After years of hard work, you’re finally ready to retire. It’s time to sit back and let your savings grow in peace. But before you do that, make sure you know which state is the best for taxes on retirees! The states with lower tax rates will allow more money to build up in your retirement fund, making life after work much easier.
There are plenty of reasons to consider moving to a different state for retirement. For many, the cost of living is the main factor in their decision. With this in mind, we thought to do some research and find out which states have the lowest taxes for retirees. The following list includes 14 states with low-income tax rates:
- Nevada: The Silver State has no income tax at all, which puts it on the list as one of the best states for retirees. It also earned a perfect score from Kiplinger’s Personal Finance for weather, crime rate, and healthcare. Apart from this, the average cost of living is low, making it a great place to settle down. Nevada also possesses the fourth-lowest median property tax rate in the country.
- Texas: If you plan on retiring in the Lone Star State, there are plenty of tax breaks to take advantage of. Even though Texas is a high-income state, it also has no income tax on Social Security or municipal bond interest. In addition to this, they only charge sales and use taxes with local rates up to a maximum of .75%.
- New Hampshire: Although New Hampshire doesn’t have an income tax at all, retirees should still expect their property taxes to be relatively low compared to other states. The effective rate for real estate will cost less than $20 per every thousand dollars worth of home value annually. Residents can easily get around any additional fees by simply prepaying them when filing early each year. Plus, the state has no tax on Social Security or municipal bond interest.
- South Carolina: South Carolina does not have an income tax, which is perfect for retirees from other states who are looking to escape high taxes. In addition, it also doesn’t have many local or county-level taxes either! This means you can live in peace knowing that your home and retirement savings will grow without the worry of extra taxation, moreover, with no estate/inheritance tax and low property rates, which shows that SC offers the lowest retirement taxes by state.
- Rhode Island: Rhode Islanders are subject to a wide range of taxes, making it one of the more expensive states for seniors to live in. However, they do have low rates at just $20 per every thousand dollars worth of home value annually. And if you’re willing to prepay your property fees when filing early each year, then you won’t need to worry about facing any additional charges!
- Lowa: The state offers three tiers of taxation for retirees’ income, with the third being the lowest possible amount. In addition to this, Iowa has no estate or inheritance taxes, and their property taxes are some of the lowest compared to other states. However, just like every other state discussed here, inflation is still a thing that must be considered when it comes to spending your savings after retirement.
- Pennsylvania: Although Pennsylvania is not what most consider when thinking about moving from your job, those who do want to retire there can benefit greatly. Their income tax system for retirees is based on the federal rates, which are currently at seven percent for those who make less than $100,000 per year. Moreover, the state only has a sales tax of six percent, which is one of the lowest in the country.
- Tennessee: If you want to retire somewhere that’s affordable but still offers plenty for retirees to do, Tennessee might be the place for you! The Volunteer State doesn’t have any income tax at all on social security retirement benefits or qualified pensions. Furthermore, property taxes are below average compared to other states, and there are no estate or inheritance taxes either.
- Florida: It’s no surprise that Florida is on this list, as it has been a popular state for retirees to move to since the 1960s. The sunshine and good weather are just bonuses added onto its low tax rates, which can be attributed to its lack of an income tax or estate. With only $0.53 owed in taxes per $100 earned by anyone who earns more than $11,770 annually (and 0% for people earning less), living here will allow you to keep most of your savings intact!
- Georgia: Georgia also follows suit with South Carolina and Texas as another example of states without personal income taxes making their way into our top ten best places for retirement. With the average effective tax rate for Georgians being at 0.86%, it’s no wonder why retirees flock to this state! Additionally, Georgians only pay an average of $0.95 per $100 in property taxes, which is one of the lowest rates nationwide!
- Wisconsin: In addition to no income tax on Social Security benefits, the state’s overall taxes for retirees are very low – particularly in comparison with other states around the country. According to Forbes Magazine, this has contributed greatly to its high ranking as one of the best places for retirement. It also offers several opportunities throughout the year so you can enjoy all four seasons without missing out on outdoor activities.
- Indiana: Our Midwest neighbor made our list due mostly to its lack of both an estate and inheritance tax. If you’re looking forward to passing your wealth along upon death, then Indiana may be just what you need! Its flat-tax system also reduces rates at the lower end of the spectrum. Besides, who doesn’t want to retire in “Hoosier Country?”
- Louisiana: This southern state offers plenty to do during all seasons – making it great for those who want to stay active after they retire. In addition to affordability, Louisiana also has no income tax on social security benefits or pensions if you’ve lived there for five consecutive years prior to receiving them. Moreover, its state tax rate is the lowest in the South!
- South Dakota: For residents who are ready to retire in the near future or have already retired, South Dakota is a great choice! It has no income tax on qualified retirement income like IRA distributions or 401k withdrawals. This means you can keep your money where it belongs in your retirement fund! In addition to this, South Dakota has a state tax rate of just 0.14%.
Anyone looking to retire in the near future or already retired should consider which state has the lowest taxes for retirees. We’ve provided information on some of these states above, but there are plenty more!