Best Tax-Friendly States For Retirees
by Burke Speaker | October 4, 2013 12:39 pm
When choosing a location to retire, some of the most important issues to consider are taxes.
But that’s not the whole issue.
The state with perhaps the best tax rate for retirees is Alaska. While there are of course benefits to living there, the majority of retirees are not able to move so far from family to a place where there are climate concerns and limited cultural and entertainment options.
So we compiled a list that notes the best tax-friendly states for retirees, but one that considers states that offer other lifestyle benefits as well (such as culture, entertainment and a good climate).
Check out the list now (note: tax rates can change at different times by state, so always check state tax offices for updates).
#5: Louisiana
State Income Tax:[1] 2% to 6%
State Sales Tax: 4%
Feeling like escaping into a southern life of relaxation? Louisiana boasts an average temperature of 66.7 degrees — and only Hawaii and Florida offer a better average climate.
The state exempts Social Security and military, civil-service, state and local government pensions from income taxes. And while you’re relaxing on the hammock, know that for residents 65 and older, you’re also exempt from income taxes up to $6,000 per person on private pension, annuity income and IRA distributions.
#4: Nevada
State Income Tax:[1] None
State Sales Tax: 6.5%
Not everything is all-night parties and gambling in Nevada. Some of the nation’s most beautiful landscapes lie in Nevada and entertainment and culture abound in the major cities. Financially speaking, the state has no income tax or estate tax. And golfing is good, good, good with the perfect climate and retirement communities geared toward the avid player.
#3: Florida
State Income Tax:[1] None
State Sales Tax: 6%
While not the best place to retire from a strictly tax point of view (all property is taxable at 100% of its market value) — Florida is one of the best places to retire when looking at the whole equation. With boating, fishing, and golfing galore across the state, Florida is a mecca for retirees. The Tampa area along the Gulf is a retiree favorite, with clubs dedicated to entire communities of those who are living out their golden years in paradise.
#2: Georgia
State Income Tax:[1] 1% to 6%
State Sales Tax: 4%
With a low state income tax and no estate or inheritance taxes, Georgia is near the top for best places to retire. According to Kiplinger, resident 65 and older “can exclude up to $65,000 of retirement income (or $130,000 per couple) from state income taxes. Retirement income includes income from pensions and annuities, interest income, dividend income, net income from rental property, capital-gains income and income from royalties.” And with Social Security also exempt from state taxes, plus access to beautiful communities and southern charm, the Peach State beckons retirees from across the country.
#1: Arizona
State Income Tax:[1] 2.59% to 4.54%
State Sales Tax: 5.6%
While other states such as Alaska and Wyoming are better places to retire from a strictly tax perspective, there is simply no denying Arizona’s charm for retirees. Some of the country’s most beautiful spa retreats and golf courses are scattered across the state. Its low personal income tax rate makes it a good choice, and Social Security benefits are exempt, along with up to $2,500 of certain retirement income.
And when considering its dry climate and red rock vistas, Arizona tops our list as the best place for retirees when considering lifestyle and taxes.
Endnotes:
- State Income Tax:: http://www.kiplinger.com/slideshow/retirement/T006-S001-10-most-tax-friendly-states-for-retirees/
Source URL: https://investorplace.com/2013/10/top-tax-friendly-states-to-retire/