10 Tax-Friendly States to Retire In

From Everything Finance

10 Tax-Friendly States to Retire In is a post originally published on: Everything Finance – Everything Finance – Its all about Money!

Retirement looks different for everyone. Maybe your dream is lounging by the beach or traveling the world. Or maybe it’s exploring the great outdoors or taking in museums, live music and theater. For some, retirement may involve moving to a new state, but figuring out the cost of living in different areas is an important part of the decision-making process, and taxes are a key consideration. 

When you think about retiring, you would want to choose a place that offers you a low cost of living and plenty of fun things to do, but you must also consider the taxes, the weather, and any other factor that affects your quality of life.

If you’re looking for the 10 best states to retire in for taxes, check out the list below.

10. Missouri

Outside of plenty of sunshine, retiring in Missouri can be a great place for its low taxes, cost of living, affordable housing, slower pace of life, and plenty of outdoor things to enjoy. Ranked as being moderately tax-friendly to retirees, Missouri partially taxes Social Security income, fully taxes withdrawals from retirement accounts, and public pensions are partially taxed while private pensions are fully taxed. It costs less than $55,000 per year to live there comfortably and houses only cost $164,000 on average.

A few things to consider before you pack up and move to Missouri is the state’s high crime rate, poor healthcare system, and hot and humid weather.

9. Washington 

Washington is one of the states with the lowest taxes for retirees because it has no state income tax or a tax on Social Security. This means that you won’t pay state income taxes on social security benefits, pension payouts, and retirement distributions from your 401(k), IRA, or other retirement accounts. Also, if you find a part-time job in retirement, you won’t pay state income taxes on your salary. However, you will still owe federal income taxes on your retirement earnings.

Since the state does not have an income tax, Washington imposes sales taxes to raise revenue, it’s state sales tax is the fourth highest in the US.

8. North Dakota

North Dakota, as the third least populated state in the nation, is ideal for retirees hoping to get away. North Dakota has a reliably strong economy; unemployment is lower than the national average.

 Sales and property taxes are in the middle of the pack, but its income tax puts it on this list. In the United States, eight states don’t have an income tax. Among those that do, North Dakota’s is the lowest.

7. South Dakota

The Dakotas are definitely a favorite retirement spot. South Dakota has an average cost of living that is 4% below the national average. There is no state income tax in South Dakota. This means Social Security, pensions and other forms of retirement income are all tax-free. Sales taxes are quite low in South Dakota; however property taxes are somewhat high, low-income seniors can offset those costs.

It would roughly cost a retiree a reasonable $60,000 per year to live there comfortably, and the average home costs less than $200,000.

6. Florida

There is hardly a best place to retire without Florida on the list. Florida has the highest proportion of people aged 65 or older than any other state, with the average person living to be 79.2 years old.

A great state if you are looking for waterfront beaches, experiencing consistently great weather, or eating some of that great seafood. In addition, no taxes on income or Social Security benefits make Florida one of the most tax-friendly states for retirees. Its property tax falls at about the middle of the states, and sales tax rates rank in the lower end of the 50 states.

5. New Hampshire

New Hampshire is known for its peaceful lifestyle and amazing natural surroundings and can provide a lovely retirement destination. It is also one of the best places to live for retirees to escape taxes. It has no sales tax, no state income tax and no tax on Social Security. Its property tax rate is the third highest in the U.S, that may be a factor to consider.

It’s going to cost you about $68,000 per year to live there comfortably, and the average cost to buy a home in New Hampshire is $280,000, 

4. Wyoming

Beyond the physical beauty, Wyoming provides an environment for retirement that has low crime and absolutely low taxes.

Wyoming is one of the best states to retire to avoid a big tax bite. There’s no state income tax or tax on Social Security benefits. Plus, Wyoming’s sales and property tax rates are among the lowest in the U.S. On average you will spend about $56,000 a year to live there comfortably, roughly $250,000 on a home, and can expect to live until you reach 78 years old on average.

3. Virginia

Virginia is tax-friendly toward retirees. Social Security income is not taxed. Withdrawals from retirement accounts are partially taxed. Wages are taxed at normal rates, and your marginal state tax rate is 5.00%.

The average Virginian lives to be 79.1 years old, and on average it will cost you about $63,000 per year to live comfortably, and buying a home is only going to run you around $264,000.

2. Delaware

Where taxes are concerned, Delaware is also one of the?most tax-friendly states?for retirees. There’s no sales tax in the state, and your Social Security benefits are tax-exempt as well. 

Delaware is also home to some incredible cultural attractions. From art galleries, museums, and performing arts centers to outdoor festivals and events, there’s always something going on in Delaware! Delaware is also well-known for its mild climate.

1. Alaska 

Alaska is the most tax-friendly state for retirees because it has no state income tax or tax on Social Security. And its sales tax rate is the fourth lowest on our list – fifth lowest in the U.S. But keep this in mind: The cost of living in Alaska is higher than in most states.

Alaska’s summers are fantastic, even in the interior where it can get surprisingly warm for such a high latitude. But the winters are long, and very cold with very short days.

The Bottom Line

The states mentioned above are often considered the best places to retire, but retirement means different things to different people. We acknowledge there’s plenty of subjectivity in choosing a place to live in retirement and each individual and couple needs to consider the factors most important to them when deciding where to retire outside of taxes. Do your research, narrow down the choices and start saving toward that retirement dream! 

10 Tax-Friendly States to Retire In is a post originally published on: Everything Finance – Everything Finance – Its all about Money!

This post was published on Everything Finance