While Uncle Sam plays a part in your retirement, he isn’t the only tax man. All 50 states are also partners to some extent.
Many state governments depend on income taxes for public revenues, and in some, city governments take a piece of the income tax pie as well. And what about the states that don’t have an income tax? They rely on other revenues, like gas, property, and sales tax collections.
If you are among the growing numbers of Americans who wish to retire elsewhere than your current community, take note. Many variables play into people’s choice of retirement relocation: the cost of living, unemployment rate, work possibilities, social opportunities, and closeness to people and causes that you hold dear.
However, they aren’t the only factors, as taxes can take a bite out of retirement income. It’s important to see how your tax situation might affect your bottom-line in any places you may be considering.
Every year, Kiplinger publishes an updated, annual guide to state taxes. Their findings show how state and local government taxes are “all over the map” – and how living in different states can be a difference of thousands of dollars in income, depending on your retirement tax situation.
Just as importantly, the guide includes an analysis of each state’s “tax friendliness” for retirees. Those judgments are based, in large part, on taxability of Social Security payments, exemptions for other retirement income, and property tax rates.
Here’s a look at the top 10 most tax-friendly states for retirees in the U.S., as ranked by Kiplinger.
