Income Exempt From State Tax

Naturally

Naturally

Well-known Member
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Did my taxes last night and a thought crossed my mind ... that I can't wrap my head around.

First of all, here in Alabama, all my income is exempt from state taxes. I even contacted the Alabama Department of Revenue and asked if I needed to file an Alabama Tax Return each year. The answer was, "No you don't. Your income sources are exempt from Alabama state tax."

Not only that, but a part of my income which is disability from the Veterans Administration (VA) is also exempt from Federal Taxes. My income is from Social Security, Retired Military Pay and the VA.

So here is what was on my mind ... When we purchase something, there are no Federal Taxes on the purchase, yet when we purchase something, here in Alabama, we pay State Sales Tax.

The thing is why do I have to pay state taxes on something I buy, when the money used to purchase the items is state tax exempt ??
In the eyes of the Alabama State Tax Laws, that money "doesn't exist". Yet when I spend it, it's taxed.
I'm thinking maybe I need a tax exempt number or something that I can provide to vendors when purchasing something.
Seems like something I should be entitled to, if the money I have is state tax exempt to begin with.
I guess as long as I keep the money and don't buy anything ever, I don't have to pay state taxes on the income :unsure:
 

Naturally said:
The thing is why do I have to pay state taxes on something I buy, when the money used to purchase the items is state tax exempt ??
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Because you are exempt for having to pay federal, state or local Income Tax, but you're not exempt from paying any other kinds of taxes, such as Sales Tax as you mentioned, property tax, vehicle registration fees (which are essentially taxes), road use tax, etc.
 
I loved living in Alabama because of the LOW taxes. Lived in Birmingham 9 years.

Had a house that was worth about $450-500 K in AL and paid ONLY about $1,900/yr in property taxes. It was GREAT.

Same price house in Texas: we paid $12,000./yr!
Yes, that is TWELVE THOUSAND a year) in property taxes.
Property taxes were as nearly high as the house payment and kept going up! :oops::rolleyes:
Schools in Texas look like mini Maj Mahal's...and the school taxes are what cause such high property taxes. Was insane.

Property taxes here on 500K house in AZ: $3100. yr; zero in income tax as SS and Mil Ret Pay is not taxed as of 2022.
 
@CooCooforCoCoPuffs ... It varies by county here in Alabama, but in the county I live in ... I'm exempt from property taxes by age and income. I pay zero property taxes on my house. I could have lived anywhere when I retired from the military and looked around. I chose Alabama for real estate prices, tax structure, cost of living and availability of nearby military facilities to use my retired military beenies.

I live in a very small two bedroom, one bath cottage built in 1945. Just the right size for a retired fella and his dog. Guy that owned it, gutted the house and rebuilt it. He was going to give the house to his sister but when that didn't work out, he put it on the market and I snatched it up for $50K and in the door.

All things considered, I got lucky and was able to retire at 53 because things are less expensive around here.
 
Naturally said:
@CooCooforCoCoPuffs ... It varies by county here in Alabama, but in the county I live in ... I'm exempt from property taxes by age and income. I pay zero property taxes on my house. I could have lived anywhere when I retired from the military and looked around. I chose Alabama for real estate prices, tax structure, cost of living and availability of nearby military facilities to use my retired military beenies.

I live in a very small two bedroom, one bath cottage built in 1945. Just the right size for a retired fella and his dog. Guy that owned it, gutted the house and rebuilt it. He was going to give the house to his sister but when that didn't work out, he put it on the market and I snatched it up for $50K and in the door.

All things considered, I got lucky and was able to retire at 53 because things are less expensive around here.
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That is really awesome. We are selling this house and are looking to move into a much less costly home, simply because we want simple and less expense. I bet your insurance is so much less on your house, too!? You got a deal. We look for military friendly, too as DH is 20 yr USMC and I am USAF medically retired @ 17yrs. VA here in Tucson is the best we have ever experienced.
 
@CooCooforCoCoPuffs ... I just paid my yearly home insurance this month with State Farm and it had gone up like everything ... paid $1229.00 for 2025. Yep, one thousand two hundred twenty-nine is all. Although I only paid $50K for this refurbished old house, it would cost somewhere north of $110K to rebuild in case of a catastrophic event. Maybe much more if the house was located somewhere/anywhere else.

I only did 20 and retired an enlisted Navy Chief. The VA holds me at 40% disability. 30% eyes and 10% hearing.

Thing is, I haven't even been to the VA here on (Army) post yet, although I'm all signed up and in the system. Before converting to Tricare for Life, I had Tricare Prime and saw the regular Army doctors and they gave me referrals out in town as needed. I'm currently seeing an ENT doctor out in town each year for my thyroid, but that's it. I haven't had a physical since 2006 when going through military retirement, so may be about time to head out to the VA.

The other choice is I could still see the Army doctors at the Army hospital on post if I chose to do so, but I would be low priority, retired and all.

And of course, I could see any doctor that accepts medicare patients.
 
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Well, here in Florida we have no state income tax, thank goodness. They make up for it in other ways, though.

When I lived in Michigan, it was a maze deciphering the taxes. Federal, state AND county. And it varied a lot. If you lived in Wayne County and worked in Wayne County, you got whacked with the highest rates. Then we moved to Oakland County, but I still worked in Wayne County and I paid a little less. Then my job moved to Oakland County and it went back up.
 
Naturally said:
@CooCooforCoCoPuffs ... I just paid my yearly home insurance this month with State Farm and it had gone up like everything ... paid $1229.00 for 2025. Yep, one thousand two hundred twenty-nine is all. Although I only paid $50K for this refurbished old house, it would cost somewhere north of $110K to rebuild in case of a catastrophic event. Maybe much more if the house was located somewhere/anywhere else.

I only did 20 and retired an enlisted Navy Chief. The VA holds me at 40% disability. 30% eyes and 10% hearing.

Thing is, I haven't even been to the VA here on (Army) post yet, although I'm all signed up and in the system. Before converting to Tricare for Life, I had Tricare Prime and saw the regular Army doctors and they gave me referrals out in town as needed. I'm currently seeing an ENT doctor out in town each year for my thyroid, but that's it. I haven't had a physical since 2006 when going through military retirement, so may be about time to head out to the VA.

The other choice is I could still see the Army doctors at the Army hospital on post if I chose to do so, but I would be low priority, retired and all.

And of course, I could see any doctor that accepts medicare patients.
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Not trying to be nosy - what is the VA hospital you are using in in AL. How far are you physically from it?
 
CooCooforCoCoPuffs said:
I loved living in Alabama because of the LOW taxes. Lived in Birmingham 9 years.

Had a house that was worth about $450-500 K in AL and paid ONLY about $1,900/yr in property taxes. It was GREAT.

Same price house in Texas: we paid $12,000./yr!
Yes, that is TWELVE THOUSAND a year) in property taxes.
Property taxes were as nearly high as the house payment and kept going up! :oops::rolleyes:
Schools in Texas look like mini Maj Mahal's...and the school taxes are what cause such high property taxes. Was insane.

Property taxes here on 500K house in AZ: $3100. yr; zero in income tax as SS and Mil Ret Pay is not taxed as of 2022.
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Birmingham is a wide range as taxes are based on county amongst others.
Greystone was awesome!!!
 
Naturally said:
@Twostep ... As I said, I haven't used the VA even though I'm in the system.
But there is a Wiregrass VA Clinic out on Fort Novosel (formerly Fort Rucker)
That would be the one I'd use. They are an outpatient clinic.
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'' I haven't used the VA even though I'm in the system.''

I used it once in my late 60's because I took a fall off a ladder and though only 3 rungs I hit my head this was like 2 am and went there , I was changing a bulb in the kitchen , they were incredibly nice and I got head scans , etc .

I have never been the brightest bulb in the box , lol so it was no big deal .

You hear bad things about them but I know lots of Vets who like them and my experience was nice . I used my insurance but a Vet is a Vet so they took me .
 
jujube said:
Well, here in Florida we have no state income tax, thank goodness. They make up for it in other ways, though.

When I lived in Michigan, it was a maze deciphering the taxes. Federal, state AND county. And it varied a lot. If you lived in Wayne County and worked in Wayne County, you got whacked with the highest rates. Then we moved to Oakland County, but I still worked in Wayne County and I paid a little less. Then my job moved to Oakland County and it went back up.
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'' They make up for it in other ways, though.''

Agree but being you are from Michigan which is freezing the Winter temps in Florida can't be beat .
 
jujube said:
When I lived in Michigan, it was a maze deciphering the taxes. Federal, state AND county.
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That's the way it is up in Humboldt County too. At one point, the sales tax alone was 9.5%. By the time you added in any other taxes, it was like living in a company town. You go to work, get paid, hen you have to pay them for everything. If you were lucky, might actually make enough money to get to keep a few bucks here and there.
 
Axel Slingerland said:
In California Property Tax is capped at 1%. So for a 500K house it would be $5k. That sounds reasonable. But a 500K house in California could be a run down shack. Cindy and I looked at a house listed for sale at $455. We pulled up in front of it, took one look at it and drove off.
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My DH and I drive around San Diego, Carlsbad....looking at prices and just laughing because the prices are so ridiculous: a shack with NO garage: a million bucks. And it looks like Tijuana.
 
NotCompSavvy said:
'' I haven't used the VA even though I'm in the system.''

I used it once in my late 60's because I took a fall off a ladder and though only 3 rungs I hit my head this was like 2 am and went there , I was changing a bulb in the kitchen , they were incredibly nice and I got head scans , etc .

I have never been the brightest bulb in the box , lol so it was no big deal .

You hear bad things about them but I know lots of Vets who like them and my experience was nice . I used my insurance but a Vet is a Vet so they took me .
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VA is good for general medicine, getting scans, tests, yearly physical. If it came to brain cancer treatment, I'd look elsewhere.
 

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