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Author Topic: TAX BURDEN for INDIANA RETIREES:  (Read 7281 times)

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Offline DoggyDaddy

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TAX BURDEN for INDIANA RETIREES:
« on: November 01, 2009, 03:49:16 am »
     
Many people planning to retire use the presence or absence of a state income tax as a litmus test for a retirement destination.  This is a serious miscalculation since higher sales and property taxes can more than offset the lack of a state income tax. The lack of a state income tax doesn’t necessarily ensure a low total tax burden. Following are the taxes you can expect to pay if you retire in Indiana:

State Sales Tax:  7% (food and prescription drugs exempt)

Fuel & Cigarette Tax:
•   Gasoline Tax: 29.7 cents/gallon
•   Diesel Fuel Tax: * 41.5 cents/gallon (Includes local county taxes)
•   Cigarette Tax: 99.5 cents/pack of 20

Personal Income Taxes
Tax Rate Range: Flat rate of 3.4% of federal adjusted gross income.  Many counties also collect income tax.  Refer to www.in.gov/dor/3810.htm  and  www.in.gov/dor/3799.htm#military.
Personal Exemptions: Single - $1,000; Married - $2,000; Dependents - $1,500; $1,000 for taxpayer and/or spouse if age 65 or over; $1,000 for taxpayer and/or spouse if blind; $500 additional exemption for each individual age 65 or over if federal adjusted gross income is less than $40,000.
Standard Deduction: None
Medical/Dental Deduction: None.
Federal Income Tax Deduction: None.
Retirement Income Taxes: Social Security is exempt.  Taxpayers 60 and older may exclude $2,000 from military pensions minus the amount of Social Security and Railroad Benefits received.  Taxpayers age 62 and older may deduct from their adjusted gross income $2,000 from a federal civil service annuity. Out-of-state pensions are fully taxed.  Homeowners can deduct up to $2,500 from their income taxes for property taxes on their residence.
Retired Military Pay: Military retirees who are age 60 are entitled to deduct up to $2,000 of military or survivor benefits.
Military Disability Retired Pay: Retirees who entered the military before Sept. 24, 1975, and members receiving disability retirements based on combat injuries or who could receive disability payments from the VA are covered by laws giving disability broad exemption from federal income tax. Most military retired pay based on service-related disabilities also is free from federal income tax, but there is no guarantee of total protection.
VA Disability Dependency and Indemnity Compensation: VA benefits are not taxable because they generally are for disabilities and are not subject to federal or state taxes.
Military SBP/SSBP/RCSBP/RSFPP: Generally subject to state taxes for those states with income tax. Check with state department of revenue office.

Property Taxes
In Indiana property taxes are administered at the local level with oversight by the Indiana Department of Local Government Finance. Refer to www.in.gov/dlgf/4988.htm.They are imposed on both real and personal property.  Property, which is assessed at 100% of its true value, is subject to taxation by a variety of taxing units (schools, counties, townships, cities and towns, libraries, etc.) making the total tax rate the sum of the tax rates imposed by all of the taxing units in which the property is located.  Homeowners are eligible for a credit against the property taxes that they pay on their homestead.  The amount of credit to which the individual is entitled equals 10% of the individual's property tax liability, which is attributable to the homestead during the calendar year. A taxpayer entitled to receive a homestead credit is also entitled to a standard deduction from the assessed value of the homestead.  The deduction is the lesser of one-half of the assessed value of the real property or $35,000. Homeowners 65 and older who earn $25,000 or less are eligible to receive a tax reduction on property with an assessed value of $144,000 or less and the individual received no other property tax deductions except for mortgage, standard, and fertilizer storage deductions.  A surviving spouse is entitled to the deduction if they are at least 60 years old.  The amount of the deduction is the lesser of one-half of the assessed value of the real property or $12,480.  Call 317-232-3777 or refer to www.in.gov/dlgf for details.

     A circuit breaker program is aimed at helping residents by ensuring they don't pay more than 2% of their property value in taxes.  The goal is to provide predictability in tax bills and equity among Hoosier taxpayers.  It became mandatory statewide for residential property in 2007.  Homeowners will not see the potential impact until their 2008 tax bill.  The circuit breaker expands to include all property types in 2009.  Taxpayers will not see the impact of the expansion until their 2010 tax bill.

Inheritance and Estate Taxes - The inheritance tax (Class A) ranges from 1% to 10% based on fair market value of property transferred at death.  The estate tax is the amount by which federal credit exceeds inheritance taxes paid to all states. Refer to www.in.gov/dor/3807.htm for details.   

For further information, visit the Indiana Department of Revenue site www.in.gov/dor/index.htm. [Source: www.retirementliving.com Oct 09 ++]
Joe Kleinsmith
All State VFW Post 1716 Cmdr (1998-2000)
Cpt, VFW Post Honor Guard, Retired (1991-2009)
SC-SB County Council Cmdr (1996-1997)
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Offline Jerry P3150

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Re: TAX BURDEN for INDIANA RETIREES:
« Reply #1 on: November 02, 2009, 06:44:49 am »
Great Information!!   Can you show how I can get this type of information about a state I am interested in?
Jerry Peterson
VFW Post 12101
Joined as a Life Member in 1994
National Aide-De-Camp (2006-2007)
National Aide-De-Camp (2010-2011)
SMSgt, US Air Force (Retired)
http://www.vfwwebcom.org/nv/post12101

Offline DoggyDaddy

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Re: TAX BURDEN for INDIANA RETIREES:
« Reply #2 on: April 01, 2014, 04:54:31 pm »
Tax Burden for Indiana Retirees ►   As of Mar 2014

Many people planning to retire use the presence or absence of a state income tax as a litmus test for a retirement destination. This is a serious miscalculation since higher sales and property taxes can more than offset the lack of a state income tax. The lack of a state income tax doesn’t necessarily ensure a low total tax burden. Following are the taxes you can expect to pay if you retire in Indiana:

State Sales Tax: 7% (food and prescription drugs exempt) Gasoline Tax: 56.6 cents/gallon (Includes all taxes) Diesel Fuel Tax: 74.6 cents/gallon (Includes all taxes) Cigarette Tax: 99.5 cents/pack of 20
Tax Rate Range: Flat rate of 3.4% of federal adjusted gross income. See tax info www.in.gov/dor/4748.htm & http://www.in.gov/dor/4735.htm#military. Counties also have the authority for a local option income tax whose goal is to provide income for the counties instead of raising property taxes. Carroll, Clark, Clay, Madison and Wabash counties have adopted new county option income rates. For details go to http://www.in.gov/dlgf/files/Local_Option_Income_Tax_Fact_Sheet.pdf & http://www.in.gov/dor/files/dn01.pdf. Personal Exemptions: Single – $1,000; Married – $2,000; Dependents – $1,500; $1,000 for taxpayer and/or spouse if age 65 or over; $1,000 for taxpayer and/or spouse if blind; $500 additional exemption for each individual age 65 or over if federal adjusted gross income is less than $40,000.
Standard Deduction: None Medical/Dental Deduction: None Federal Income Tax Deduction: None Retirement Income Taxes: Social Security is exempt. Taxpayers 60 and older may exclude $2,000 from military pensions minus the amount of Social Security and Railroad Benefits received. Taxpayers age 62 and older may deduct from their adjusted gross income $2,000 from a federal civil service annuity. Out-of-state pensions are fully taxed. Homeowners can deduct up to $2,500 from their income taxes for property taxes on their residence. To view information for seniors go to http://www.in.gov/dor/4748.htm.

Sales Taxes
Personal Income Taxes
Retired Military Pay: Military retirees who are age 60 are entitled to deduct up to $5,000 of military or survivor benefits. Active Duty or Reserve Military Pay: Military personnel (regardless of age) on active duty or in the reserves may deduct up to $5,000 of taxable military pay if it is not already excluded or deducted from their adjusted gross income.
Military Disability Retired Pay: Retirees who entered the military before Sept. 24, 1975, and members receiving disability retirements based on combat injuries or who could receive disability payments from the VA are covered by laws giving disability broad exemption from federal income tax. Most military retired pay based on service- related disabilities also is free from federal income tax, but there is no guarantee of total protection.
VA Disability Dependency and Indemnity Compensation: VA benefits are not taxable because they generally are for disabilities and are not subject to federal or state taxes. Military SBP/SSBP/RCSBP/RSFPP: Generally subject to state taxes for those states with income tax. Check with state department of revenue office.
Property taxes in Indiana are administered at the local level with oversight by the Indiana Department of Local Government Finance (http://www.in.gov/dlgf/2516.htm).. They are imposed on both real and personal property. Property, which is assessed at 100% of its true value, is subject to taxation by a variety of taxing units (schools, counties, townships, cities and towns, libraries, etc.) making the total tax rate the sum of the tax rates imposed by all of the taxing units in which the property is located. Homeowners are eligible for a credit against the property taxes that they pay on their homestead. The amount of credit to which the individual is entitled equals 10% of the individual’s property tax liability, which is attributable to the homestead during the calendar year. A taxpayer entitled to receive a homestead credit is also entitled to a standard deduction from the assessed value of the homestead. The deduction is the lesser of one-half of the assessed value of the real property or $35,000. Homeowners 65 and older who earn $25,000 or less are eligible to receive a tax reduction on property with an assessed value of $182,430 or less and the individual received no other property tax deductions except for mortgage, standard, and fertilizer storage deductions.   For details go to http://www.in.gov/dlgf/files/2010pay2011_Deductions_and_Credits_Fact_Sheet.pdf.   A surviving spouse is entitled to the deduction if they are at least 60 years old. The amount of the deduction is the lesser of one-half of the assessed value of the real property or $12,480. Call 317-232-3777 or go to http://www.in.gov/dlgf for details.
A circuit breaker program is aimed at helping residents by ensuring they don’t pay more than 2% of their property value in taxes. The goal is to provide predictability in tax bills and equity among Hoosier taxpayers. For more information on property tax deductions go to http://www.in.gov/dlgf/2344.htm.
The inheritance tax (Class A) ranges from 1% to 10% based on fair market value of property transferred at death. The estate tax is the amount by which federal credit exceeds inheritance taxes paid to all states. For details go to http://www.in.gov/dor/3807.htm.
For further information, visit the Indiana Department of Revenue site http://www.in.gov/dor.
[Source: http://www.retirementliving.com/taxes-alabama-iowa#INDIANA Mar 2014 ++]
Joe Kleinsmith
All State VFW Post 1716 Cmdr (1998-2000)
Cpt, VFW Post Honor Guard, Retired (1991-2009)
SC-SB County Council Cmdr (1996-1997)
SFC, US Army, Retired (1971-1991)
Full Time RV'er
www.vfwwebcom.org/ca/post1716
http://vfwwebcom.org/ca/Post1716HonorGuard/