When choosing a place to live during retirement, most people check the obvious items off the list: recreation, weather, social opportunities, arts and culture and others. However, another factor that comes into play for many retirees is how far their dollar will stretch in a particular locale. Taxes can play a significant role in a retiree’s financial situation, and the taxes dictated by a particular location can therefore make it a desirable or undesirable place to live in retirement. Financial website Kiplinger.com’s annual list of the most tax-friendly states for retirees in the U.S. reveals those places where retirees may enjoy a tax break—and therefore where they will be able to make their retirement income last longer.
Here’s Kiplinger’s list of the 10 most tax-friendly states for retirees in the U.S.
- Alaska—Alaska is the only state that does not collect state sales tax or levy and individual income tax. This means that Social Security income, withdrawals from retirement accounts and pension income is not taxed, which is obviously a benefit for retirees.
- Wyoming—Similarly to Alaska, Wyoming does not have its own state income tax, meaning all forms of retirement income will not be taxed by the state, including Social Security. In addition, property and sales taxes in Wyoming are very low.
- Nevada—Nevada also does not have state income tax, so all retirement income is tax-free at the state level. The state also has low property taxes, but sales tax is a bit higher than average.
- Mississippi—In Mississippi, all forms for retirement income are exempt from taxation, including Social Security benefits, IRA and 401(k) withdrawals and pension income. Mississippi has low property taxes and average sales tax rates.
- South Dakota—South Dakota does not have a state income tax, so all forms of retirement income are tax-free. Also, sales taxes are low, and property taxes are moderate.
- Florida—Florida also does not have a state income tax, meaning that Social Security benefits and other forms of retirement income from IRAs, 401(k)’s and pensions are all untaxed. Florida also does not have estate or inheritance tax.
- Georgia—Georgia does not tax Social Security retirement benefits and does not have state inheritance or estate tax. Georgia also provides a deduction of $65,000 per person on all types of retirement income for anyone 64 or older.
- Delaware—Delaware also does not tax Social Security benefits and it does not have a sales tax at the state or local level. Also, Delaware has the fourth lowest property tax rates of any state and does not have an estate or inheritance tax.
- Louisiana—Louisiana does not tax Social Security benefits, does not tax income from private pensions and has the third lowest property taxes in the country. Louisiana does have a higher than average sales tax.
- Tennessee—Tennessee does not have a standard income tax, and Social Security and retirement income are not taxed at the state level. Property taxes are low, but sales taxes are high.
If you are looking for ways to save money in retirement, moving to one of the most tax-friendly states for retirees in the U.S. is one straightforward way to do it. For more information on how to maximize your retirement income, continue to follow Ty J. Young Inc.’s Retirement You Earned blog, or call our team of skilled advisors today at 877-912-1919!