For retirees on a mission to make their savings sing, finding a place with low taxes and a delightful lifestyle can be a game-changer. But listen up! Some states, known as tax-friendly states for retirees, are friendlier regarding taxes. It can significantly boost your savings, giving you more freedom to enjoy your golden years. So, when picking your retirement paradise, consider the tax situation alongside the beautiful beaches and stunning mountains!

 

 

1. Florida

Florida is a dream spot for retirees looking for a sunny, tax-friendly place to enjoy their golden years. Since there’s no state income tax and no taxes on Social Security benefits, retirement account withdrawals, and pensions, retirees can hang onto more of their hard-earned cash. Plus, with its average temperature of 77.7°F and loads of fun activities, Florida is perfect for anyone wanting to stay active and soak up some sunshine.

Considering the state’s median sales tax rate of 6.00% is essential when budgeting for retirement. While Florida offers quality healthcare in major cities like Miami, Tampa, and Orlando, property taxes and sales tax must be considered when considering the overall cost of living. The median property tax in 2023 was $1,773 for a home valued at the state’s median of $182,400. The combined state and average local sales tax rate is 7%.

 

2. Nevada

Nevada is another tax-friendly haven for retirees, mainly because it lacks state income and inheritance taxes. In addition, retirees can enjoy their Social Security benefits, pension income, and retirement account withdrawals entirely tax-free. Adding to its appeal, according to the Tax Foundation, Nevada boasts one of the nation’s lowest median property tax rates at just 0.56%.

The property taxes in Nevada might fit well within your budget. The average property tax is $1,749 annually for homes valued at the median price of $207,600. It has an average combined state and local sales tax rate of 8.24%. As for healthcare, cities like Las Vegas and Reno are known for their top-notch medical facilities, covering a wide range of specialties, according to Trenta.

 

3. Wyoming

Wyoming offers a unique blend of tax-free living and breathtaking landscapes. Retirees benefit from the absence of state income tax, estate tax, and inheritance tax, allowing them to retain more of their hard-earned savings. Social Security benefits and retirement account withdrawals are exempt from state taxes, maximizing financial security. The state’s low cost of living is 9% below the national average, according to AreaVibes.

Owning a home here has the added benefit of not facing steep property taxes. “Combine the advantage of no income and modest property taxes with the breathtaking natural beauty of Wyoming for a serene and tax-efficient retirement, noted Plummer”. In Wyoming, the average property tax is just $1,058 annually for a home valued at the median price of $184,000. For healthcare, retirees may prefer Rock Springs, Gillette, or Cheyenne.

 

4. South Dakota

South Dakota is renowned for its favourable tax climate. There is no state income tax, inheritance tax, or estate tax so that retirees can keep more of their retirement income, including Social Security benefits and pension distributions. The state’s friendly communities, affordable housing options, and access to outdoor pursuits make it an attractive destination for retirees seeking a peaceful retirement.

“South Dakota offers low sales and property taxes along with a diverse climate to suit many preferences,” noted Shawn Plummer, CEO of the Annuity Expert, in an email. It makes it an appealing choice if you enjoy rural settings and vast open areas. The average property tax here is $1,620 yearly for a median-valued home at $126,200. The state and average local sales tax rates combine to 6.11%.

 

5. Texas

Texas completes our list of tax-friendly states for retirees. There’s no state income tax here, so retirees enjoy tax-free Social Security, pension incomes, and retirement account distributions. Despite higher property taxes, the median is $2,275 annually for homes valued at $125,800. Texas attracts with its varied climate, cultural diversity, and access to top-notch healthcare in cities like Houston, Dallas, and San Antonio. 

The combined sales tax rate is 8.2%. Despite this, the state’s affordable living costs and rich cultural experiences make it an attractive option for those seeking a cost-effective yet vibrant retirement. The wide array of outdoor activities and historical sites provides endless exploration opportunities for active retirees. Texas’s friendly communities and diverse landscapes ensure a welcoming environment for all who call it home.

Recommended read – 12 Best Retirement Podcasts to Tune into in 2024

 

6. Alaska

Alaska stands out for retirees looking for a tax-friendly setting with no state income or sales tax. Residents enjoy a yearly dividend from the Alaska Permanent Fund, adding to their retirement funds. While living costs can be high in some areas, Alaska’s breathtaking scenery and outdoor activities cater to those seeking adventure. The median property tax is $2,422 annually for homes at a median value of $232,900. 

Residents who have lived in the area for a year are eligible for a $1,312 payout from the oil wealth trust fund in 2023. Top-notch healthcare is available in major cities like Anchorage and Fairbanks, ensuring retirees have access to quality medical services. The state’s low population density offers a peaceful, less crowded living environment for those seeking tranquillity in retirement.

 

7. Washington

Washington State stands out for retirees with its no-state income tax policy, enhancing its tax-friendly appeal despite the sales tax. Social Security benefits and retirement account withdrawals remain untaxed, offering additional financial leeway. Beyond fiscal benefits, the state boasts magnificent landscapes like the Cascade Mountains and Puget Sound, paired with lively cities like Seattle.

Retirees can indulge in both nature and culture. The median property tax here is $2,631 annually for homes valued at the median of $287,200, with a combined sales tax rate of 9.38%. “Washington prides itself on top-notch healthcare, especially in Seattle and other major cities,” mentions Trenta, ensuring retirees have access to excellent medical care.

💁‍♀️ Also read – The Psychology Behind Retirement Relocation

 

8. Tennessee

Tennessee is celebrated for its retiree-friendly tax stance, exempting Social Security benefits and retirement account withdrawals from taxes and only applying a nominal income tax on interest and dividends. The absence of an inheritance tax further enhances its appeal for those thinking ahead about estate planning. It has low property taxes at $933 yearly for median-valued homes of $137,300 but a higher combined sales tax of 9.55%.

Retirees can access top-notch medical care in cities like Nashville, Memphis, and Chattanooga. With its lively music scene, scenic mountainous regions, and rich cultural history, Tennessee offers a unique mix of affordability and cultural wealth. It is perfect for retirees who cherish music, mountain living, and the Southeast’s charming ambience, hospitality, tranquillity, and warmth.

💡Related – The Ultimate Nashville Relocation Guide: Your Key to the Music City

 

Is Relocating for Lower Taxes a Good Decision?

Lowering your tax obligations can make sense when you’re on a fixed income. It’s essential to weigh the financial benefits against your retirement aspirations, like spending more time with family or engaging in outdoor pursuits. Is it worth uprooting and starting anew elsewhere? That’s a decision only you can make. Consider consulting with a financial advisor to explore all aspects of such a move before making your final decision.

 

Summing Up

Deciding on your retirement location is a big move that impacts your wallet and daily living. The states listed above are known for their tax-friendly states for retirees benefits, which could boost your retirement funds. But remember, weighing all your needs and wants before making a choice is essential. Consulting a financial advisor can help you choose the best state for your retirement goals, particularly regarding taxes.

 

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