Wyoming taxes for retirees: How the equality state can support your golden years

With breathtaking landscapes and some of the lowest taxes in the country, Wyoming offers both beautiful scenery and budget-friendliness for retirees. Wyoming is one of nine states that does not impose state income taxes, meaning your retirement income, such as withdrawals from a 401(k) or IRA, is not subject to state income taxes.

Is Social Security tax-exempt in Wyoming?

Social Security retirement benefits are also exempt from state income taxes in Wyoming. However, while the state won’t tax Social Security benefits, the IRS might.

Federal taxes may still apply to Social Security benefits, depending on your overall income and filing status. Your benefits may be taxed up to 85% if your total income exceeds a certain base amount.

Does Wyoming tax pensions?

Wyoming does not tax retirement income — or any income — meaning, your pension will also be tax-free during retirement. But, just like with Social Security, federal income tax still applies.

Depending on your total taxable income, pension payments may also be partially or fully taxed by the IRS. If you are planning to move states during retirement, you may want to contact a financial or tax advisor to help get a clear overview of tax obligations in your new state.

The lack of income taxes, alongside fairly low local and state taxes, makes Wyoming one of the best states to retire in for tax purposes. With no retirement taxes in Wyoming, which includes pensions, Social Security, and other retirement income like an IRA or 401(k), this can help your money go further in retirement.

Property taxes in Wyoming

Wyoming offers some of the lowest property tax rates in the county, with an average effective tax rate of 0.55%.¹ Property tax rates may vary between counties, with the lowest rates being 0.38%.²

Housing costs in Wyoming are generally low compared to other states, with median single-family home prices at $346,014,³ making it an ideal location for budget-conscious retirees. However, Teton County is the one exception, as it contains all of Grand Teton National Park and part of Yellowstone National Park, causing home values to exceed $1 million.

Inheritance and estate taxes in Wyoming

Wyoming does not impose estate or inheritance taxes. It is important to note that if you inherit an estate from someone living in a state with estate taxes (or vice versa), you must follow local tax regulations.

If you plan to leave an inheritance or estate behind, you may want to ensure all your beneficiaries are up-to-date in your estate plan.

Capital gains tax in Wyoming

Capital gains are also free of state income taxes in Wyoming. Since Wyoming does not have personal income tax, capital gains are tax-exempt at the state level.

However, it is important to know that federal capital gains taxes will still apply. If you have long-term capital gains, federal tax rates may range from 0% to 20%, depending on your income and the duration you held the asset.

Sales tax in Wyoming

State sales tax rates in Wyoming are quite low, at only 4%.¹ Like other states, local governments can impose additional sales tax on top of the state rate; however, voter approval is needed before adding these taxes. The average combined state and local sales tax is 5.44%.¹

Certain items, including groceries, prescription drugs, and most medical supplies, are exempt from sales tax. Wyoming’s combination of minimal sales tax, modest property tax rates, and the absence of state income tax makes it an exceptionally tax-efficient choice for retirees seeking to preserve and extend their retirement savings.

Beyond its favorable tax structure, Wyoming offers a range of appealing qualities that draw retirees from across the country — including:

• Beautiful outdoor scenery: The state is also known for its captivating natural beauty and is home to Yellowstone National Park, Grand Teton National Park, and the Rocky Mountains. Wyoming’s national parks and serene environment offer retirees a plethora of opportunities for outdoor activities, including hiking, skiing, camping, hunting, and fishing.
• Low population density but a strong sense of community: Wyoming is the least populated U.S. state, offering a quieter, less congested environment — perfect for those seeking solitude or a slower pace of life. At the same time, small-town living fosters neighborly connections and tight-knit communities, which may also be comforting during retirement.
• Affordable cost of living: The cost of living in Wyoming is generally lower compared to the national average, which can be beneficial for retirees on a fixed income.

On the other hand, it is also important to consider possible disadvantages of retiring in Wyoming, including:

• Harsh winters and variable weather: Long, cold winters with heavy snow, especially in mountainous regions, can be challenging for retirees unaccustomed to extreme weather. Strong winds — and potential tornadoes in some regions — may also be more frequent and can discourage people from spending time outdoors.
• Limited healthcare access: While Wyoming has more accessible healthcare in larger towns, rural areas may lack immediate access to specialized care or large hospitals. This can be concerning for those with chronic health conditions.
• Sparse cultural amenities: Although the state offers plenty of opportunities for outdoor activities, due to its lower population density and small cities, there are fewer theaters, museums, and dining options compared to more urban or suburban states. This may not be as appealing to those seeking an active cultural or nightlife scene.

Wyoming’s tax-friendly policies, from tax-free retirement income to low sales and property taxes, allows retirees to make the most of their retirement funds. However, it is crucial to weigh these benefits against other lifestyle considerations, to determine if Wyoming fits your retirement needs.

Like with any other big financial decision, it is important to seek professional financial advice to weigh up the true costs of moving states and retiring in Wyoming, in order to make a more informed decision about what the best retirement for you would be. You may also want to ensure your retirement savings will still allow you to live comfortably after moving, and that you are aware of your tax obligations during retirement.

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1. https://taxfoundation.org/location/wyoming/
2. https://taxfoundation.org/data/all/state/property-taxes-by-state-county/
3. https://www.attomdata.com/data/us-real-estate/wy/