If you want to stretch your retirement savings as far as possible, don’t focus solely on the cheapest places to retire. Pay attention to taxes in the places you’re considering, too, because they can take a big bite out of your retirement income.
1. State sales and average local tax 2. State tax on Social Security 3. Effective property tax 4. Income tax rate
– State sales and average local tax: 7.08% – State tax on Social Security: None – Effective property tax: 0.94% – Income tax rate (65+): 0% No taxes on income or Social Security benefits make Florida one of the most tax-friendly states for retirees. Its property and sales tax rates rank in the middle of states.
– State sales and average local tax: 5.73% – State tax on Social Security: None – Effective property tax: 0.86% – Income tax rate (65+): 5.75% Virginia retirees benefit from no taxes on Social Security and the 10th-lowest sales tax. But the income tax rate is higher than more than half the states on this list.
– State sales and average local tax: 1.76% – State tax on Social Security: None – Effective property tax: 1.02% – Income tax rate (65+): 0% Alaska is the most tax-friendly state for retirees because it has no state income tax or tax on Social Security. And its sales tax rate is the fourth lowest on our list.
– State sales and average local tax: 0% – State tax on Social Security: None – Effective property tax: 0.58% – Income tax rate (65+): 5.55% Delaware is one of the best states to retire taxwise because there is no state tax on Social Security or sales tax. Plus, its property tax rate is among the lowest in our rankings.
– State sales and average local tax: 9.55% – State tax on Social Security: None – Effective property tax: 0.73% – Income tax rate (65+): 0% Tennessee doesn’t tax Social Security benefits. But Tennessee retirees need to watch out for the state’s sale tax, which is the second highest in the U.S. and the highest on our list.
– State sales and average local tax: o% – State tax on Social Security: None – Effective property tax: 2.03% – Income tax rate (65+): 5 New Hampshire is one of the best places to live for retirees to escape taxes. It has no sales tax, no state income tax and no tax on Social Security.
– State sales and average local tax: 8.40% – State tax on Social Security: None – Effective property tax: 0.67% – Income tax rate (65+): 3.34% There’s a reason Arizona is a haven for retirees. They can escape the cold weather and a big tax bill by moving here. Its income tax rate is among the lowest in the U.S., and Social Security benefits aren’t taxed.