The Best Money-Saving Tax Tips for Each State
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The Best Money-Saving Tax Tips for Each State

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The Best Money-Saving Tax Tips for Each State
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'Tis the (Tax) Season

Paying taxes may be a fact of life, but depending on where you live, you may be able to keep a little extra money in your pocket thanks to some state-specific tax breaks. From socking away money in a college savings fund to donating to a charitable cause, there are plenty of ways to save money with available tax credits and deductions — if you qualify. While heading into tax season, shoebox of receipts in hand, keep in mind these money-saving tax tips from each state.

(Be sure to consult a tax adviser to confirm benefits that might be available based on your state or individual status.)

Alabama
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Alabama

Families and individuals saving for college can benefit at tax time thanks to the CollegeCounts 529 Fund, a plan that offers tax deferral for savings within the account as well as tax-free withdrawals for certain college expenses. The fund can help meet college costs nationwide, even if you don't live in the state. While most states offer 529 plans, Alabama taxpayers have it good: They are eligible for a state income tax deduction up to $5,000 for individuals and $10,000 for couples filing jointly when both contribute.

Alaska
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Alaska

Alaska is one of a handful of states that doesn't withhold personal income tax — the others are Florida, Nevada, South Dakota, Texas, Washington, and Wyoming — which helps save a bundle. The state also exempts from property taxes the first $150,000 of assessed value for disabled veterans and seniors 65 and older. And if you happen to be a whaling captain recognized by the Alaska Eskimo Whaling Commission, you can deduct up to $10,000 for whaling-related expenses.

Arizona
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Arizona

Taxpayers who itemize deductions can take advantage of several state-specific tax credits while getting a federal deduction for the same charitable deductions. The credits include donating to the state's public school system (up to $200 for individuals and $400 for family) even if you don't have a student enrolled. Taxpayers can also donate to a qualifying state foster care charitable organization, the Arizona State Department of Veteran Services, and organizations that help the working poor. Other items that may be deductible include license plate fees and medical expenses.

Arkansas
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Arkansas

Individuals and businesses that own historic properties in Arkansas can make the most of a law that increases the state tax credit on certified rehabilitation projects. While it may not apply to many, if you own a property listed on the National Register of Historic Places or contribute to National Register historic districts, you can claim a tax credit on 25% of at least $1.5 million of eligible expenses — more than triple the amount before the law was passed.

California
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California

If you rent your home and have personal income tax liability, you may be eligible for the state's renters credit, which applies if your adjusted gross income is $42,932 or less as an individual or $85,864 or less if married (or are registered domestic partners) and filing jointly. The credit isn't huge — $60 for individuals and $120 for couples — but, hey, everything counts at tax time. Certain income is also exempt from income taxes, including Social Security, state tax refunds, unemployment compensation, and state lottery winnings (fingers crossed).

Colorado
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Colorado

Low-income, elderly and disabled taxpayers may be eligible for a rebate on property tax and heating costs, including those paid as part of rent payments or directly. Known as the Property Tax/Rent/Heat Credit rebate, or "PTC" rebate, the total amount is determined by income and expenses.

Delaware
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Connecticut

A phaseout of income taxes on retirement income started last year, meaning that pension and annuity income on adjusted gross income of up to $75,000 for singles (or $100,000 for couples) has hit 28% exemption — doubling in 2021 and continuing to rise year by year until hitting a full 100% in 2025.

Estate Tax
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Delaware

For such a small state, Delaware offers taxpayers huge benefits in tax season. In addition to having the fourth-lowest U.S. property tax, it also has low income tax rates, does not tax Social Security income, and has no inheritance tax (and no estate tax below $11.6 million in value) — all of which make a hugely popular destination for retirees. Retirees should also take advantage of a pension exclusion that offers a deduction up to $12,500 on income from pensions or retirement savings accounts for residents 60 and older.

Florida
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Florida

Sunshine and beautiful beaches aren't the only reason snowbirds descend every winter. Establish residency by crossing the 183-day mark and become eligible to enjoy no income tax, zero taxes on Social Security and retirement earnings, certain investment earnings, and generally lower taxes. Consult a tax professional before moving, though. There are may be other requirements.

Taking Social Security Too Early
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Georgia

Another popular state for retirees, the Peach State offers a number of money-saving opportunities. Georgia does not tax Social Security retirement benefits, and there's no estate or state inheritance tax. Additionally, individuals 64 and older can deduct up to $65,000 (it's $130,00 if married) on retirement income. Taxpayers who are 62 and older, or permanently and totally disabled, also may be exempt from tax on most types of retirement income up to $40,000.

Hawaii
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Hawaii

While most of us just daydream about a trip to Hawaii, those lucky enough to live there can save money at tax time if they help care for the island's lush landscape. Taxpayers may deduct up to $3,000 for each tree on their property deemed "exceptional" by a certified arborist who establishes the tree worthy of preservation based on rarity, age, location, size or aesthetics. The deduction goes toward maintaining the tree, but can be taken only once every three consecutive tax years.

Idaho
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Idaho

To help offset sales tax and help families buy groceries, Idaho introduced a grocery credit in 1965. The grocery credit goes up to $100 per person, based on income, and can go toward stocking up on Idaho spuds or anything else on the grocery list. (In January, a bill was introduced to raise the credit to $135.) Taxpayers who don't wish to get the credit can donate it to the Cooperative Welfare Fund, a state trust fund for public assistance.

Illinois
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Illinois

Another retiree-friendly state, Illinois offers full deductions for pension income, Social Security, and retirement savings account income. Taxpayers with children in kindergarten to 12th grade at a public or private school may also qualify for a tax credit for a portion of expenses. Low- and some middle-income families and individuals may also qualify for the state's Earned Income Tax Credit, which can equal 18% of their federal EIC.

Indiana
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Indiana

Small-business owners may be able to claim numerous business-related expenses as deductions or write-offs, but must file additional schedules. One of the most common is the Schedule C Business Deductions, which includes things such as promotional materials, office supplies, and home office deductions. They can also claim adjustments to gross or total income on federal taxes, including half of the self-employment taxes paid, retirement accounts, and health plans.

College Savings
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Iowa

Iowa taxpayers can deduct the first $3,387 they contribute to college savings, per person rather than per child, from taxable income — so a married couple with two children could deduct up to $13,548 in College Savings Iowa contributions on their state taxes by having four accounts.

Kansas
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Kansas

Social Security income is exempt for retirees with an Adjusted Gross Income below $75,000, and public pension income. (Other forms of retirement income, such as a 401(k) or IRA, are not.) To help lower-income seniors, the state offers tax relief programs such as the homestead refund for individuals born before Jan. 1, 1964, with a total household income of $35,700 or less. The Safe Seniors program also refunds 75% of paid property taxes for those over 65 with a household income of $20,300 or less.

Uber and Lyft
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Kentucky

New for 2020 filers who have a "micro-business" or take part in the “gig” economy by (for example) driving for Lyft or delivering for Instacart: You no longer need to file "tangible personal property" tax returns for stuff with a value of $1,000 or less.

Louisiana
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Louisiana

Got kids? Taxpayers with children in kindergarten through 12th grade in qualifying public and nonpublic schools — and even those that are homeschooled — could save a bundle on tuition, textbooks, uniforms, and other school expenses. Residents may be able to deduct half of the associated costs up to $5,000 for each dependent. Tax credits are also available for child care expenses, as well as child care providers and businesses donating to those organizations.

Maine
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Maine

Renters and property owners may be eligible for tax relief by meeting certain requirements for the Property Tax Fairness Credit — though many don't realize they qualify. Replacing the more limited Circuit Breaker credit, it is available to residents with adjusted gross income up to $34,167 if single or $44,167 if married filing jointly, head of household or qualifying widow(er). If real estate taxes were more than 6% of total income or total rent was more than 40%, you may be entitled to up to $750 or $1,200 if 65 years or older.

Maryland
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Maryland

Residents can use part of their state refund to donate to the Chesapeake Bay and Endangered Species Fund, the Developmental Disabilities Services and Support Fund, or the Maryland Cancer Fund (or all three), and deduct the amount from their federal tax the following year.

Legally Blind
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Massachusetts

Taxpayers may be eligible for numerous tax exemptions and deductions. Some of the more common include $700 for each taxpayer age 65 or older, and $1,000 for each dependent; less common ones include $2,200 for each legally blind taxpayer or spouse.

Michigan
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Michigan

To help offset heating costs for low-income residents, there's a home heating credit. Eligible residents may get a credit anywhere from $482 to upward of $1,333 depending on their income level and exemptions. It's important to submit the required form before Sept. 30.

Free College Tours

Minnesota

Taxpayers saving for college can take advantage of a state tax deduction or credit. Individual taxpayers may deduct up to $1,500 for contributions to qualified plans, while married couples filing jointly can deduct up to $3,000.

Mississippi
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Mississippi

Taxpayers whose homes are damaged by hurricanes or flooding may be able to open a catastrophe savings account that can be used tax-free to pay for eligible expenses. Homeowners can put in up to $2,000 if their home insurance deductible is $1,000 or less. If the deductible is over $1,000, they can contribute up to $15,000 or twice the deductible, depending on which is less.

Donate
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Missouri

Residents may be able to save a bundle come tax time from an extensive list of available tax credits that help reduce tax bills dollar for dollar (as opposed to deductions that just reduce the amount of taxable income). Many credits involve making donations to charitable causes, such as eligible agencies that help at-risk children, domestic violence victims, pregnant mothers, and even local sports organizations.

Montana
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Montana

Taxpayers can save with tax credits for a range of expenses, such as those related to adoption, alternative energy, dependent care, and college contributions. The state also offers a Elderly Homeowner/Renter Tax Credit that helps renters and homeowners 62 and older with less than $45,000 in gross household income.

Nebraska
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Nebraska

To encourage careers in farming, Nebraska offers a Beginning Farmer/Rancher program tax incentive. Qualifying farmers — who don't have to be young to be eligible — may be exempted from personal property tax up to $100,000 for agricultural land, and up to $500 credit for qualified financial management classes. Taxpayers that help beginning farmers with such things as land, livestock, and equipment may also be eligible for tax credits.

Las Vegas Casino
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Nevada

Nevada is another state with no income tax, which means residents aren't taxed on winnings at the state's casinos (though they are responsible for federal taxes on those).

New Hampshire
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New Hampshire

Wages and salaries aren't taxed by New Hampshire (there's also no sales tax) but those getting income from interest and dividends have to pay a 5% flat tax on earnings above $2,400 individually or $4,800 married filing jointly. There are additional exemptions of $1,200 for residents 65 or older; blind; or disabled and unable to work but under 65.

Doctor Visit
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New Jersey

While a number of federal deductions are not allowed on the New Jersey state tax return, such as moving expenses, mortgage interest, IRA contributions and employee business expenses, Garden Staters still have available deductions in medical expenses that exceed 2% of income, including doctor's visits and dental care, and self-employed health insurance. In some cases homeowners and renters may qualify for a property tax deduction or credit for up to 100% of property taxes or $15,000, whichever is less (and for tenants, 18% of rent paid during the year).

New Mexico
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New Mexico

If you're lucky enough to live to 100 or older in the Land of Enchantment and no one is claiming you as a dependent, you're exempt from state income tax. And if you're married at that age, you can exempt half of all community income and all of your income. Younger folks still may be able to make the most of numerous tax credits.

New York
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New York

The Empire State offers taxpayers a lengthy list of tax credits that could come in handy. Popular ones include a college tuition credit up to $400, a child and dependent care credit, and a family tax relief credit of $350. Volunteer firefighters and ambulance workers can also claim $200 (or $400 for married couples when both volunteer), and individuals and families living in New York City may also be eligible for additional credits.

North Carolina
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North Carolina

In recent years, North Carolina did away with several tax credits, but as long as a taxpayer continues to meet the eligibility requirements for those repealed credits they can still benefit from them. Additionally, the state allows tax credits for each dependent child. If you happened to rehabilitate a historic structure or mill facility, you may also be eligible for tax credits.

North Dakota
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North Dakota

Taxpayers may be eligible for a number of tax credits, including a popular marriage credit. If an individual takes care of a family member who is disabled or age 65 or older, they may be eligible for a credit up to $2,000 per family member (with a total limit of $4,000) for qualified care expenses

Ohio
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Ohio

A tax reform package passed a few years back lets small-business owners deduct 100% of business income up to $250,000. Taxpayers saving for college can deduct up to $4,000 per person by contributing to the state's College Savings Plan.

Electric vehicle
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Oklahoma

Taxpayers considering buying a new electric vehicle or converting a gas-powered one to electric can claim a credit for 45% of the additional cost compared with a standard gas vehicle with a cap of $1,500 — on top of the federal credit. The credit expired this year, though. And it doesn't apply to golf carts or go-carts.

Oregon
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Oregon

While the Beaver State often gets dinged for having some of the country’s highest income tax rates (5% to 9.9%), consumers there do catch a break in that there is no sales tax. Residents looking to buy their first home may also be eligible for the state’s First Time Home Buyer Savings Account program that lets individuals sock away up to $5,000 ($10,000 for joint filers) and subtract that amount from their taxable income.

Pennsylvania
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Pennsylvania

Taxpayers are likely keenly aware that flat-tax Pennsylvania doesn't allow many of the deductions available on the federal return — but there are a few, including employment-related expenses that aren't reimbursed by an employer, contributions to medical and health savings accounts, and contributions to 529 college savings accounts up to $14,000 per student or $28,000 per year for married couples. (Which is $1,000 less than it used to be per person.)

Rhode Island
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Rhode Island

Taxpayers saving for college should consider taking advantage of the state's 529 College Savings plans. Not only will their contributions grow free of state and federal tax, but Rhode Island allows taxpayers to deduct $500 per year for individuals and $1,000 for married couples filing jointly.

A Focus on Fuel Efficiency
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South Carolina

Among tax credits here are a handful of new ones and updates people may not know about. To help offset an increase to the state's motor fuel user fee, drivers are now eligible for a credit for up to two vehicles or motorcycles to help cover fuel and preventive maintenance. People parenting an exceptional-needs child can claim a dollar-for-dollar credit on state income tax liability – though it's capped at $12 million statewide.

South Dakota
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South Dakota

After benefiting from the lack of an income tax, South Dakotans can't deduct state income tax from federal returns but can still save by deducting state and local sales tax. Individuals and businesses can also benefit from a tax credit for donating to Scholarship Granting Organizations that help students in nonpublic primary and secondary schools.

Tennessee
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Tennessee

Taxpayers don't have to pay a state "hall" tax on income from salaries and wages, but are required to pay a flat 2% tax on income from interest and dividend earnings, decreasing every year until the tax is gone. The first $1,250 of those earnings are exempt for single filers ($2,500 for joint filers). And people 65 and older with an income of $37,000 or less ($68,000 for joint filers), are also exempt. Starting this year, anyone age 100 or older will also be exempt.

Texas
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Texas

No income tax is collected from Texans, who can save further by taking the state and local tax deduction (aka SALT) on their federal returns, though the deduction is now capped at $10,000 and may not be worthwhile for many after the federal tax reform law increased the standard deduction.

Surgery
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Utah

Taxpayers making a sacrifice to help those in need can be helped in turn by the live organ donation expenses credit of up to $10,000 for certain expenses (such as travel, lodging, or lost wages) when donating certain organs, including bone marrow. The state also offers credits for things such as retirement income, solar projects, and educational savings plans.

Vermont
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Vermont

Vermont has one of the higher income tax rates in the country, but residents can still save thanks to a number of tax credit programs. Among the more popular is one helping working people offset the cost of caring for children and other dependents. The state also offers a rebate program to help with a percentage of rent paid for households where the annual income doesn't exceed $47,000.

Virginia
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Virginia

Farmers who have had a particularly abundant year may want to consider donating excess food crops to a nonprofit food bank and reaping the Food Crop Donation Credit allows credit equal to 30% of the fair market value for the donated food up to $5,000. Non-farmers can take advantage of other deductions, including for child and dependent care.

Washington
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Washington

One more state that doesn't collect income tax, Washingtonians should be sure investigate whether it is worthwhile to deduct their pricey state and local sales taxes on federal returns.

West Virginia
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West Virginia

Taxpayers 65 or older, or who are permanently and totally disabled, may subtract up to $8,000 from their federal adjusted gross income for West Virginia tax purposes.

Wisconsin
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Wisconsin

Low- to moderate-income working families may be eligible for tax relief from the Wisconsin Earned Income Tax credit (in addition to the federal credit). Individuals or married couples age 62 or over, or the disabled, may also find some relief with the state's Homestead Credit.

Wyoming
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Wyoming

Wyoming doesn't collect state income tax or tax intangible assets such as stocks and bonds. And retirees don't have to pay tax on Social Security, withdrawals from a 401(k), or other types of retirement income.