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How All 50 States Tax Retirees


Jan. 24, 2019 Kiplinger

Retirees relocate for lots of different reasons, from the weather to proximity to grandchildren. Moving from a pricey part of the country to one with low housing prices could also lower your expenses and make your retirement savings last longer. But as you consider the cost of living in potential retirement destinations, don’t overlook the impact of state taxes on your bottom line.

Arizona

OUR RANKING: Mixed tax picture

STATE INCOME TAX: 2.59% (on up to $20,690 of taxable income for married joint filers and up to $10,346 for all others) — 4.54% (on more than $310,317 of taxable income for married joint filers and more than $155,159 for all others)

AVERAGE STATE AND LOCAL SALES TAXES: 8.33%

ESTATE TAX/INHERITANCE TAX: No/No

GO TO ARIZONA’S FULL STATE TAX PROFILE

The Grand Canyon State is a major retirement destination, with plenty of sunshine and a low personal income tax rate that tops out at 4.54%. Social Security benefits are exempt, as is up to $2,500 of some retirement income. The shadow on this picture? Stiff sales taxes, which in many places are also levied on groceries.

Florida

OUR RANKING: Most tax-friendly

STATE INCOME TAX: None

AVERAGE STATE AND LOCAL SALES TAXES: 6.80%

ESTATE TAX/INHERITANCE TAX: No/No

GO TO FLORIDA’S FULL STATE TAX PROFILE

One of Kiplinger’ top ten most tax-friendly states for retirees, the Sunshine State is very popular with retirees, not just because of its abundant sunshine but also because of the absence of a state income tax. Permanent residents are entitled to a homestead exemption of up to $50,000, regardless of age, and seniors may qualify for an additional exemption.

Texas

OUR RANKING: Tax-friendly

STATE INCOME TAX: None

AVERAGE STATE AND LOCAL SALES TAXES: 8.17%

ESTATE TAX/INHERITANCE TAX: No/No

GO TO TEXAS’ FULL STATE TAX PROFILE

The Lone Star State is a no-income-tax state, so Social Security benefits and all forms of retirement income escape taxes in Texas. The state offers a homestead exemption for all homeowners, as well as a homestead exemption for seniors. But, sales taxes run high.

Click “Read More” for a list of the full 50 states, plus DC.

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