicles, tobacco products, alcoholic beverages, marijuana and vapor products will still be taxed.

Ohio sales tax holiday comes as tariffs are expected to hit hard

Ohio’s sales tax holiday could be a welcome reprieve from price hikes associated with Trump’s widespread tariff agenda.

As reported by Kiplinger, some states will face a higher burden than others due to the new levies on most of the U.S.’s trading partners. The impact of President Donald Trump’s tariff hikes will not only affect consumer prices but also potentially jeopardize job security for some Ohioans.

That’s because the Buckeye State is dependent on global markets to thrive economically — 7% of Ohio’s global exports (PDF) went to China in 2024.

Other top markets that receive exported goods from Ohio include Canada, Mexico, Japan and the United Kingdom. These have all been slammed by tariffs and have reciprocated.

Exports, in particular, sustain thousands of Ohio businesses and farmers.

• A total of 15,594 companies exported from Ohio locations, according to the latest government data available. Of those, 88% were small and medium businesses with fewer than 500 employees.
• Ohio was also the country’s 11th-largest agricultural exporting state, shipping $5.1 billion in goods abroad in 2023.
• Ohio is a major exporter of soybeans and corn. That could face some turmoil, given the volatility of Trump’s tariffs.

Manufacturing industries have also faced trouble in Ohio due to a trade spat with Canada and Mexico in April. American auto company Stellantis temporarily laid off 900 workers at five U.S. facilities, including in Toledo, Ohio.

Even now, Trump’s 25% tariffs on imported car parts are expected to cause car prices to increase. For some Ohioans, it might seem that price hikes are just about everywhere.

The U.S. Chamber of Commerce found that small business owners have been forced to adjust prices on their products as they’ve been unable to absorb the higher costs of tariffs. For one business owner in Ohio, the Trump administration’s tariffs on China have caused strain.

“With announcement after announcement of tariffs, including any computer accessories that I sell online, it leaves me no choice but to probably increase prices again soon,” said Amber Hawkins, President, CEO, and Consultant at Your Computer Needs of Toledo.

Given the economic climate, it’s almost certain that consumers will see slightly higher prices on back-to-school items this year — from clothes to groceries needed to pack your child’s lunch.

Don’t miss your sales tax holiday in 2025

It’s no secret that prices are on the rise, and Trump’s latest trade strategy is putting a strain on consumers like you.

The Trump administration imposed sweeping tariffs on nearly all the United States' trading partners.

• Currently, most imports face a 10% baseline duty, while Chinese goods face a 30% tariff.
• Some items, such as steel and aluminum, are facing duties as high as 50%.
• The tariffs on steel and aluminum imports could impact the price of everyday goods such as canned foods, soda, bikes and cars, just to name a few.

While some major U.S. retailers have tried their best to absorb the shock of tariffs, now many are warning of upcoming price hikes across all categories. As reported by Kiplinger, Walmart, Target, and Nike are getting ready to increase their prices in response to Trump’s tariffs.

With back-to-school just around the corner, it’s more important than ever to prepare your finances so you won’t face any surprises. The Trump administration’s tariff strategy has been unpredictable, and for now, that could equal more pressure on shoppers.

Stay tuned for more information, as some states have yet to announce their sales tax holiday dates for 2025.

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That's because Hawaii just became the first state to impose a so-called "Green Fee" or "green tax" for tourists.

The fee, designed to help protect Hawai'i's natural ecosystem from the impacts of climate change, will raise the state’s transient accommodations tax (TAT) for nightly lodging. It will apply to hotel stays, cruise ship cabins, and short-term rentals.

Since the Aloha State welcomes roughly 10 million visitors yearly, state officials say the fee could raise around $100 million annually.

A portion of the revenue from the climate impact fee will be directed toward Hawaii’s response to future disasters, like the Maui wildfire of 2023.

“Hawaii is at the forefront of protecting our natural resources, recognizing their fundamental role in sustaining the ecological, cultural, and economic health of Hawaiʻi,” said Gov. Josh Green in a press statement.

So, how much will the so-called "Green Fee" add to your stay in Hawaii?

Here's what you need to know, along with some other taxes you can expect when booking a trip.

Hawaii approves 'green tax' for tourists

Hawaii’s new climate impact fee will go into effect next year, in 2026. As mentioned, the fee is designed to mitigate climate change impacts by addressing wildfire risks and protecting vulnerable environments.

Gov. Green, who signed Act 96 into law, says the fee will translate to visitors paying an additional $3 per night on a $400 room stay.

“The fee will restore and remediate our beaches and shorelines and harden infrastructure critical to the health and safety of all who call Hawaii home, whether for a few days or a lifetime,” Green said in a statement.

If you’re planning to travel to Hawaii, here are some added fees you can expect for your nightly stay at a hotel and short-term rentals.

Note: Cruise ships that port in the state will also face TAT taxes for the first time.

• The tax that travelers pay for their hotel or vacation rental rooms — called the Transient Accommodation Tax (TAT) — is set to go up in Hawaii. Right now, it’s 10.25%, but next year it will be 11%. In 2027, it’s expected to rise again to 12%.
• Hawaii’s four counties can add an extra tax on top of the state TAT. All of them have decided to add the maximum possible, which is another 3%. When you add that to the new state TAT, you could end up paying a total tax of 14% for your accommodations.
• The General Excise Tax (GET) is also part of the bill, added to your room rate. That changes depending on which island you’re on, ranging from 4% to 4.5%.

Hawaii ‘green fee’ to raise $100 million a year

The climate impact fee is expected to usher in $100 million annually. Gov. Green's administration will work with the state legislature to select projects and determine which local groups will benefit.

According to the governor's office, some key projects will likely include environmental stewardship, climate and hazard resiliency, and sustainable tourism.

Meanwhile, some groups and local reporters are concerned that part of the ‘green fee’ revenue could go to the state’s general fund.

• Originally, the governor’s proposal directed climate fee revenue to two new special funds: the Climate Mitigation and Resiliency Special Fund and the Economic Development and Revitalization Special Fund.
• However, after negotiations with the state Senate Ways and Means Committee, the final bill removed those special funds and put the revenue into the general fund instead.
• The bill requires the governor to request an amount close to the extra TAT revenues in the executive or supplemental budget to use the funds for projects addressing climate change, environmental protection, or tourism impact mitigation.

Why does this matter? Sometimes, when new taxes or fees are placed into the general fund, there is a risk that the money may be allocated to other shifting state priorities or unrelated projects, rather than the intended goals.

That uncertainty has led to questions about whether the climate fee will truly support the environmental and climate-related objectives it is designed to address.

Why Hawaii’s climate fee is a historic win

Though general tourist taxes aren't new, Hawaii is the first U.S. state to create a tax to address the rapid impact of climate change and mitigate the impact tourism can have on the environment.

The legislature found that the Aloha State is experiencing a climate emergency, with effects of climate change already impacting its residents and natural ecosystems. Some events have included rising temperatures, prolonged droughts, and destructive weather events that have impacted the islands.

Lawmakers also found that economic development couldn't be separated from environmental stewardship, as most of Hawaii’s economy is dependent on its natural resources.

The measure comes two years after a deadly wildfire engulfed some areas of the island of Maui and destroyed more than 2,200 structures in its wake. The U.S. Fire Administration reported that the natural disaster resulted in about $5.5 billion in damages. In Lahaina, more than 100 lives were lost.

Taking action now, through enacting a ‘green fee,’ could be a proactive step to safeguard the environment, residents, and businesses of the islands. Though Hawaii is the first state to usher in a tax of this kind, and the benefits remain to be seen, perhaps more states will follow.

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“To get a budget in a challenging situation to the finish line, it’s going to require working together and a lot of compromise,” Ferguson said of the bill. “I believe we accomplished that with this budget.”

Alongside the capital gains tax hike, the legislation raises the state’s gas tax rate (more on that below) and estate tax exemption. It also increases business taxes and introduces new sales taxes on certain services.

Overall, the biennial budget appropriates about $77.8 billion, a 6.5% increase over the previous period.

But, the state’s capital gains tax, first implemented in 2022, has arguably been one of Washington's most debated fiscal policies in recent years. Two years ago, the state’s Supreme Court upheld the capital gains tax, and voters rejected a proposed tax repeal during last year’s November elections.

So, what’s changing for 2025 and who’s affected? Read on.

New WA capital gains tax rate takes effect for 2025

Washington’s capital gains tax initially imposed a 7% tax on long-term capital gains above an annual exemption ($270,000 for 2024, with inflation adjustments).

The tax applies to profits from the sale of stocks, bonds, and other non-retirement assets, while exempting real estate, retirement accounts, and many small business sales.

With the passage of this bill, a new 2.9% surcharge applies to net long-term capital gains exceeding $1 million above the exemption, effective retroactively from January 1, 2025.

That brings the top rate to 9.9% for the largest gains.

Here’s how the new structure works:

Proponents say the structure is designed to target the state’s highest earners, with fewer than 8,200 households expected to be affected.

The new law also allows for up to $100,000 in charitable deductions and continues to exempt real estate and retirement accounts, meaning most Washingtonians won’t see any direct impact.

Opposition to Washington’s capital gains tax

Some critics have argued that, particularly since Washington is a state with no income tax, the capital gains levy harms small businesses and innovation.

• The measure was challenged in court as an unconstitutional income tax.
• However, the Washington Supreme Court upheld the tax in 2023, and the U.S. Supreme Court declined to hear an appeal.
• The capital gains debate peaked during the 2024 election, when Initiative 2109, a measure to repeal the capital gains tax, appeared on the state’s November ballot.

As Kiplinger reported, voters rejected the repeal effort, with over 63% voting “no.”

Additionally, the capital gains tax has sparked warnings of “wealth flight.” Some critics worried that high-income individuals and entrepreneurs would leave Washington for states with lower or no capital gains taxes.

However, data tells a different story. In its first year, the tax generated $786 million — well above projections — while a subsequent drop to $433 million was tied to market volatility, not a mass exodus of wealthy residents, according to the state’s Department of Revenue.

Essentially, state data and independent analysis haven’t found a significant uptick in out-migration due to the tax.

State capital gains tax rates

Though it’s worth noting that some other states are moving away from capital gains taxes.

Missouri, for example, could become the first state to eliminate its capital gains tax. For more information, see Missouri Leads on Capital Gains Tax Repeal.

With its new 9.9% top capital gains rate, Washington now matches Oregon and sits just below California (13.3%) and Hawaii (11%), according to the Tax Foundation.

However, Washington’s high exemption threshold means a much smaller percentage of residents are subject to the tax compared to those states.

As noted, the law contains some exemptions for real estate, retirement accounts, and many small businesses, which supporters say are designed to keep the tax targeted at the state’s wealthiest investors.

Still, since the new rates take effect retroactively from January 1, 2025, affected taxpayers will need to account for the higher rate when filing their 2025 returns in April 2026.

Washington gas tax hike?

The 2025 Washington budget package brings several other notable tax changes.

• The new transportation budget pushes the state gas tax up by 6 cents per gallon for regular fuel and 12 cents for diesel starting July 1.
• That will raise the gas tax from 49.4 to 55.4 cents per gallon, when Washington is already among the states with the highest gas taxes.
• After that, the tax will automatically climb by 2% each year beginning in mid-2026.

Some state leaders say this move is needed to keep road and ferry projects from stalling out as construction costs rise and the budget gap widens. Though even the governor acknowledged the challenges involved.

“The people of the state of Washington expect us to invest in those projects, but we have limited revenue options right now. The gas tax, unfortunately, is one of them,” Ferguson told reporters.

Beyond the gas tax, in Washington, the estate tax exemption rises to $3 million, while the top estate tax rate jumps from 20% to 35% for estates over $9 million.

State lawmakers also approved new sales taxes on services like temporary staffing and advertising, a tax on rented self-storage units, and new levies related to electric vehicle credits.

Related

• States With Low and No Capital Gains Taxes
• Capital Gains Tax Rates for 2025
• Capital Gains Tax Exclusion for Homeowners: What to Know

However, that averages all counties in New York and doesn’t account for individual areas.

The places on this list have property tax bills that are less than half of the median property taxes in New York State. Plus, each county has its own vibe: some are small business-oriented, others might gel with foodies, and still more counties host an abundance of fishing, equestrian, and skiing spots.

So if you’re in the state and looking to relocate or are planning a move to The Empire State, here are the ten cheapest places to live in New York.

Cheapest places to live in New York

Kiplinger ranked New York property tax bills from highest to lowest per county, and rural areas won out as the cheapest places to live in the state. You will typically find more affordable living in the countryside than in the hustle and bustle of, say, the Big Apple: New York City.

But if you’re game for enjoying state parks, historical sites, or annual festivals (and maybe want to commute for other enjoyments), check out these cheapest places to live in New York.

Note: Kiplinger used 2025 data presented by the Tax Foundation (sourced from the U.S. Census Bureau) to find the cheapest counties in New York to live.

Delaware County

Median Property Tax Bill: $3,059

Median Home Price: $176,200

Home prices in Delaware County are a comfortable $176,200, with a median property tax bill just above $3,000 (according to the Tax Foundation dataset for 2025). While Delaware property taxes are the most expensive on our list, home values are not as high as in other areas of New York.

As part of the picturesque Catskill Mountains, Delaware County might appeal to those seeking a little adventure. Hiking through valleys, canoeing on the Delaware River, and skiing on mountaintops are just a few ways you can enjoy the vibrant locale.

So if you like exploring and hate paying taxes, you may consider a move to Delaware County, New York.

Cattaraugus County

Median Property Tax Bill: $2,946

Median Home Price: $109,400

Locally known as “Catt” County, Cattaraugus has a relatively cheap median home price of around $109,400. The median property tax bill is also pretty low by New York standards, at less than $3,000 per Tax Foundation data.

Cattaraugus is for nature lovers who prefer peaceful living. Wooded hilltops overlook valleys that were once sculpted by glacial masses. You can see the ancient pathways carved by glaciers at the Otto Stadial Site.

Cattaraugus also offers ski resorts, a state park, and small town charm. Plus, the county is only about an hour and a half south of Niagara Falls.

Otsego County

Median Property Tax Bill: $2,911

Median Home Price: $175,900

Located in central New York, home prices may be more expensive in Otsego than in other places on this list. However, the median property tax bill is just barely above $2,900, per the Tax Foundation.

About 260,000 people flock to Otsego annually to visit the National Baseball Hall of Fame and Museum. Known for its rich history and culture, Otsego also hosts the Fenimore Farm and Country Village, a 19th-century recreation of daily life, an art museum, 1800s mansions, and Doubleday Field.

For those who may not know, this historic stadium hosts the annual Hall of Fame Classic played by retired baseball legends. So if you’re a sports fan or a history buff, Otsego might be the place to save on property taxes in New York.

Allegany County

Median Property Tax Bill: $2,881

Median Home Price: $97,900

Allegany County has the cheapest median home price on our list at $97,900. And the median property tax bill is just under $2,900, according to five-year estimate numbers released by the U.S. Census Bureau.

While the low home prices may be due to declining population, about 46,400 people still live in the area, according to the latest census.

However, the uncrowded locale shouldn’t scare you off. In fact, Allegany is just an hour away from Allegany State Park, which offers 55 miles of equestrian trails, 90 miles of snowmobiling routes in the winter, and several boat launches for summer excursions. Residents can also visit several county parks and a yearly music and arts festival.

Ergo, if you like low property taxes and fun outdoor activities, Allegany County may be your next move.

Jefferson County

Median Property Tax Bill: $2,851

Median Home Price: $181,000

Named after Thomas Jefferson, the third President of the United States, the county’s median property tax bill is just over $2,850, and its median home price is barely above $180,000 (according to 2025 Tax Foundation data).

Looking for a waterfront property? Jefferson may have you covered. The county is close to Lake Ontario and the Thousand Islands, which may be why it attracts tourists and residents alike.

You can take a boat tour, river cruise, or visit the Boldt Castle for a glimpse back in time. But if touristy attractions aren’t your style, no biggie: You can easily attend local amenities like farmers markets or the Watertown Zoo.

Chautauqua County

Median Property Tax Bill: $2,846

Median Home Price: $119,300

Houses in Chautauqua County tend to have a lower median price, at around $119,000. Property taxes, too, can be cheap, with a median property tax bill of about $2,800 per the Tax Foundation.

Chautauqua is known as “America’s Grape Country,” since the county produces about 65% of New York State’s annual grape harvest.

The Lake Erie Wine Trail, which is shared between Chautauqua and neighboring state Pennsylvania, hosts over 20 wineries, many of which offer tastings. There’s also a local craft beverage scene with various beers and spirits. Plus, many towns in the county have weekly markets with fresh produce and crafts. And if you like comedy, the county hosts the National Comedy Center, featuring the annual Lucille Ball Comedy Festival.

So if you’re a foodie and comedy lover looking for someplace cheaper to live in New York, Chautauqua might be the neighborhood for you.

St. Lawrence County

Median Property Tax Bill: $2,735

Median Home Price: $119,800

Located along the Canadian border, St. Lawrence home prices sit comfortably at around $119,800. The median property tax bill is also on the lower side for New York, at about $2,700 (according to the latest available data from the U.S. Census Bureau).

St. Lawrence is definitely for the fishing enthusiasts. Year-round, anglers can go to over 200 lakes, ponds, and streams in the area, including the St. Lawrence and Raquette rivers.

But if you want to enjoy the waterways in another way, you can access waterfalls, paddle, and scuba dive in the summer. Or, try snowmobiling, snowshoeing, and cross-country skiing in the winter.

The county also offers two interesting “barn quilt” trails, which lead folks on a journey through more than 100 barn quilts displayed throughout St. Lawrence.

Come for the low property taxes, but stay in St. Lawrence for the culture and waterworks.

Lewis County

Median Property Tax Bill: $2,682

Median Home Price: $158,000

Located in the northwestern part of New York, Lewis' home prices are just $158,000 with tax bills under $2,700, as of 2025. Low home prices could be partly due to Lewis’ status as the fourth-least populous county in New York, per the U.S. Census Bureau.

Spacious Lewis County nonetheless has everything for the folks who want to get out of the busy day-to-day and settle into a strong rural vibe. Scenic agricultural fields surround attractions like Whetstone Gulf State Park, Whitaker Park, and golf courses. Residents may also enjoy hiking and kayaking.

So if you’re looking to cut back on noise and focus on nature, on a budget, you might consider a move to Lewis County, New York.

Franklin County

Median Property Tax Bill: $2,418

Median Home Price: $128,600

Franklin County home prices are relatively cheap, at around $128,600, according to the latest data from the U.S. Census Bureau. Median property tax bills are also inexpensive for the Big Apple State, at just above $2,400. This property tax bill is cheaper than most surrounding New York counties.

Franklin can be great for small business owners. For instance, Adirondack Frontier partners with entrepreneurs and businesses to attract visitors with the goal of them becoming locals.

You can get a great deal of exploring too. The Adirondack Mountains run through Franklin, forming Adirondack Park, a sprawling 6-million-acre wilderness area where folks can boat, hike, or fish.

Ergo, if you’re into a mountainous vibe that’s friendly with business, check out Franklin County’s low property taxes in New York.

Hamilton County

Median Property Tax Bill: $2,369

Median Home Price: $242,000

Hamilton County is the cheapest place to live in New York, according to the Tax Foundation, with a median property tax bill under $2,400 and home prices around $242,000.

Not only is Hamilton “low cost” compared to the rest of the counties in New York, but there is tons to do. For example, residents can visit sites like The Museum on Blue Mountain Lake to get a sneak peek into the area’s historic past. Locals also enjoy whitewater rafting, exploring waterfalls, and fishing. So if you’re looking for outdoorsy fun, your next move may be to Hamilton County, the cheapest place to live in New York.

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(That's particularly true now, with all the talk of tariffs and 2025 federal tax reform (also known as President Trump's "one big beautiful bill.")

So, we're exploring some state tax incentives to help you maximize your retirement savings.

Whether you're enjoying retirement or still planning, this information can hopefully guide you to a great retirement destination in the United States.

States with no income tax

Nine states don’t tax individual income (including retirement income), making them attractive for retirees looking to reduce their tax burden.

A retiree with a $50,000 annual income could save $2,000 to $5,000 yearly in a no-income-tax state compared to a state with an average income tax rate.

As of 2025, these states are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.

A couple of things to note: As of 2025, New Hampshire fully phased out its tax on interest and dividends. Also, while Washington state doesn’t tax most earned income, it has a long-term capital gains tax — 7% on assets sold for a profit exceeding $270,000 as of 2024.

State retirement income incentives

Some states offer targeted retiree tax relief, even if they tax other forms of income. That can be helpful for retirees working part-time or with income sources beyond retirement accounts.

For instance, Pennsylvania doesn’t tax retirement income and offers a flat tax rate of 3.07% on other income sources. That can provide a more predictable tax environment for those who supplement their retirement income.

Illinois fully exempts distributions from pensions, 401(k)s, IRAs, and Social Security.

In Iowa, residents 55 and older pay no state income tax on retirement income. Mississippi exempts retirement plans and pensions. However, early withdrawals are taxable.

Grocery and sales tax relief

Even in tax-friendly states, sales taxes, especially on groceries, can add up. Consider these sales tax breaks:

• Alaska: No state sales tax (local taxes may apply).
• Delaware, Montana, New Hampshire, and Oregon also don’t have state sales tax
• Florida and Texas: Exempt most grocery items from statewide sales tax
• Nevada: Unprepared grocery items are exempt from state sales tax
• Plenty of other states have long-exempted groceries from tax

While not income-tax-free states, Oklahoma and Kansas recently eliminated state sales taxes on groceries. Illinois is set to eliminate its 1% grocery tax in January 2026.

This matters: Data show that in 2023, retirees spent an average of $4,497 annually on groceries consumed at home.

In 2025, a household's average monthly grocery bill is about $500. So, a family spending that much on groceries in Florida could save $30–$60/month compared to a state that taxes groceries at 4%. Over a decade, that's up to $7,200 in savings.

Property taxes and homestead exemptions

High property tax can significantly offset income and sales tax savings. However, several states offer homestead exemptions, particularly for older adults and retirees. Here are a few to consider.

• Alaska: Up to $150,000 off home value for those 65 or older who meet specific requirements
• Florida: Up to $50,000 (combined exemptions for eligible taxpayer properties)
• Texas: Up to $150,000 for older adults (pending a 2025 vote)

New Jersey, Maryland, and Washington, D.C., offer property tax relief programs for older adults in 2025, with New Jersey introducing a combined application for multiple programs, including “Stay NJ.”

For more information, see "What's Going on With NJ Property Tax Relief Programs?

Maryland's Howard County provides an Aging-in-Place Tax Credit, and Washington, D.C., offers a 50% property tax reduction for eligible individuals over 65.

Estate and inheritance taxes

As you plan for the future, preserving wealth for heirs becomes a primary concern.

As of 2025, 38 states have eliminated estate or inheritance taxes. The absence of these taxes can lead to significant savings for your loved ones, depending on the size of your estate.

A few:

• Florida and Texas: Combine no income tax with no inheritance or estate taxes
• Arizona: Has a low flat income tax rate of 2.5% and no estate or inheritance tax

Veteran tax benefits?

Approximately 18 million Veterans reportedly reside in the U.S.(though it’s hard to say how many are retirees), and various states offer Veteran-focused tax breaks.

Maryland allows Veterans over age 55 to exempt up to $20,000 in retirement income from tax, regardless of disability status. Illinois exempts military retirement pay, Survivor Benefit Plan payments, and other military benefits from state tax for all its veterans.

Virginia has a growing deduction for military retirees, allowing them, as of 2025, to exclude up to $40,000 of their retirement pay from state taxes.

Additionally, as of 2025, most states fully exempt military retirement pay from state income tax.

Other retiree tax breaks

Some states offer other targeted tax breaks that can be particularly appealing to retirees.

• Georgia allows residents 62 and older to exclude up to $35,000 of their retirement income from state taxes, increasing to $65,000 for those 65 and older.
• Colorado now allows residents between 55 and 64 to avoid paying taxes on Social Security benefits if their adjusted gross income (AGI) stays under $75,000 for single filers or $95,000 for joint filers.
• Meanwhile, West Virginia is set to eliminate its taxes on Social Security benefits by 2026, becoming more tax-friendly for retirees.

For more information, see: New Social Security Tax Reforms Change Benefits in Two States.

Some states also offer tax breaks for long-term care insurance premiums and medical expenses.

For example, Montana provides a tax credit for long-term care premiums paid for a qualifying family member. The maximum account is up to $5,000 per family member in a tax year or $10,000 for two or more family members.

New York provides a 20% tax credit for qualifying long-term care insurance premiums, up to $1,500, for state-approved policies.

Where to retire: Tradeoffs and future considerations

Don't forget to look at the complete picture when considering a retirement state for tax savings.

For example, Washington and Texas have no income tax but higher property taxes. Nevada and Florida offer no income tax but relatively higher sales taxes. Alaska offers several tax breaks but a relatively high cost of living, particularly in remote areas.

Plus, some states with income tax may have a lower overall tax burden for particular residents. A study by the Institute on Taxation and Economic Policy found that families in California earning below $145,900 faced an overall tax burden close to the national average, which is surprising considering California's high-tax reputation.

Also, as we move through 2025, many states are reducing tax rates, which can lower one's tax burden and free up income for other retirement pursuits.

Nebraska lowered its top individual income tax rate from 5.84% to 5.2%, North Carolina reduced its flat personal income tax rate from 4.5% to 4.25%, and West Virginia decreased its top tax rate from 5.12% to 4.82%.

Retirement Taxes

Finding balance

By focusing on states that align with your income sources and spending habits, you can help safeguard your nest egg and enjoy retirement on your terms. Remember that tax laws can change, so stay informed about updates in your state.

And while considering tax savings can help you make a well-informed decision for a fulfilling and secure retirement, ultimately, the ideal retirement destination balances financial benefits with quality of life.

Note: This item first appeared in Kiplinger’s Retirement Report, our popular monthly periodical that covers key concerns of affluent older Americans who are retired or preparing for retirement. Subscribe for retirement advice that’s right on the money.

More on Retirement Taxes

• Taxes in Retirement: How All 50 States Tax Retirees
• Social Security and Your Taxes: Five Things to Know
• Are No Income Tax States Better to Live In?
• Retirement Income Tax and the IRS

However, if you’re willing to accept a rural lifestyle, you might be surprised to find an affordable place in your favorite travel spot.

According to the U.S. Census Bureau, Florida has one of the fastest-growing state populations, and it’s no wonder. Residents enjoy warmer weather year-round, no state income tax and plenty of water access.

Plus, you’re not far from the action. Cities such as Miami Beach and Orlando offer world-famous amusements, including hot beaches and internationally known theme parks. If you’re considering life in Florida, here are the top 10 cheapest places to live in the state.

Cheapest places to live in Florida

After ranking property tax bills from highest to lowest per county in Florida, one thing’s for sure: Rural areas win out. You can generally find more affordable living in the countryside than in the hustle and bustle of a big city.

If you’re game for enjoying historic sites, state parks, and natural springs (and maybe want to commute for other enjoyments) check out these cheap places to live in Florida.

Note: Kiplinger used 2025 data presented by the Tax Foundation (sourced from the U.S. Census Bureau) to find the cheapest counties in Florida to live.

Madison County

Median Property Tax Bill: $928

Median Home Price: $105,900

Home prices are relatively low in Madison, as the median price tag is barely above $100,000. The median property tax bill is also cheap — less than $1,000 — and significantly less than neighboring counties such as Brooks, where property taxes are about $1,500, according to the Tax Foundation.

Relocating to Madison might offer a close-knit community feel, with its small-town vibes and annual fair and rodeo. The county is also home to natural springs and rivers, such as Madison Blue Spring State Park, known for its crystal-clear waters, swimming, and cave-diving excursions.

Gadsden County

Median Property Tax Bill: $854

Median Home Price: $154,700

Gadsden is in the panhandle of Florida and has roughly 44,000 people (according to the census recorded five years ago). Home prices are higher than other counties on this list, with the median at $154,700. However, the median property tax bill is just below $855 as of the last five-year estimate from the U.S. Census Bureau.

One of the most notable features of Gadsden is Lake Talquin State Forest Park, which promotes fishing, walking trails, camp sites, and boating activities. If you’re more of a “lake person” than an “ocean person,” and want a slower pace with low-cost home options, Gadsden might be right for your lifestyle.

Lafayette County

Median Property Tax Bill: $850

Median Home Price: $131,600

Homes in Lafayette tend to have a lower median price, at around $131,600. Property taxes, too, can be cheap, with a median bill of $850, per 2025 Tax Foundation data.

Interestingly, Lafayette is a “prohibition county,” meaning local authorities can dictate the kinds of alcoholic beverages sold. Retail sales of beer are allowed in Lafayette, although hard liquor and most wines can’t be sold.

But if you’re OK with a partially dry county, you can enjoy a couple of state parks, including one with blue springs, as well as farms, nature preserves and the Suwannee River Campground. The camp might be particularly excellent for pet owners, as it offers a pet washing station, five dog parks, and tons of trail access.

Hamilton County

Median Property Tax Bill: $806

Median Home Price: $110,400

Named for Alexander Hamilton, the first U.S. Secretary of the Treasury, the county boasts low home prices, with the median around $110,400. The median property tax bill is similarly cheap, barely above $800, according to the latest data from the Tax Foundation.

Known for its history, Hamilton has such sites as the Stephen Foster Folk Culture Center, which honors the writer of Florida’s official state song, “Old Folks at Home.” You can stay overnight on the premises and go to the Florida Folk Festival, which hosts more than 300 performances, shopping, demonstrations, and workshops. Hamilton’s rich history also extends to its Old Jail House, built in the 19th century, and County Museum.

Washington County

Median Property Tax Bill: $787

Median Home Price: $156,000

Washington County has the most expensive median home price on our list at $156,000. However, the median property tax bill is just under $800, according to five-year estimate numbers released by the U.S. Census Bureau. The low property taxes might be because effective property tax rates in the area are just .50%, well below the national average.

Washington County offers several interesting excursions for the not-so-faint of heart. You can go off-roading in a swamp park, boating in the Holmes Creek Canoe Livery, or visit the Orange Hill Gator Farm. The area is built around its forestry and agriculture industries, so if you like fishing, hunting, and boating. This might be the perfect low-cost option for your Florida lifestyle.

Calhoun County

Median Property Tax Bill: $743

Median Home Price: $134,000

Home prices in Calhoun sit comfortably at $134,000, with median property tax bills under $750, according to the Tax Foundation data for 2025. Low property taxes could be partly due to Calhoun’s status as the fifth-least populous county in Florida.

Uncrowded Calhoun is nonetheless packed with things to do. Adventures on the Apalachicola River include boating, fishing, and swimming. The Chipola River also has the largest number of freshwater springs in any Northwest Florida river and features sandy beaches and rapids.

Combined with the low property taxes, Calhoun might be a great place for adventurous fun lovers who want to stay on a budget.

Taylor County

Median Property Tax Bill: $724

Median Home Price: $100,200

Taylor is known as the “Tree Capital of the South” due to its prominence in Florida’s timber industry. An abundance of lumber might contribute to low home prices in the area, with the median of slightly more than $100,000 and property tax bills averaging around $720 per year as of 2025.

Taylor hosts the annual Florida Forest Festival, which has a rich history going back almost 70 years. The event offers a free fish fry, a large lumberjack show and competition, fireworks, a Ferris wheel, and games for children. But if you’re not into crowds, no biggie. Taylor residents also enjoy state parks, boating, and golfing.

Dixie County

Median Property Tax Bill: $715

Median Home Price: $96,900

Located in the “Big Bend” region of Florida, Dixie has relatively low home prices, with a median just above $96,000. Property tax bills are relatively cheap, too, around $700 per Tax Foundation data.

Dixie is a rural county. You might enjoy the area if you like simpler living, rustic farms, quiet wildlife centers, and peaceful natural springs. If you’re looking for an unhurried atmosphere and relatively low property prices and taxes, why not take a chance on Dixie?

Jackson County

Median Property Tax Bill: $625

Median Home Price: $113,900

Jackson home prices are relatively cheap, just under $114,000, according to the latest available data from the U.S. Census Bureau. Median property tax bills are relatively low at about $625 per year. The property tax bill in Jackson is also cheaper than most surrounding Florida counties.

Jackson is generally nature-focused, so if you’re an outdoor enthusiast, this could be the place for you. Explore the Florida Caverns State Park, swim at the Blue Springs, or kayak and fish across the county. In short, Jackson might be the best and cheapest place to live in Florida if you like adventurous water recreation.

Holmes County

Median Property Tax Bill: $527

Median Home Price: $101,400

Holmes is the cheapest place to live in Florida according to the Tax Foundation, with a median property tax bill of $527 and home prices of around $101,000 for 2025.

In addition to being low-cost, Holmes has a lot to offer. More than 80 years of rodeo tradition are packed into the county’s annual Northwest Florida Championship Rodeo, which features a 5K run, rodeo parade, and a pageant. Sites such as Waits Mansion and Ponce de Leon Springs State Park give the area a historic and outdoorsy vibe, too, so if you’re looking for history and fun on a budget, Holmes can provide it.

More on Florida

• How Snowbirds Can Establish Tax Residency in Florida
• Why Abolishing Florida Property Taxes is Problematic
• Reasons People Retire in Florida
• The Great Florida Property Tax Relief Debate of 2025

You may have seen families on popular social media platforms like YouTube, TikTok, or Instagram featuring their children and expanding their online footprint. People under 18 have also grown more active on social media, making money from sponsored posts, affiliate marketing, brand representation, and subscribers, just to name a few examples.

For instance, Ryan Kaji is a content creator who started off by conducting toy reviews on his YouTube channel Ryan’s World. By age 6, Ryan had earned more than $10 million. Now 12, Ryan has amassed over 39 million subscribers and was worth $35 million as of 2024, according to Forbes.

The number of “kidfluencers”, or children who are social media influencers, has been growing over recent years. On a smaller scale, CBS News reports that a child with at least 1 million followers could earn as much as $10,000 per sponsored post.

But the cash earned by being an influencer isn’t a "free lunch." If your child or children are earning income, they may need to file a tax return this year. Those earnings may also impact your tax liability.

Furthermore, some states have recently passed landmark laws providing child influencers with protections similar to those for child actors. Those pieces of legislation, which come in the wake of several scandals involving kidfluencers being taken advantage of, give children legal rights to a share of the profits earned.

Here’s what families need to know about handling taxes if their children earn income from social media.

How much does my kid have to make to file taxes?

Some child influencers may have little to no earnings and won’t have to file a return this tax season. However, other minors may earn incomes high enough that they must meet tax filing obligations.

As reported by Kiplinger, if a child only has earned income from wages, they must file if their income exceeds the standard deduction for the tax year ($14,600 for 2024 and $15,000 for 2025).

The filing threshold is much lower for other types of income:

• Minors must file a 2024 federal income tax return if they received $400 or more in tips or self-employed income.
• For unearned income (such as dividends or interest), the filing threshold is $1,300 for the 2024 tax year.
• Unearned income that exceeds $2,600 is taxed at the parent’s rate unless the child’s rate is higher (often referred to as the kiddie tax).

There’s one caveat: Even if a minor doesn’t earn enough to file taxes, they may opt to file a return to receive a refund of tax withheld from their earnings. Parents or guardians can also claim a child as a dependent regardless of whether they file, except for a few exceptions.

For more information: Does Your Child Need to File a Tax Return This Year?

Some states offer more protections to child influencers

Most states across the country don’t have many legal protections for child social media influencers, according to the University of Chicago Law School.

However, as family influencer and parent-facilitated child influencer content has become more common, some states have stepped up to safeguard minors from being exploited for profit.

Many of these families make thousands of dollars annually from associated brand deals, merchandise, and paid subscription models. Videos or vlogs often showcase families' day-to-day activities, vacations, and more.

A report from CNBC showed that you need a minimum of 5,000 Instagram subscribers and about 308 sponsored posts a year to generate $100,000. The draw has led some parents to abandon traditional jobs and become full-time influencers featuring their families.

Here are some states paving the way for children to safeguard their finances.

California

In California, Gov. Gavin Newsom signed legislation in September 2024 that protects children and teenagers featured in online content from financial abuse.

The legislation expands the Coogan Law (California Child Actor’s Bill) to include minors who are employed as online content creators. Essentially, parents and guardians must create a trust for their children and contribute to the account based on how often they appear in content.

• Marketers and those hiring child influencers must verify the existence of Coogan trust accounts and deposit 15% of earnings directly into those accounts.
• If the minor is featured on 30% of monetized digital content, 65% of their gross earnings must be put into a trust account.

The new law became effective January 1, 2025.

Illinois

Illinois passed a state Child Labor Law that requires parents of influencer children to set a portion of their earnings in a trust account, mirroring California’s Coogan Law.

• Under the law, if a child appears in at least 30% of a parent or guardian’s social media content over a 30-day period, and gathers enough views to receive compensation, the minor is entitled so some of those earnings.
• A trust fund must be made in the minor’s name, to be accessed once they turn 18.
• Parents must keep records of the content created.

The legislation has been effective since July 1, 2024.

Minnesota

The state of Minnesota stepped up its protections for children influencers in several ways.

• The Minnesota House passed legislation in 2024 that prohibits parents from including children under 14 in their vlogs or videos.
• On their own, minors under 14 are also barred from “engaging in the work of content creation.”
• If your child is age 14-17 and appears in at least 30% of content creator’s material over a 30-day period, they are entitled 30% of the generated revenue.
• Modeling California’s Coogan Law, the income must be placed in a trust account for the minor and be accessible once they reach adulthood.

The law on children influencer content will be effective on July 1, 2025.

Keep track of your child’s earnings

If you or your child is social media content creator, make sure you keep track of any earnings as they may be subject to taxes this tax season. With the April 15 federal tax deadline around the corner, you don’t want to accidentally file late and incur unwanted penalties or fees.

As mentioned above, some states have enacted or are slated to issue new protections for child influencers this year. This could change how you report some earnings on your tax return, so it’s recommended that you talk to a trusted certified public accountant (CPA) or tax professional.

Likewise, even if your child earns enough income to file a tax return, you can still claim them as a dependent on your tax return. You could still be eligible to claim popular tax breaks for families like the Child Tax Credit (CTC) or Earned Income Tax Credit (EITC).

Related Content

• Tax Benefits of Hiring Your Kids Plus IRS Rules to Follow
• Child Tax Credit: How Much Is It for 2024 and 2025?
• Trusts for Child Influencers: What Families Need to Know
• Does Your Child Need to File a Tax Return This Year?

Earlier this year, severe storms, straight-line winds, flooding and landslides ripped through the Commonwealth, resulting in more than 1,000 rescues and at least 21 deaths. Thousands of others were without power for several days; hundreds of road closures are still in effect.

While it might bring little relief, the IRS’ tax deadline extension could help some Kentucky residents complete their federal tax obligations. The IRS typically waives interest and penalties on taxes owed by taxpayers in disaster areas.

However, state-level income taxes might be another story. According to the Kentucky Department of Revenue (DOR), taxpayers affected by disaster might owe higher state tax bills if they opt for a later extension deadline in the fall.

Read on.

Kentucky tax extension

On February 24, the IRS announced tax relief for all individuals and businesses in Kentucky — 10 days after the February storms began. This announcement pushed the tax day deadline for Kentuckians from April 15 to November 3, 2025. The extension applies to numerous key federal tax deadlines, including:

• Individual income tax returns and payments that are typically due on April 15, 2025.
• 2024 contributions to IRAs and health savings accounts for eligible taxpayers.
• Quarterly estimated income tax payments for 2025, including those normally due on April 15, June 16, and September 15, 2025.
• Various payroll, partnership, S corporation, and tax-exempt organization returns.

For more information on the federal tax return extension, see the IRS Kentucky deadline announcement.

Kentucky state tax deadline

The extended tax deadline for Kentucky returns is November 3, 2025. That includes individual and business tax returns originally due April 15, 2025.

The Commonwealth's announcement in February said that the state tax deadlines “will mirror the IRS federal extensions related to this disaster for filing income tax returns, including payment of tax due.”

However, unlike the federal tax extension announcement, the state cautions that filing later might come with a price.

“Kentucky’s tax laws have no provision to waive interest accrued,” the state’s DOR writes in a release, “Therefore, the total liability due will increase for taxpayers who defer paying their taxes by the regularly scheduled due date.”

How much interest could you pay?

Luckily, the Kentucky DOR provides an example.

Kentucky tax payment example

If you decide to file and pay your Kentucky state taxes by the November 3, 2025, extension deadline, the interest rate can be as high as 10%.

But here is an example given by the state’s DOR of how much you could owe:

• If you have $50,000 in state-taxable income, then your tax liability on April 15 might be $2,000.
• If you delay your filing and payment until November 3, then your added interest could be $111.23.
• This means the total tax owed on November 3 would be $2,111.23 if you decided not to file and pay by April 15.

Note: This example is from the Kentucky Department of Revenue website and does not include applicable deductions, withholding payments or estimated tax paid throughout the year.

Because interest fees could increase your state tax liability from April 15 to November 3, the Kentucky Department of Revenue encourages taxpayers to file by the April deadline or as soon as possible after tax day.

Kentucky disaster relief for taxes

Taxpayers claiming disaster relief should write “Kentucky Disaster Relief” at the top of state tax returns, according to the Kentucky DOR. The writing should be in large, red lettering. E-filing Kentucky residents can enter “Disaster” on their return with most tax software.

If filing after regularly required deadlines, affected taxpayers should also write the Federal Emergency Management Agency (FEMA) disaster declaration number, 3624-EM, on any return. This number should be put on federal tax returns, especially when claiming a casualty loss or requesting copies of previously filed tax returns.

Related Content

• Kentucky Has a New 2025 Income Tax Rate
• Kentucky Tax Guide
• States With 2025 IRS Tax Deadline Extensions
• How to Recover Tax Records and Vital Documents After a Disaster

However, what’s happening with taxes on overtime pay has sparked national debate. There’s talk about whether “no tax on overtime” will help workers or contribute to the federal deficit and incentivize employers to use longer hours instead of hiring additional employees, especially after the so-called "One Big Beautiful Bill" was signed.

But do you know how your state is weighing in on the no tax on overtime debate?

States can follow the federal “no taxes on overtime” movement or decide to continue taxing overtime income.

Here are the states that have proposed bills relating to no taxes on overtime, and where those proposals are now.

States with no income taxes were excluded from this list as they do not tax overtime. These include Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.

Is overtime taxed more in Illinois?

Illinois has four active bills proposing no tax on overtime, “effective immediately” if signed into law:

• SB 174, sponsored by Senate Republicans, would deduct any overtime wages paid during the taxable year.
• HB 2734, sponsored by Rep. Christopher “C.D.” Davidsmeyer (R-Murrayville), would deduct overtime wages included in the taxpayer’s federal adjusted gross income (AGI).
• HB 1899, sponsored by House Republicans, would create a tax deduction for overtime compensation included in a taxpayer’s AGI.
• HB 1750, sponsored by Rep. Joe C. Sosnowski (R-Rockford), would not only exclude overtime from wages but also exempt gratuities (tips) from state income taxation.

All four “no tax on overtime” bills are being read in their respective chambers and have yet to crossover.

Does overtime get taxed more in Massachusetts?

Massachusetts might exempt overtime from the Commonwealth’s income taxes with HB 3173.

Sponsored by Rep. Marc Lombardo (R-Billerica), the bill could exclude overtime compensations from income tax in a place among those with the highest income tax rates for retirees.

However, only hourly employees would be included — not salaried. There is no enactment date for Massachusetts’ “no tax on overtime” bill.

Michigan rules for overtime tax on pay

Michigan legislators have proposed a no-tax-on-overtime bill. SB 125, sponsored by state Senate Republicans, seeks to deduct overtime compensation from the state’s taxable income.

The Great Lakes State recently raised base pay for hourly workers. Tipped employees went from $4.01 to $4.74 per hour, while nontipped worker rates went up to $12.48 from $10.56. No tax on overtime could provide further relief for hourly employees in 2025.

Overtime taxed in New Jersey

New Jersey is looking to exempt overtime pay from state income taxes. The Republican-sponsored bill would exclude overtime compensation from gross income as early as January 1 following the date of enactment.

The Garden State has some of the highest taxes in the nation. Not only is New Jersey expensive for homeowners, but the state also has one of the highest income tax rates for retirees. No taxes on overtime could help provide tax relief for some residents.

Overtime pay is taxed in North Carolina

North Carolina has a bill that includes more than no tax on overtime. Republican-led HB 11 would provide:

• No tax on overtime pay.
• An exemption of state income taxes on tips.
• An exemption on the first $2,500 in bonuses from state income taxes.

Bonus pay might include hourly and salaried workers. The bill has been passed to the House Finance Committee for review.

Does no tax on overtime start in Ohio?

Ohio might consider ending state tax on overtime. HB 39, proposed by House Republicans, would amend Ohio’s tax policy to allow a deduction for overtime wages.

This would effectively make overtime pay state tax-exempt. If signed into law, the bill could go into effect as early as January 1, 2026. However, it was only recently referred to the House Ways and Means Committee.

Does overtime get taxed in Pennsylvania?

Pennsylvania lawmakers are seeking to exempt overtime pay from state taxes. Not only that, but the Coal State might implement no tax on tips, too, if signed into law:

• HB 1586, a House Republican bill, would provide a tax credit for state taxes on overtime pay.
• HB 1514, also Republican-led, would allow for a tax credit to offset taxes collected on tips.

Currently, both bills are in the House Finance Committee for consideration. If signed into law, either bill would be effective after December 31, 2025.

Does Alabama still tax overtime?

Although Alabama used to exempt overtime pay from state income taxes, that key piece of legislation expired earlier this year.

Alabama House Democrats had introduced a bill to preserve the income tax exemption on overtime pay. But House Republicans sought to let the provision expire in favor of other state tax breaks, such as reducing the state’s grocery tax, which is set to be cut from 3% to 2% in September.

State tax on overtime

More states may weigh in on the “no tax on overtime” debate. State legislatures will meet throughout the year, and overtime income could be on the slate of bills proposed. More than just your federal tax bill could be on the line, so stay tuned.

Read More

• What’s Happening With Taxes on Overtime Pay?
• New 'No Tax on Tips' Bill Approved for 2025: What to Know Now
• States That Could End Tax on Tips
• Most Taxpayers Don't Like What's in Trump's 'Big Beautiful Bill'

The Florida House Ways and Means Committee unanimously approved a measure to permanently reduce the state sales tax from 6% to 5.25%. Other sales taxes for commercial rent, new mobile homes, coin-operated amusement machines, and electricity would also be cut by a 0.75% rate.

The legislation is estimated to cost the state $5 billion annually and is against Gov. Ron DeSantis’ preference to direct that tax relief to Florida homeowners.

Instead, the governor had proposed to deliver up to $1,000 in tax rebates to each homesteaded property in the Sunshine State. The property tax relief rebates would have been issued in December 2025 if the Florida Legislature granted authority.

According to the governor's office, the measure would have benefited over 5.1 million homeowners. That pitch appears left in the dust as legislators voted instead for a sales cut.

“Property taxes effectively require homeowners to pay rent to the government,” DeSantis said in a statement. “Constitutional protections for Florida homeowners require approval of the voters in 2026. In the meantime, Floridians need relief.

The governor noted that the sales tax cut would benefit tourists and part-time residents, and he would rather see foreigners subsidize tax cuts for Floridians. DeSantis also suggested better transparency and accountability on how taxes are spent to curb overspending.

“In Florida, we have this great luxury of being able to offload tax burden to non-Floridians because people visit, people invest here, people live here part-time who aren't residents.”

So, what kind of tax cut will Floridians get? Here are some proposals on the table.

Abolishing property taxes

DeSantis is fed up with property taxes and wants to do something about them.

The governor has expressed support for a constitutional amendment abolishing property taxes in Florida in 2026. However, the bold proposal has roused concerns from economists on the implications this measure would have for state revenue.

As reported by Kiplinger, in Florida, property taxes fund schools, infrastructure for roads and parks, and safety net programs — like firefighters, police departments, and public hospitals. This funding is essential given that the Sunshine State is a no-income state.

According to the Florida Policy Institute (FPI), Florida’s tax on real property makes up 18% of county revenue, 17% of municipal revenue, and up to 60% of school district revenue. They say that eliminating property taxes would be problematic.

“The tax has proved remarkably resilient and capable of being tailored to local interests,” the FPI analysts wrote. “It survives as the most important source of revenue in local governments primarily because of its stability.”

If Florida were to eliminate property taxes, the state would have to raise $43 billion (or $2,015 per person) to keep public services currently funded with property tax revenue afloat.

To get close to getting that funding back, the state would need to double its sales tax rate to 12%. That would generate roughly $40.2 billion annually — that’s only if consumers can keep up with higher costs.

Separately, costs of everyday goods are expected to rise due to President Donald Trump’s sweeping tariff policies on imported goods to the U.S.

“Increasing sales taxes, whether it is at the local level or statewide, is a regressive option that would ultimately make Florida’s tax code more inequitable,” wrote the FPI.

So far, Illinois, Pennsylvania, and Kansas have proposed similar measures to banish property taxes.

A $1,000 rebate check for homestead homeowners

Instead of providing $5 billion per year via a statewide sales cut, DeSantis would have preferred the Florida House to provide tax relief on property taxes.

Under DeSantis’ proposal, the cut would have resulted in a rebate averaging $1,000 for each homesteaded property in the state. The rebates would have also covered state-mandated school property taxes, which would guarantee school district funding while offering a tax break to homeowners.

The governor was counting on the legislature to approve the measure to get the rebates delivered to homeowners immediately, as soon as December 2025.

“We want to be as bold as we can be, but we also have a reality that we have to get these things passed by the legislature,” said DeSantis during a conference at the Florida Realtors Association this month. “You gotta convince them.”

State sales tax cut moves one step further

While Gov. DeSantis didn’t oppose the idea of a sales tax cut for the state of Florida, he noted that a property tax cut should be a priority for legislators to consider while weighing the state budget.

Florida lawmakers proposed $5 billion in tax cuts directed at slicing the state sales tax from 6% to 5.25%. Under the measure, a 0.75% sales tax reduction is also applicable for other goods and services, including:

• The rate of commercial rent would drop from 2% to 1.25%
• The rate on electricity would fall from 4.35% to 3.6%
• The sales rate of new mobile homes would be reduced from 3% to 2.25%
• The rate on coin-operated amusement machines would fall from 4% to 3.25%

The state's House of Ways and Means Committee advanced the bill with unanimous support on April 2, 2025.

“This will not be a temporary measure; a stunt or a tax holiday,” said Florida House Speaker Daniel Perez when he proposed the sales cut last week. “This will be a permanent, recurring tax reduction. This will be the largest state tax cut in the history of Florida.”

What was the governor saying before the move?

“People are not clamoring for sales tax relief, they are clamoring for property tax relief. There’s no property tax relief in that proposal. It also allows relief for foreigners, it allows relief for visitors and part-time residents,” DeSantis said. “I think the tax relief needs to be focused on Floridians. We need a Florida-first tax package.”

What’s on the Florida ballot in 2026

As reported by Kiplinger, Florida government officials have floated tax relief measures for state homeowners recently. However, some haven’t advanced in the Legislature.

• Sen. Blaise Ingoglia, R-Spring Hill, wants to increase the homestead exemption from its $50,000 assessed value cap to $75,000 for all levies, with annual inflation adjustments via (SB 1018).
• Rep. Ryan Chamberlin, R-Belleview, proposed a $100,000 exemption on all real properties in Florida via (HB 357).

For now, Florida homeowners will have to wait and see as lawmakers push forward measures to bring tax relief to constituents. It appears that a state sales tax could be on the table.

Still, homeowners looking for immediate tax relief from climbing tax bills can act now by implementing strategies to lower their property tax bills. For example, Florida has certain property tax benefits for persons age 65 or older, and Veterans in the state. Avoiding unnecessary home improvements can also help reduce your tax bill.

Related Content

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South Carolina has one of the highest income tax rates in the Southeast. Neighboring states Alabama, Georgia, and North Carolina, and the Commonwealth of Virginia have lower rates.

While collapsing the South Carolina tax brackets into one fixed bracket would make the state more competitive with its neighbors, many South Carolinians might see their tax bills rise if the bill is signed into law.

According to the latest report by the state Revenue and Fiscal Affairs Office (RFA), 59.4% of filers could pay more taxes in 2027.

Here’s more of what you need to know.

State income tax bill in South Carolina

Late last month, South Carolina GOP leaders released a bill, known as HB 4216, to collapse the state’s income tax brackets into one fixed rate of 3.99%. South Carolinians currently pay the following state income tax rates:

• Annual incomes than $3,560 pays 0%.
• Annual incomes between $3,560 and $17,830 pay 3%.
• Annual incomes of more than $17,830 pays 6.2%.

The relatively low income threshold for each bracket significantly narrows the tax base in South Carolina, which causes a discrepancy in taxpayer financial burdens.

For instance, according to an analysis released two years ago by the state's Revenue and Fiscal Affairs Office, 44% of South Carolinians pay zero income taxes, and 10% of filers account for 63% of the state’s total income tax liability.

By collapsing the income brackets into one rate, South Carolina’s tax base would broaden, requiring more taxpayers to pay. However, those with incomes over $17,830 would likely be taxed less under the bill.

Also, taxpayers in the lowest income bracket might still pay no tax. That is because the proposed legislation provides a new $6,000 personal exemption for lower-income filers ($12,000 for married filing joint couples), which would have the following phaseout thresholds:

• Full exemption for those with adjusted gross income (AGI) of $30,000 or less (married filing jointly would have an exemption of $60,000 AGI or less).
• Partial exemption for filers earning between $30,000 and $40,000 AGI (married filing jointly would have an exemption phase-out between $60,000 and $80,000 AGI).

But a broader tax base isn’t the only way HB 4216 could affect your next tax bill. The bill might also change how your income is taxed — which could affect South Carolina taxpayers in all brackets.

South Carolina might get a flat income tax

South Carolina has one of the highest income tax rates in the South. States like Georgia, Alabama, and North Carolina have lower income taxes. But under the flat income tax bill, that would change.

"That makes us not only more competitive but also more attractive to new businesses and more affordable for families to call South Carolina home,” Rep. Bruce Bannister (R-Greeneville), Chair of the House Ways and Means Committee, told reporters during the bill’s unveiling.

Yet the bill might come with a caveat.

At present, South Carolinians are taxed on federal taxable income, allowing them to claim property taxes, mortgage interest, and other deductions before state taxes.

Under the new flat income tax bill, South Carolinians would be taxed on adjusted gross income (AGI). This might increase state tax for some taxpayers, as AGI is a higher before-deduction amount than federal taxable income. Most states that have an income tax use this method.

The most recent report from the state RFA office estimates how much different income groups in South Carolina might pay under a flat income tax rate of 3.99%:

• Those with income up to $10,000 might pay $98 more in taxes.
• Those between $50,000 and $75,000 might pay $560 more in taxes.
• Incomes over $1,000,000 might pay over $10,000 more in taxes.

In total, almost 1.7 million filers could pay more taxes in 2027 if the bill is passed into law. 550,000 taxpayers might see a decrease in tax liability, averaging $2,110.

However, every South Carolinian's tax situation is unique. Some taxpayers in every bracket might see their income tax liability lower. For instance, 23,500 filers with incomes between $50,000 and $75,000 might see a decrease of $125. Tax residents between $150,000 and $200,000 could see a decrease of over $1,000.

For this reason, the state Revenue and Fiscal Affairs Office cautions against generalizing.

“The impact on individual taxpayers varies widely within each range depending on the specific tax situation of each tax filer,” writes Frank A. Rainwater, Executive Director of the Office.

‘Tax-friendly’ state savings in South Carolina

If the South Carolina bill to cut state income taxes becomes law, taxpayers might see the following tax savings:

• GOP lawmakers estimate South Carolinians could save $200 million in the year the bill is enacted.
• Future income tax cuts might be triggered if state revenue goals are met, reducing the rate until it reaches 2.49%.

In total, South Carolinians could save over $2 billion in taxes, pending future rate reductions. The latest state RFA report found many filers possibly seeing an increase in tax liability at the 3.99% rate. However, future rate reductions could decrease income taxes for almost all filers — if specific economic triggers are met.

The bill, currently in the state House Ways and Means Committee, needs to clear additional legislative hurdles, but if eventually approved, it could go into effect as early as 2026.

Related Content

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Eight states, plus Washington, D.C., have the highest income tax rates in the country, making them perhaps less tax-favorable for retirement. However, some states on the list may exclude certain retiree income from tax, which could soften the blow. And other states offer no state taxes on Social Security.

However, before we delve into states with the highest income tax rates, let’s briefly review marginal taxes to understand how much you could pay if you reside in a high-income tax state.

What is a state marginal tax rate?

A marginal tax rate is the amount you pay for every additional dollar of a revenue stream. This means the highest tax bracket you qualify for is only paid on part of your income. States have different tax rates and tax brackets.

For example, say you have $10,000 in income. If your state has an income tax rate of 5% on the first $5,000 and 10% on income from $5,001 to $10,000, you could expect to pay:

• $5,000 x 5% = $250, plus
• ($10,000 - $5,001) x 10% = $500.

In total, you would owe about $750 in taxes. This is good to remember as we list the states with high-income tax rates, since only part — not all — of your income could be taxed at the highest rate.

States with the highest income taxes

Some states with no income tax may have higher taxes in other areas, like capital gains and property tax, or have “death taxes.” For this reason, you may want to consult with a tax professional before moving to a lower-income tax rate state.

Kiplinger used data from the Tax Foundation to identify the eight states (plus Washington, D.C.) with the highest income tax rates in 2025. Here they are.

Note: Federal tax rates apply no matter where you live in the U.S.

Vermont

Vermont income tax rate

Vermont ranks eighth among states with the highest income tax rates, at 8.75% for earners making more than $242,000 (single) and $294,600 (married filing jointly). The lowest tax rate in Vermont is 3.35%.

Below are some fast facts about Vermont’s retirement income taxes:

• 401(k) and IRA distributions are taxable.
• Vermont is one of the few states that tax Social Security benefits.
• Public and private pensions are generally taxed.

Vermont has a Social Security exemption for qualified residents, but your adjusted gross income (AGI) must be $65,000 or less (married filing jointly). The Green Mountain State also has a deduction of up to $10,000 on military retirement pay and another deduction of up to $10,000 for other types of retirement income. However, income limits apply.

Because of these exemptions, and ranking the “lowest” of the high-income tax rates, Vermont may be one of the more optimal states on this list to retire.

Massachusetts

Is Massachusetts a high-income tax state?

The top tax rate in Massachusetts is 9%, making The Bay State the seventh highest in state income taxes. However, the tax rate only applies to taxpayers making more than $1,083,150, a higher threshold than other states on this list.

Most other taxpayers in the state pay a flat income tax rate of 5%.

Here are a few fast facts about retirement income taxes in Massachusetts:

• 401(k) and IRA distributions are taxed.
• Social Security benefits are not taxable.
• Private pensions are taxable, though government and public pension plans may be tax-exempt.

So, if you aren’t a millionaire and can afford property taxes in one of the most expensive states for homeowners, you could still consider a move to Massachusetts.

Minnesota

Minnesota high income tax rate

Minnesota comes sixth on our list of states with the highest income taxes. The top tax rate in The Gopher State is 9.85% for single filers making more than $198,630 ($330,410 for married filing joint couples).

The lowest tax rate is still high at 5.35%.

Here are a few fast facts about retirement income taxes in Minnesota:

• 401(k) and IRA distributions are taxable.
• Social Security benefits are taxed.
• Public and private pensions (including federal) are typically taxed, though some may qualify for a subtraction.

Minnesota’s Social Security tax exemption could exempt part or all of your benefits from state income taxes if you make under a certain amount. For example, Social Security incomes below $108,320 (married filing jointly) or $84,490 (single filers) may qualify for a state tax exemption.

So if your retirement plan mostly relies on Social Security benefits under the exemption amounts, you may be willing to accept a higher income tax rate in Minnesota.

Oregon

What is the income tax rate in Oregon?

Oregon’s top tax rate of 9.9% ranks the Beaver State fifth on our list. While the actual percentage is “low” compared to other states listed here, more residents may qualify for the highest tax bracket as the income threshold is just $125,00 for single filers and $250,000 for married filing joint couples.

Additionally, the lowest tax rate in the state is 4.75%, which is relatively high.

Here are a few facts about tax on retirement income in Oregon:

• 401(k) and IRA distributions are taxable.
• Social Security benefits are not taxed.
• Public and private pensions are generally taxed, though federal pension income may be partially or entirely excluded from Oregon taxable income.

Because of the “low” income thresholds for the top tax rate, you might rethink potential retirement in Oregon.

New Jersey

Is New Jersey a high-income tax state?

New Jersey’s top income tax rate is the fourth highest in the nation. Anyone making more than one million dollars can expect to pay a 10.75% income tax rate, regardless of filing status. The remaining tax rates range from 1.4% to 8.97%.

Below are a few facts about the taxability of New Jersey retirement income:

• 401(k) and IRA distributions are partially taxable (income requirements apply).
• Social Security benefits and military pensions are exempt.
• Private and public pensions are partially taxable (income requirements apply).

Although New Jersey taxes most retirement benefits, retirees 62 and older may deduct a significant portion of their taxable income. The maximum deduction is up to $75,000 for single filers, $50,000 for married filing separately, and $100,000 for joint filers if your federal AGI is below $100,000. You may qualify for a partial exemption if you make less than $150,000.

Retirement in The Garden State may be more affordable if you qualify for the retirement income exclusion.

Washington, D.C.

Does Washington, D.C. have income tax?

Although technically not a state, Washington D.C. ties in rank with New Jersey for the fourth highest income tax rate at 10.75%. Like the Garden State, you’ll pay this tax if your income is over $1 million. However, the lowest rate in D.C. is much less favorable, at 4% for incomes $10,000 or less.

Here’s a quick overview of how retirement income is taxed in Washington, D.C.:

• 401(k) and IRA distributions are taxable.
• Social Security benefits are not taxed.
• Public and private pensions (including government) are taxed.

Apart from a government pension income deduction, D.C. offers few ways to save on retirement income tax. Also, The Nation’s Capital is included on the list of states with scary estate taxes, meaning your heirs might pay more in tax, too. For these reasons, D.C. may not be your top retirement choice.

New York

New York income tax rate

New York has the third highest income tax rate in the U.S. at 10.9% for incomes over $25 million. But that’s not all. Localities may also impose income taxes. For instance, New York City charges an additional income tax of up to 3.876%.

And even if your earnings are lower — $8,500 (single filer) or $17,150 (married filing jointly) — you’ll still have a 4% tax rate on income.

Here are a few facts about New York taxes on retirement:

• 401(k) and IRA distributions are taxable.
• Social Security benefits are not taxable.
• Federal, New York State, local, and military retirement pensions are exempt.

The Big Apple allows some taxpayers 59.5 years and older to deduct up to $20,000 of qualified retirement income, but depending on that exemption might not be enough to retire in New York under the highest tax rate.

Hawaii’s high-income tax rate

Hawaii’s high-income tax rate

It may come as no surprise that Hawaii has the second-highest income tax rate in the nation given its high cost of living: Groceries, housing, and utilities tend to be significantly higher than the national average.

Single filers making more than $325,000 (or $650,000 married filing jointly) can expect to reach the highest tax rate of 11%. However, that income rate drops to 1.4% for single taxpayers making less than $9,600 (or $19,200 for married couples).

Here are a few facts about Hawaii’s taxes on retirement income:

• 401(k) and IRA distributions are taxed.
• Social Security benefits are exempt.
• Military, federal, state, and local pensions are not taxable (including out-of-state government pensions). However, you must not have made contributions to the plan.

The Aloha State also charges a 10% to 20% tax on estates worth more than $5.49 million. So if you want to leave something substantial for your heirs, you might not want to live and retire in Hawaii.

California

California: The highest income-taxed state

California has the highest income tax rate in the U.S., with a staggering 13.3% on income over $1 million for single filers, and $1,442,628 for taxpayers married filing jointly.

But you’ll likely pay more than that if you’re a millionaire. Thanks to California’s tax expansion, the 2025 top rate is increased to 14.5% due to the state eliminating its wage cap on employee payroll tax for State Disability Insurance (SDI).

But if you don’t make millions, you can pay as low as 1% on income up to $10,756 for single filers (up to $21,512 for married filing joint couples).

Here are a few other facts about retirement income taxes in California:

• 401(k) and IRA distributions are taxed.
• Social Security benefits are tax-exempt.
• Pension income is taxable.

California also exacts a 2.5% state penalty on early distributions from retirement plans, annuities, and IRAs. So, if you’re looking to save on income taxes in retirement, the state with the highest income tax rate may not be right for you.

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Despite some speculating that a potential tax exemption could help low-income workers, others say it may lead to systemic abuse.

Either way, the so-called "One Big Beautiful Bill" (OBBB) that was recently signed into law approved no tax on tips. This makes tips under a certain threshold temporarily tax-deductible, although there are phase-out income limits for filers.

But even if your tips are tax-exempt at the federal level, how is your state weighing in on the tax on tips debate?

States can follow the federal “no taxes on tips” movement or decide to continue taxing tip income. They could also choose to instate wage caps on tips, which would mean that only a certain amount of tip income would be excluded from taxes (similar to how it will work federally).

Here are the states that are currently considering bills relating to no taxes on tips, and where those proposals are now.

Note: States with no income taxes were excluded from this list as they do not tax tips.

Tip tax law in Illinois

Illinois has a bill proposing no tax on tips. HB 1750, sponsored by Rep. Joe C. Sosnowski (R-Rockford), would not only:

• Exclude tips from wages, but also
• Exempt overtime from state income taxation.

The bill would also be “effective immediately” if signed into law.

Another Illinois bill seeks to end the state's tip credit — an amount paid by customers to subsidize employee pay. If the tip credit is eliminated, some speculate that independent and family-owned restaurants across the state would feel the strain from rising payroll costs.

Do you pay taxes on tips in Massachusetts?

Recently, there has been talk of a “no tax on tips” bill in Massachusetts. Proposed by Rep. Marc Lombardo (R-Middlesex), HB 3172 would make tipped wages, including tips from service industry workers, tax-exempt for state tax purposes.

Different types of workers could be impacted by this bill, including:

• Bartenders
• Restaurant workers
• Nail and hair stylists

The no tax on tips proposal in Massachusetts was introduced in February and is currently in the Joint Revenue Committee for review.

New Jersey no tax on tips

New Jersey service workers would pay no tax on tips if S-3741 is signed into law. Proposed by Sen. Vince Polistina (R-Egg Harbor Township), the bill would:

• Remove tips from the list of taxable income on New Jersey’s gross income tax.
• Begin on or after January 1 next following the date of enactment.

The minimum wage in New Jersey is $15.49 for most employees. However, that number can include tips and base pay, so if an employee earns higher tips, the base pay may be lowered to meet the minimum wage rate. S-3741 could help higher-tip-earning employees potentially make up for lower base pay.

Are tips taxable in New York?

New York is also considering a no tax on tip income proposal, SB 587. Introduced by Senate Republicans, the bill would eliminate state income taxes on cash tips.

Notably, no tax on tips in New York could provide tax relief in a state that is one of the most expensive to live in and has some of the highest sales taxes across all U.S. states. Currently, the proposal is pending a review by the Senate Investigations and Government Operations Committee.

Does North Carolina tax tips?

North Carolina has a bill that includes more than no taxes on tips. Republican-led HB 11 would provide:

• An exemption of state income taxes on tips.
• No tax on overtime pay.
• An exemption on the first $2,500 in bonuses from state income taxes.

Bonus pay might include hourly and salaried workers. The bill has been passed to the state’s House Finance Committee for review.

Oregon ending tax on tips?

Sen. Dick Anderson (R-Lincoln City) has submitted a plan for a “No Tax on Tips” bill in Oregon. The bill would provide tax relief for service industry workers, including waitstaff, bartenders, and other tipped employees, by exempting tips from the Beaver State’s income tax.

Tips are currently taxed as ordinary income, which for Oregon taxpayers is between 4.75% and 9.9%, depending on an individual’s income bracket. If no tax on tips is formally proposed and signed into law, that would mean taxpayers could save at least $4.75 per $100 in tip income.

Is there tax on tips in Pennsylvania?

Pennsylvania lawmakers are seeking to exempt tipped pay from state taxes and no tax on overtime, in two separate bills:

• HB 1514, a House Republican bill, would allow for a tax credit to offset taxes collected on tips.
• HB 1586, also Republican-led, would provide a tax credit for state taxes on overtime pay.

Currently, both bills are in the House Finance Committee for consideration. If signed into law, either bill would be effective after December 31, 2025.

State tax on tips

More states may weigh in on the “no tax on tips” debate. State legislatures will continue to meet throughout 2025 and into 2026, and tip income could be on the slate of bills proposed. Stay tuned.

Read More

• Another State Rebels Against Trump’s New 2025 Tax Law: What Now?
• New 'No Tax on Tips' Bill Approved for 2025
• Could Your State End Tax on Overtime?
• What's Happening With Taxes on Overtime Pay

But more than just tax refunds are on the horizon.

Another law Kemp signed addresses state income tax cuts. As Kiplinger reported, Georgia moved to a new lower income tax rate last year and will continue to cut income taxes if certain economic factors are met. However, this new law accelerates the income tax cuts, and some taxpayers may see more tax savings than others.

Here’s what you need to know about the Georgia surplus tax refund and income tax cuts in 2025.

Related: Is Georgia ending the state income tax?

Georgia surplus tax refund 2025

As Kiplinger has reported, Georgia has sent special tax payments to residents twice before. And this year, Georgia residents can expect another payout. Taxpayers may be eligible for a surplus tax refund if they meet the following requirements:

• Full- or part-year Georgia resident (or nonresident).
• Filing the current year’s and prior year’s state income tax returns by the May 1 deadline (or by the October extension due date, if applicable).
• Had a tax liability for tax year 2023.

How much is the Georgia tax rebate in 2025?

According to the state's Department of Revenue, Georgia tax surplus refund amounts will be as follows:

• $250 for single and married filing separate filers.
• $375 for heads of household.
• $500 for married filing joint filers.

*Note: Part-year or nonresidents may be eligible for only a proportional refund. The amount received will be the maximum amount above multiplied by the share of your Georgia taxable income.

2025 Georgia rebate date

After you file your taxes, your refund will be sent automatically, starting in June.

The payment option you chose for your state income tax return will be reflected in your surplus rebate check. Typically, you can expect payment in 6-8 weeks if you filed your state income tax return by the May 1, 2025, deadline.

Georgia tax surplus refund: Check status

You can check the status of your Georgia rebate check by using the online Surplus Tax Refund tool. To use the Surplus Tax Refund checker, you will need to provide the following information:

• Your SSN or ITIN
• The amount of your federal adjusted gross income (AGI) listed on your 2023 Georgia income tax return. This can be found on Form 500 (line 16) or Form 500EZ (line 4).

Georgia state income tax rate 2025

In addition to rebate checks, Georgia will also cut the income tax rate for 2025.

Last year, Georgia switched from a tiered income tax system, which peaked at 5.75%, to a flat income tax rate of 5.49%. In the current filing season, the rate dropped to 5.39%. And Georgia’s new income tax rate is expected to go even lower in future years.

• Each subsequent year, the rate will decrease by .10%.
• The final flat income tax rate of 4.99% is projected to be reached in 2028.

For these rate drops to occur, the state budget must meet certain economic targets, such as increasing the annual revenue estimate by at least 3%. While some claim the 3% rule was not met to warrant a 2025 reduction, Gov. Kemp has signed a bill to slash 2025’s income tax rate to 5.19% — one year ahead of schedule.

This may be better news for some more than others.

According to the Georgia Budget and Policy Institute, an income tax cut from 5.39% to 5.19% provides higher savings to wealthier individuals and lower savings to lower-income residents, with:

• $313 million going to Georgians with incomes $75,000 and up.
• $144 million going to Georgia residents with incomes of $45,000 and below.

However, total taxpayer savings for all income groups is expected to be $870 million. This tax relief will most likely come from Georgia's $11 billion budget surplus, which the Governor’s Office of Planning and Budget reported last fall.

More on State Tax

• Georgia Could Be Latest State to End Income Taxes
• Georgia Has a New Income Tax Rate
• States With IRS Tax Deadline Extensions
• Georgia Tax Guide