The 10 Most Tax-Friendly States for Retirees

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Retirement Alaska

Deciding where to live in retirement involves important decisions about climate, cost of living, proximity to friends and family, and an ideal location to enjoy favorite activities. State and local taxes play a critical role, too, because they can increase or decrease the amount of spendable income you'll have to enjoy life in retirement.

These ten states impose some of the lowest taxes on retirees in the U.S., according to Kiplinger's analysis of state tax rules plus research by the Tax Foundation, a nonprofit organization in Washington, D.C., and CCH, a leading provider of tax information and software. We give special preference to states that offer tax incentives to attract retirees.

All of these tax havens exempt Social Security benefits from taxation (and some impose no state income tax at all). Many of them exclude government and military pensions from income taxes, and some exempt private pensions, too. A few offer blanket exclusions up to a specific dollar amount of retirement income from a wide variety of sources, which is important if you depend on distributions from IRAs and 401(k) plans rather than traditional pensions. Review all of your sources of income before you decide which state may be the best fit for your retirement home.


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annawillim

You can enjoy life more if you have a lot of money rather than a lot of things .


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June 23 2013 at 8:14 AM Report abuse rate up rate down Reply
Frank

Come on NJ.,you got to be kidden....

January 01 2013 at 8:31 AM Report abuse rate up rate down Reply
mdkkhome

What about New Jersey
Sorry wrong article

November 28 2012 at 4:35 PM Report abuse rate up rate down Reply
ronsblue

New Hampshire should be number one on the list.............we pay no income taxes on earned income or on pensions, IRA's, 401k's, or Social Security nor do we have any sales taxes. I believe we are one of only two states that does not have a sales nor an income tax. There is a tax on interest and dividends that exceeds $600 a year however it is very low.

November 28 2012 at 1:04 PM Report abuse rate up rate down Reply
GARY

I can't disagree
I wondered what happened to Texas and Florida

November 27 2012 at 1:35 AM Report abuse rate up rate down Reply
straveler222

wow, wonder how mach they were paid for this, the only two states that belong on that list were Alabama and Wyoming, what happened to looking at the cost of living, PA, NV, no freaking way, look at Colorado, Oklahoma, Texas and other interior states, remember that living near the ocean anywhere makes your home owners or renters insurance more than retirees can bear. Having lived and worked in 38 states in my life, I have seen the good and bad of them all. And I can tell you that the worst state to live in period is Kansas, where every thing is taxed to the max and the politicans are controlled by the Union Bosses. they even require tags and taxes on bikes. Second worst is of course California, followed by New york, Washington, OR, Georgia, etc. Remember, any time some one says we are trying to help you, they mean they are trying to help you give them your money, these obvious paid for surveys are always a farce, it cost money to do them and those that pay win the survey.

November 26 2012 at 7:28 PM Report abuse rate up rate down Reply
laedbac1

Florida is the best state in America.

November 26 2012 at 5:36 AM Report abuse +1 rate up rate down Reply
apercu001

I see no mention of any of the eight states that have no personal income tax except for Nevada.

November 26 2012 at 4:38 AM Report abuse rate up rate down Reply
beth.miranda

Very useful site

November 25 2012 at 10:52 PM Report abuse rate up rate down Reply
beechbumone

Regarding 10 Most Tax Friendly states for retirees.....
All of those states on the list, people would either sweat or freeze their butts off. No thanks! I won't mind paying a bit higher taxes and less in air conditioning and heating bills and will stay right where I am in retirement, the best weather of anywhere.

November 25 2012 at 9:30 PM Report abuse rate up rate down Reply