10 tax friendly states for seniors
You’ve paid your dues. Retirement is a celebration of a life well lived and the fulfillment of a carefully calculated, long-term plan. However, juggling Social Security and taxes, not to mention the cost of senior housing and daily living expenses, can be difficult to manage on a fixed income.
When planning for retirement, consider evaluating state sales tax, income tax range, Social Security, exemptions for retirement income, property taxes, and inheritance and estate taxes.
Certain tax-friendly states offer low taxes, exemptions or incentives for retirees. Commonly, these states do not have an income tax, sales tax or tax Social Security. States may also exempt pensions, withdrawals and retirement income. If you're about to retire or have plans to relocate to be near family or friends, keep reading. We put together this list to help you evaluate which states will maximize your hard-earned dollar and benefits.
“There are a lot of factors that go into how well retirees will do in a state,” said Claes Bell, a senior analyst at Bankrate, Inc., in an interview with Fortune Magazine. “While features like pleasant weather and nearby amenities are important, nuts-and-bolts considerations like cost of living and the local tax burden may have a bigger impact on your overall quality of life. Many retirees live on a fixed income, and it’s hard to have a pleasant retirement if you’re constantly under financial pressure.”
10 tax-friendly states
- Wyoming: The Equality State doesn't tax any form of income, including Social Security and retirement benefits.
- Alaska: The Last Frontier state has no income tax or sales tax, and doesn’t tax pension or Social Security.
- Florida: The Sunshine State has no state or income tax, and doesn’t tax Social Security or pension.
- Nevada: The Silver State has no income tax, which includes Social Security and pension income.
- Mississippi: The Magnolia State doesn't tax Social Security, retirement accounts, pensions and annuities.
- South Dakota: The Mount Rushmore State doesn’t have income tax, including exemptions for Social Security and pension.
- Washington: The Evergreen State has no income tax, including exemptions for Social Security and pension.
- Texas: The Lone Star State has no income tax, including retirement income such as Social Security and pensions.
- Tennessee: The Volunteer State has no income tax or tax on Social Security benefits.
- Georgia: The Peach State doesn’t tax Social Security benefits or retirement income including pensions and annuities.
Other taxes to consider
No two retirement plans are alike. Equally, each state offers its own (sometimes intricate) state sales tax rates. When considering a retirement destination, consider states where prescription medications and over-the-counter medication are exempt from state sales tax. Also examine veterans tax exemptions, particularly regarding property taxes.
When it comes to retirement, there's a lot to consider. Taxes are only part of the equation. Budgeting and stretching retirement income are primary concerns for seniors, which is why Holiday has created a Retirement Cost of Living Calculator that can be used to compare the cost of living at home to the potential savings of an all-inclusive lifestyle at a Holiday Retirement community.