Everyone envisions their retirement differently. Perhaps you dream of lapping up the sun at the beach or exploring new countries. Others might prefer adventuring in nature, visiting museums, or enjoying live music and theatre. Some envision themselves moving to a new state in their retired years, although the cost of living across various regions is crucial to consider, and taxes can significantly impact this.
When planning your retirement, your ideal location should offer a low cost of living, and an abundance of enjoyable activities, but remember to keep in mind elements such as taxes, climate, and any other factors that could affect your quality of life. Discover the top 10 tax-friendly states for retirement in our list below.
10. MISSOURI
Here you can soak up copious amounts of sunshine and delight in lower taxes, affordable living expenses, reasonable real estate prices, and a leisurely pace of life. Missouri is generally tax-friendly towards retirees; although Social Security income is partially taxed and withdrawals from retirement accounts are fully taxed. Idealistically, living comfortably in Missouri costs under $55,000 per year, with an average house price of $164,000. Still, you should prepare for a high crime rate, healthcare provisions that aren’t the best, and sweltering, humid weather.
9. WASHINGTON
Washington stands out owing to its supremely low taxes for retirees due to the absence of a state income tax, including on Social Security. Therefore, you won’t owe state income taxes on your pension, retirement distributions, or part-time job salary after retirement, although federal income taxes will still apply. However, Washington raises revenue through the fourth-highest sales tax in the US due to the lack of an income tax.
8. NORTH DAKOTA
As one of the least populous states, North Dakota is an ideal retirement haven for those seeking solitude. The state prides itself on its robust economy boasting unemployment rates below national averages. North Dakota has mid-range sales and property taxes but its income tax is among the lowest across states that impose it.
7. SOUTH DAKOTA
South Dakotas is a popular retirement destination known for a cost of living that’s 4% below the national average. There’s no state income tax, meaning all forms of retirement income, including Social Security and pensions, remain untaxed. While property taxes here are somewhat high, their impact can be offset for low-income seniors. A typical retiree would require roughly $60,000 annually to live comfortably here, with the average house price falling below $200,000.
6. FLORIDA
A list about desirable retirement destinations wouldn’t be complete without Florida. The state boasts magnificent beaches, spectacular weather, and delicious seafood. Additionally, Florida’s lack of income or Social Security taxes make it hugely tax-friendly for retirees. Its property tax ranks average among the states, and its sales tax rates are among the country’s lowest.
5. NEW HAMPSHIRE
Known for its serene lifestyle and stunning natural surroundings, New Hampshire is a picturesque place for retirement. Furthermore, its appealing tax benefits including no sales tax, no state income tax, and no Social Security tax, make it a great choice. However, you should weigh in the third-highest property tax rate in the U.S before deciding.
4. WYOMING
In addition to its breathtaking beauty, Wyoming promises a safe retirement environment with remarkably low taxes. The state levies no income tax or Social Security tax, and its sales and property tax rates fall among the nation’s lowest.
3. VIRGINIA
Virginia is also tax-friendly towards retirees, with no Social Security income tax and only partial tax on retirement account withdrawals.
2. DELAWARE
Delaware is another tax-friendly choice due to its lack of sales tax and the tax exemptions on Social Security benefits. Besides tax benefits, Delaware is famous for its culture-rich environment that features art galleries, museums, performing arts centers, outdoor festivals, and more.
1. ALASKA
Alaska tops the list of most tax-friendly states for retirees for its lack of state income tax, including on Social Security. The cost of living in Alaska, however, is higher than in most other states.
The states mentioned above are perceived as the best retirement locales, albeit, retirement signifies something unique to each individual or couple. Deciding where to retire involves a nuanced approach, taking into account more than just taxes, but also personal preferences and lifestyle choices. Hence, conducting adequate research, narrowing down options, and saving accordingly is crucial in actualizing your dream retirement. Source: SmartAsset.com.
