When it comes to choosing a place to live, cost of living is top of mind for many retirees. But as you consider the usual expenses-housing, groceries, health care-don't overlook state taxes.
Depending on your situation, state and local taxes could cost you thousands of dollars more in one state than in another. That's particularly the case with property taxes: You could pay up to three times more in some states for a home with the same value. Some states exclude all or a significant portion of income from retirement savings, while others tax nearly all of your retirement income, including Social Security.
To help seniors avoid a state tax bombshell, Kiplinger has created a state-by-state guide to taxes on retirees (we also included Washington, D.C.). Our results are based on the estimated state and local tax burden in each state for two hypothetical retired couples with a mixture of income from wages, Social Security, traditional IRAS, Roth IRAS, private pensions, 401(k) plans, interest, dividends and capital gains. (For more on our methodology, see the box on page 60.)
We've included details on the 10 most-friendly and 10 least-friendly states for retiree taxes. For details on taxes in every state, including estate and inheritance taxes, go to kiplinger.com/kpf/retireetaxmap.
All of the states among the most tax-friendly for retirees exempt Social Security benefits from state income taxes. Most also allow an exemption for at least a portion of our hypothetical couples' other retirement income, such as private pensions or IRA withdrawals. They tend to have low property tax rates and/or reasonable sales tax rates, too.
MOST TAX-FRIENDLY
1. DELAWARE
State Income Tax Range: 2.2% (on taxable income from $2,001 to $5,000) to 6.6% (on taxable income over $60,000)
Average Combined State and Local Sales Tax Rate: 0%
Denne historien er fra March 2023-utgaven av Kiplinger's Personal Finance.
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Denne historien er fra March 2023-utgaven av Kiplinger's Personal Finance.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
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