There`s a reason Arizona is a retirement paradise. They can escape the cold and a big tax bill by settling here. The income tax rate is among the lowest in the United States and Social Security benefits are not taxed. Maryland ranks among the top 20 states for pension taxes because it doesn`t tax Social Security benefits. Its income tax rate is relatively low and its sales tax is lower than that of more than half of the states on this list. An indicator of good places for retirees is the number of seniors who already live there. There could be one or two reasons for the attraction of these places. Kiplinger`s analysis looked at the estimated state and local tax burdens in each state for a hypothetical retired couple who had Social Security income, ira, private pension, interest and dividends, and capital gains. This couple also had a $400,000 home with a small mortgage and $10,000 in deductible medical expenses. Delaware is one of the best states to retire for tax purposes, as there is no state tax on Social Security or sales tax. In addition, the property tax rate is among the lowest in our ranking. Property taxes in Tennessee aren`t that bad either. For example, our hypothetical couple with a $250,000 home in the state would pay about $1,590 per year in property taxes ($2,226 for the couple with a $350,000 home).
This is well below the national average. There are also property tax relief programs in the state that offer property tax refunds to seniors who are eligible for income. Tennessee also has a property tax freeze program for homeowners 65 and older. With plenty of ribs and no sales tax, Delaware is ideal for retirees. Although the state`s property taxes are slightly higher than some of the southern and western states on the list, it`s still quite tax-efficient to live there. This affordable Western state has attracted retirees in droves in recent years, and its fiscally advantageous nature may be the reason. National and local taxes can have a particularly strong impact on retirees. As described below, income taxes on things like Social Security retirement benefits and withdrawals from retirement accounts vary greatly from state to state.
Similarly, there are large differences between property and sales tax rates across the country. The ”fiscal friendliness” of a state depends on the sum of income, sales and wealth taxes paid by our two hypothetical retired couples. However, pay attention to the Tennessee sales tax. The combined average state and local sales tax rate of 9.547% is the second highest in the country. Tennessee is also one of the few states where food is subject to sales tax — it`s taxed by the state at a rate of 4% (additional local taxes may also apply). Nevada is a good place to spend your golden years if you don`t want to gamble with your retirement savings. That`s because the Silver State offers retirees a jackpot of tax savings. There`s no state income tax, so you can cash out your retirement plans and collect your Social Security checks without having to worry about a large state tax bill. There is also no inheritance or inheritance tax in Nevada.
Property taxes are also low in D.C. The district`s median property tax rate is the eighth lowest compared to comparable data for all 50 states. For our hypothetical retired couples, their estimated annual property tax bills in D.C. would be $1,410 ($250,000 house) and $1,974 ($350,000 house). In addition, homeowners over the age of 65 may be entitled to a 50% reduction in property tax or a deferral of property tax payments. Despite its nickname ”Taxachusetts,” Massachusetts isn`t even close to the worst state for retirees when it comes to taxes. In fact, he beats 22 of them. For starters, MA doesn`t tax Social Security benefits — and its 6.25 percent sales tax rate is lower than most states. However, property tax rates are among the highest. At one time or another, just about everyone approaching retirement or early retirement is thinking about spending their golden years in a new place – often in a different state.
Some retirees want to be closer to their family, while others are simply looking for warmer weather and more sunshine. .