• Tax-Friendly States for Retirees

  • by Austin Quinn
Tax Friendly States

Finding the right place to settle down for retirement can be a great challenge. Living near loved ones, living in a temperate climate, and living in active communities are all great concerns for many seniors. However, seniors also have to make sure that their savings will last. These ten tax-friendly states may be great spots for retirees looking to stretch their budgets.

  1. Tennessee – Thanks to a remarkably low overall state tax burden at 6.56%, Tennessee remains one of the best possible retirement destinations for seniors looking to preserve their wealth. Tennessee also has the seventh lowest cost of living out of all fifty states. Although the Volunteer State does collect personal income tax, seniors over the age of 65 who earn less than $33,000 per year as individuals (or less than $59,000 when filing jointly) are exempt from this income tax.
  2. Wyoming – If you’re avoiding crowds and taxes, Wyoming is the right place to be. As one of the few states with no personal income tax, it holds an overall tax burden at just 7.62% – the ninth lowest in the country. Boasting a similarly low cost of living, Wyoming is an attractive prospect for seniors looking to get away from big crowds – and taxes. For those who love the outdoors, keep in mind that it’s also the home of Yellowstone National Park.
  3. Texas – Featuring mild weather, a bit of snow, and a 7.67% state tax burden, the Lone Star State is a solid choice for many seniors. Furthermore, Texas had the ninth lowest cost of living in 2016, demonstrating that it is one of the cheapest places to live among all the states that don’t tax personal income.
  4. Nevada – With an overall state tax burden of 8.37% and very little rain, Nevada stands out as a sensible place for many seniors to spend retirement. Home to plenty of retirement communities and gambling opportunities, Nevada serves as an easy choice for seniors who don’t mind dry weather and blackjack.
  5. New Hampshire – The Granite State makes an exceptional choice for many seniors. Boasting a combined state tax burden of only 6.88% (the fourth lowest burden in the country), New Hampshire provides retirees with much lower rates than many of its neighboring states. While the state does collect income tax, it only does so on interest and dividend income. Best of all, there are some exemptions available for seniors.
  6. South Dakota – South Dakota is a solid place to settle in for retirement. As one of a handful of states that do not collect personal income tax, South Dakotans benefit from the fifth smallest combined state tax burden in the country (at 6.94%). With comfortable, midsize cities and a moderate cost of living, South Dakota offers plenty of reasons to retire there. If you like sightseeing, keep in mind that you’ll have easy access to Mount Rushmore.
  7. Florida – The Sunshine State offers seniors a comfortable climate and many retirement communities to choose from. With no personal income taxes, great weather, and plenty of exciting opportunities to sightsee and enjoy the beaches. An overall state tax burden of 9.2% places Florida just below the national average (9.4%), but the cost of living is 1.2% higher than the national average.
  8. Alaska – If you can handle the cold, Alaska offers a great place for retirees looking to avoid both taxes and nosey neighbors. With an overall state tax burden of just 7%, Alaska has the second smallest tax burden out of all fifty states. However, the cost of living can get expensive, so your savings may not go as far as they would elsewhere.
  9. Washington – The Evergreen State features picturesque mountains, lakes, rivers, and low tax rates. Although it has a combined state tax burden of 8.45%, it also benefits from being one of several states that does not collect personal income tax. Although the cost of living is a bit above average, the scenery and community make it a worthwhile retirement destination for many.
  10. Georgia – Low taxes, low costs of living, and warm temperatures mark the Peach State as a retirement destination for many seniors across the country. Seniors also benefit from the fact that Social Security income is exempt from state taxes – as are most forms of retirement income.

Combined state tax burdens have been provided by WalletHub. Information on each state’s average cost of living has been provided by the Missouri Economic Research and Information Center.