Taxation

Tax burdens on older adults vary greatly from state to state. Many replicate federal law in allowing an extra standard deduction, and some do not tax Social Security benefits at all. Many also exclude a large portion of other types of retirement income. This creates a severe inequity between people whose income flow is in the form of pensions and people who get exactly the same income from interest and dividends that are fully taxed. Table 1 describes selected tax provisions that especially affected elderly taxpayers in different states in 1998. It does not include provisions related to property taxes.