Best and worst places for retiree taxes

Where you live can make a lot of difference in how far your retirement dollars stretch, and the story goes way beyond which states have no income tax.

By Kiplinger's Personal Finance magazine

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Bicycles and mature couple with binoculars © Image Source/Getty Images
Best and worst states for retirees

Where's the best state for you to retire? A lot will depend on your sources of income. For retirees, while relocating to an income tax-free state such as Florida or Texas may sound appealing, sometimes the best retirement destination is a state that imposes an income tax but offers generous exemptions for Social Security benefits, pensions and other types of typical retirement income.

Here are the five of the most -- and least -- tax-friendly states for retirees. Just make sure that, before you move anywhere in retirement, you factor in local taxes, too. Municipalities can impose hefty property taxes or other assessments. Federal taxes? They'll be about the same no matter where you live.

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66Comments
Mar 28, 2011 1:39PM
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No suprise that California is the worst place. It takes alot of your hard earned money to support the masses of worthless people sucking the state dry.
Apr 6, 2011 11:07AM
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.Well I am tired of The R  and D.  If The government shut down Friday the house and senate will still get paid.  Bull no pay for you either.  They taxes us to death. Food, fuel. electric, heating oil, insurances the list goes on and on.  It is time to stop all the big CEO giving themselves a raise and those guys in Washington voting themselves a raise.  We should vote there raise.  They need to pay health care like we do and into SS. Also you only get SS if you played into it  if they all kept there hands out of the pot we would not have ****blem.  They pay to much for everything in washington down to you local government it is all paybacks.  Come on people get a grip and call and complain and use your right to vote. Maybe we could live anywhere then.  It is a runaway train and only we the legal citizens can stop it .Those that are  on well fair that can work can clean streets parks earn that check.  This is the place to come to live it up while we worked all of our lives now we have to worry about if we can afford our homes.  United we stand divided we will fall.  Common sense would go a long way  God Bless you all and our wonderful troops that keep us safe. 

Mar 16, 2011 4:26PM
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I live in Vermont and have no intentions of being here for retirement. We might be outta here long before that. Vermont is about as close to socialism as you're going to get in the US. Our taxes are stupid, especially considering good paying jobs are few and far between. I'm sick of paying the bills of people that refuse to pay there own.
Mar 8, 2011 12:54PM
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gamerk, it is worse then that. This article limits the choices. For instance, I have tenants in Costa Rica. US retirees all. They left the country to get better health care, better tax treatment, and a higher standard of living. The cost of health care like banking is represented in the cost of everything. It is killing this countries competitiveness.  We cannot even hold on to our elderly populations and you know what is happening with our manufacturing base.

 

The government for the people by the people is no longer functioning that way and multi national corporations that are running things have no country.  

Mar 8, 2011 6:21PM
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I wish just once they would include Texas in one of these "worst" categories.  No one ever realizes that even without an income tax that the people are taxed to death on everything else.
I have a rather small house and the real estate taxes for Travis/Austin/Leander are over $7000
a year.  That's as bad as most states income tax.  And we pay 8.25% sales tax on almost everything.  All this from a State that is 46th in the nation in education.  All our state legislature has to argue about is abortions and voter id's and redistricting.  They don't care about education or jobs....except to keep theirs.  Born Texan, but can't wait to get out.
Apr 27, 2011 1:32PM
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I can't wait to retire and get out of California.  Yeah, the weather is fabulous but everything else in this welfare state positively sucks.  We pay the highest income tax, property taxes and sales taxes, the government over regulates and fees us to death (fee: just another word for tax)  and the school system is almost last in the nation even though almost anyone in a newer subdivision pays mellos roos on top of mandated property taxes to fund schools.  You voting Democrats can have it, as when the majority of us that pay all these taxes (which numbers wise is the minority) then those throngs of illegals and socialist freeloaders can turn off the lights themselves.  Everyone needs to either re-read Atlas Shrugged or go see the movie... that's this state and our federal government's path.   Heads up Governor Brown, we're mad as hell and the businesses and people that you want to be here, are picking up stakes and moving as quickly as they can...to someplace where they are appreciated and not looked at for more.         
Apr 27, 2011 2:07PM
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Try Kansas if you love taxes, every county taxes you to the point you can not afford to own a place, at least not on fixed income.

 

I love how we give billions to every other nation, but not one red cent to the US citizens.  First tax cut medicare and Social Security.  Why not cut money to illegal's, I mean, what part of illegal do they not understand? 

 

Mar 8, 2011 2:42PM
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Trouble with the best five listed is they're all cold in the winter and costs are high for fuel and insurance due to fender benders on icy roads. Florida has no real income tax and you don't need those expensive winter clothes. I think the best scenerio in retirement is be a Florida resident but live up north in the summer. Then you get the best of both worlds but don't pay income taxes.
Mar 8, 2011 12:39PM
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Alaska - are you kidding? Focusing solely on taxes is misleading.  Overall cost of living is more insightful.


Mar 28, 2011 1:01PM
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Pennsylvania should not be on the list of best places - property taxes will destroy you.  Example: A house valued at $100K will cost at least $4K - $5K per year in county and school property taxes.  There are 500 school districts and they all have their own taxing authority.  A 5-year effort to eliminate property taxes has fallen on deaf ears in the corrupt legislature and a flaming tax-and spend governor - Ed Rendell.  PA is in a state of financial ruin and the new governor is cutting state services to the bare-bones.  Don't worry about inheritance taxes - you won't have anything left to inherit.

Apr 6, 2011 4:40AM
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new york is as bad or worse than california the socialist  school tax here  is obscene people need to stop breeding  or pay for their own brats schooling  

Apr 20, 2011 4:58PM
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legal jockey wrote, quote: "REPUBLICANS HAVE CLOSED FACTORIES, SENT JOBS TO CHINA" End Quote

 

to legal jockey, it was CLINTON, right before he left his office who signed the GLOBAL ECONOMY aggreement that allos companies in the U.S. to makes their product in another country.

 

to blame somebody else, one need to know the truth.

 

We need to start producing our "made in USA" again and compete with those chinese product before they mastered what they are doing. Their chinese product broken so quick anyway I would rather to spend my money paying higher for American Product. The problem is, there is not much "made in USA" anymore out there.

 

 

Apr 27, 2011 2:26PM
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Ken 101a.   If I hear one more person say that the rich don't pay their fair share of taxes, I'm going to hurl.   Folks like you keep lumping all people who make good earnings into a single pot and keep saying this have no idea what you are talking about.   Maybe the super-rich have some advantage but the majority of the people in that pot pay plenty.   There is a reason that the top 10% of earners pay a disproportionate share of the tax revenue and it's because we do pay plenty.  DUH!    How about focusing on the 50% of Americans that pay nothing?   I think it's pretty gracious of us to carry millions of people that are healthy and able to work and support their own but choose instead to keep popping out babies and be on the dole.   Just as an FYI, I don't get ANY deductions that aren't available to everyone.  In fact, I probably have less than most since I don't have a mortgage.   So before you keep spouting off that the rich don't pay their fair share then please explain to me how that 10% fraction of earners at the top pay about 60% of all taxes paid?  Let's not split hairs about proportionately this and proportionately that.  Simply when you are counting up the dollars paid in taxes then that top 10% of wage earners is allowing the bottom 50% to pay nothing.   How EXACTLY is that fair?   And even though we do pay in a disportionate share, we do it to keep the wheels turning and things humming along .  The problem is it's never enough...never enough for those "looters" with their hands out wanting to spend, spend, spend some more.   I'd speculate that those of us that have money, likely worked very hard to earn it and didn't frivolously spend it all.  We'll be the ones means tested after all the money that we have contributed while you go on to collect social security and medicare and we're told that we don't get any because we have enough.  I am SO SICK of the sweeping generalities that people like you make.  On one of your other statements, let me just say that I thank my lucky stars daily that I live in the US and have the American military making it possible.  If I had my way, the military personnel would make far more than they do.  Have Congress quit spending billions if not trillions on pork projects, special interests like unions and subsidies to BIG business (banks, oil and farms for three that DON'T need it ) and maybe, just maybe, there would be some to spend on important things like rebuilding jobs in America and turning out something other than deficiently educated children who will never be able to compete with other countries AND allow our seniors to retire when they wish with the means to do so.  Unfortunately,  this all which used to be the American dream has been sadly eroded.  We have our elected politicians to thank for the erosion and this sick and very unproductive class warfare that is developing.           
Mar 16, 2011 5:14PM
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I am retired and living in the South.  Those top 5 states must have paid some money to get their plugs.  At 72 I know I don't want to live in a remote snow covered area where I would be totally isolated in the winter or iced over - that's just plain crazy.  I want a good transportation system, convient to shopping and good healthcare system - or yeah and I like the beach, too.

Mar 8, 2011 12:04PM
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I don't think Grandma would enjoy being snowed-in for half the year Sarcastic
Mar 28, 2011 10:58AM
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You have to do some real research on best states for retirement.  If you are looking to minimize taxes, I suggest you check out  the southern states.  Mississippi, for example (I know) has a top rate of 5% on income; a 7% sales tax rate; very reasonable property tax rates, with retirees having a $75000 homestead exemption; not taxes on earnings from pensions, annuities, or IRA/401k; and no taxes on Social Security.  Summers are miserable, but Fall and Spring are fantastic.  Short drives to Birmingham, New Orleans, Memphis, the beach.  Casinos with all the good and some of the bad.  Friendly people and great medical care.  State has cities designated retirement areas and plenty of golf and universities.  Oxford, Starkville, are two college towns.  Moved here from California with a job transfer.  Hated the first year--then it kinda grew on me. 

 

 

Mar 8, 2011 4:19PM
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Right, one magazine's Top Ten list is another person's cat box liner.

Hey, I'd like to thank the knuckleheads who respond to this article with political spewage.

Total taxes and life quality are what matter to me.
I just have to balance it all out.
Once you move away from Winter, you may never go back.

Apr 6, 2011 3:29AM
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Forget Alaska......property, food, etc, is high priced......and forget Pennsylvania unless you don't have a pot to piss in......property taxes are very high (e.g., in order to subsidize people who are sending their kids to schools but own no property).

Mar 28, 2011 1:56PM
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There is no free lunch.  If you want services, you have taxes. As many others have mentioned, property taxes can be at least as bad as sales and income taxes.  If and when I retire, I plan to look at all factors - climate, quality of life, cultural opportunities, proximity to outdoor recreation, housing costs, and overall taxes. 
Mar 28, 2011 10:09AM
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Funny how they NEVER include the PROPERTY TAXES only thew state taxes. Here, on Long Island, you're hard pressed to find a house that has a property tax BELOW $9,000.00. Being on a fixed inbcome doesn't cut it when everything keeps rising and your income stays the same too....
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