State and local income tax

State is where you live at the plan’s start. Local income tax lists the catalog localities for that state, plus Custom rates. A later move goes in the residency timeline, and each residence carries its own locality. See Move between states or cities.

The state’s brackets apply to that amount. Capital gains are ordinary income for the state, except that Wisconsin, Arkansas, North Dakota, South Carolina and Vermont exclude part of a long-term gain and Montana and Hawaii tax it at lower rates. On a joint return, CoastMath uses the state’s published joint schedule where it has one (New Jersey, Maryland, Maine, New York, Minnesota, Wisconsin, New Mexico, North Dakota and Vermont), the same schedule as single filers where every filer shares one (DC, Massachusetts, Ohio, Virginia, Rhode Island, South Carolina and West Virginia), and doubles the single-filer thresholds and deduction elsewhere. Heads of household use their state’s own schedule where CoastMath has one. Actual joint and head-of-household schedules in other states can differ. Maryland adds 2% of your net capital gain when federal AGI is over $350,000, whatever your filing status; that threshold doesn’t grow with inflation. Built-in thresholds and deductions stay at their 2026 values for 2026, then grow each year with your inflation assumption. An amount a law sets for a later year applies as written in that year, then grows the same way; see Changes already in law.

Pennsylvania taxes the money you put into a traditional 401(k), 403(b), 457(b) or IRA, so CoastMath adds those contributions back to Pennsylvania income. HSA contributions stay excluded, as they are federally. New Jersey taxes traditional IRA contributions, 403(b) and 457(b) deferrals and employer money paid into a 403(b) in the year they’re made, but not 401(k) deferrals. Massachusetts taxes traditional IRA contributions only. Those taxed contributions are tracked for each account and come back tax free when you withdraw while living in the same state; see Contributions your state already taxed.

Where a state has already enacted a dated change for 2027 or later, CoastMath applies it from that year: each year uses the latest change in effect, and a change replaces only the rates or amounts it sets. Cuts that happen only if a future revenue test is met aren’t applied until they’re certified.

California is the one state that CoastMath models beyond its brackets:

• The taxable part of Social Security is subtracted, since California doesn’t tax benefits.
• HSA contributions, both yours and your employer’s, are added back to California income, since California doesn’t recognize HSAs.
• Personal and senior exemption credits apply to the people you mark as eligible. Dependent credits apply for each year you enter a count. The credits phase out at high federal AGI.
• Head of household uses California’s own schedule and deduction.
• 2026 uses the 2025 tables, as California directs for 2026 estimated tax. Later years are inflation projections.

Turn on Use state deduction rules where supported to replace the standard deduction estimate with the state’s own rules: the choice between its standard and itemized deductions, its personal and dependent exemptions after any income phase-out, and any deduction for federal income tax. The rules use the state’s own deduction categories, not your federal itemized total after the federal cap. States without supported rules keep the standard deduction estimate, and the results list a note saying so.

Supported states are Alabama, Arizona, Arkansas, Connecticut, Delaware, the District of Columbia, Georgia, Hawaii, Illinois, Indiana, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Oregon, Rhode Island, Utah, Virginia, West Virginia and Wisconsin, using each state’s latest published forms or statute.

Some states let you itemize only when you itemize on your federal return, and the District of Columbia, Georgia, New Mexico, Oklahoma and Virginia require the same choice as your federal return. Maine and Minnesota shrink the standard and itemized deductions as income rises, and Maine, Minnesota and New Mexico reduce their exemptions as income rises. Some states give a credit in place of an exemption, such as Utah’s taxpayer credit and the personal credits of Arkansas, Delaware, Kentucky and Nebraska; credits reduce the state tax but never below zero. Connecticut also adds its rate phase-out and recapture amounts and takes its personal tax credit, a share of that tax. Wisconsin’s itemized deduction is a credit against its tax, never a deduction. Kentucky allows one standard deduction on a joint return.

A deduction for federal income tax uses the same year’s projected federal income tax after credits, excluding payroll tax and the net investment income tax. Your federal itemized deduction for state tax then uses the lower state tax, and CoastMath recalculates both until they agree to within a dollar. California’s exemption credits and Ohio’s exemptions keep their existing rules.

Amounts the state indexes are projected with your inflation assumption after their published year. Changes already in law are applied in their year: Hawaii’s and Virginia’s later standard deductions, and Illinois’ exemption, which its law sets only through 2028.

Each state’s rule starts from the taxable part of your benefits on the federal return and subtracts some or all of it before state tax. Nothing is entered. Most income-tax states subtract all of it; eight states still tax benefits in 2026.

Maryland and Maine subtract all taxable benefits and still lower each person’s pension exclusion by their Social Security. Custom state brackets keep taxing benefits as federal AGI does, except in California.

Tax tools›Annual tax breakdown shows the amount as State Social Security subtraction, and the annual report’s Taxes view has a column for it.

In 23 states, part or all of each person’s pension and retirement-account income is subtracted before state tax. Nothing is entered: the rule follows the state, each person’s age at the end of the year and the income’s type. Pensions and annuities come from the income type you choose; IRA and workplace-plan amounts are that person’s taxable withdrawals, required distributions and SEPP payments.

The state for the year applies to all of that year’s income. After a move, the new state’s rule applies from the year it takes effect; see Move between states or cities. Dollar limits that the state indexes grow with the plan’s inflation; the others stay fixed.

Tax tools›Annual tax breakdown shows the amount as State retirement-income exclusion, and the annual report’s Taxes view has a column for it.

Pennsylvania, New Jersey and Massachusetts tax some retirement contributions when they’re made (see above). CoastMath keeps that taxed amount for each account, together with the state that taxed it, and excludes it from that account’s withdrawals, required distributions and SEPP payments while you live in that state.

A withdrawal that the state’s retirement-income exclusion already covers isn’t excluded twice, though it still uses up the taxed contributions. Pennsylvania withdrawals from 59½ are exempt anyway, so the recovery matters mostly for earlier withdrawals.

Washington residents owe a separate tax on long-term capital gains. CoastMath adds it to state tax. It applies to gains from selling taxable investments, including gains you choose to harvest. Gains on property sales are excluded, and retirement accounts don’t realize gains.

It’s counted toward your federal itemized deduction for state and local taxes with the rest of state tax. Tax tools›Annual tax breakdown shows it as Washington capital gains tax.

Washington income tax from 2028

From 2028 Washington taxes income above a $1,000,000 standard deduction at 9.9%. The deduction is one per person or per married couple; CoastMath gives each spouse half on separate returns and grows it with inflation after 2028. The base is federal AGI with long-term gains limited to those the capital gains tax covers, so property sale gains stay out. The capital gains tax paid on gains the income tax also reaches is credited against it, up to the income tax on those gains.

The catalog covers taxes that residents owe because of where they live, at 2026 rates. Each locality taxes one of the bases below. Rates set to change on a known schedule follow that schedule.

For a locality outside the catalog, choose Custom rates. You can combine an Earned income rate, a State taxable income rate and a State tax surcharge. Any combination can be used, for example a city rate plus an Ohio school district rate. When you live in Indiana or Maryland, or in Pennsylvania with earned income, and haven’t chosen a locality, a note reminds you that local tax is missing.

Employee payroll programs are added only for the people and years you list as covered. They appear as named expenses, not as income tax. California SDI and Washington Paid Leave count toward your federal itemized state and local tax deduction. Washington Cares doesn’t.

After 2026 the rates stay fixed, and the Paid Leave wage cap grows with inflation.

Local taxes on a state base inherit these gaps and the state’s subtractions. New York City tax, for instance, is figured on state taxable income without Social Security or the excluded $20,000 of pension.

Tax tools›Annual tax breakdown lists State tax and Local tax for the year you pick. Both are in the year’s total tax and are settled with it; see Withholding, refunds and balances due. The same year’s state and local tax is also counted toward your federal itemized deduction for state and local taxes, up to the cap. See Itemized deductions.