Where retirees decide to sink their roots for this stage of their lives can sometimes depend on how much of their incomes will go toward state and local taxes.
Some states give seniors a break, usually on property taxes, and other states have no income tax or low sales tax.
To determine the states that make it easiest on retirees to have a good life on a fixed income, Kiplinger, a financial news and business forecasting firm, ranked the states on a number of tax issues. Following are the 15 best tax states for retirees listed in reverse order with the best listed last. A few of the reasons each made the list are included.
No. 15: Arkansas
Social Security benefits and up to $6,000 in other retirement income are exempt from the income tax, which can go up to 7 percent. Property taxes are among the lowest in the nation.
No. 14: Colorado
Generous deductions from the state income tax, which is 4.63 percent, are given for retirement. Colorado also has the ninth lowest property taxes in the country.
No. 13: Kentucky
The Bluegrass State exempts Social Security benefits and up to $41,110 in other retirement income from the state income tax. Food, utilities and prescription drugs are among the sales tax exemptions.
No. 12: South Carolina
Social Security and some other sources of retirement income are not subject to the state income tax, which ranges from 3 percent to 7 percent. Seniors also pay a reduced sales tax of 5 percent. Property taxes are among the lowest in the nation.
No. 11: Pennsylvania
The Keystone state is one of the most generous when it comes to excluding retirement income from state taxes and numerous exemptions from the 6 percent sales tax make it more palatable.
No. 10: Florida
The Sunshine State has a low tax climate with no income tax and no estate or inheritance tax. Some seniors receive an additional homestead rebate on top of what all residents receive.
No. 9: South Dakota
This state has no income tax and a modest 4 percent sales tax, although there are few exemptions from the sales tax. Home prices are moderate, but property taxes are the sixteenth highest in the country.
No. 8: Louisiana
Income taxes here range from 2 percent to 6 percent, but Social Security and many other types of retirement income are exempt. Property taxes are the third lowest in the nation.
No. 7: Arizona
This retirement haven has a low income tax rate of 2.59 percent to 4.54 percent, no estate or inheritance taxes, and gas and property taxes are well below the national average.
No. 6 Delaware
With no sales tax and an income tax that is a modest 2.2 percent to 6.6 percent, Delaware comes in among the lower tax states. Social Security is not taxed and exemptions are made for some other retirement income. Delaware has the fourth lowest property tax in the nation, according to the Tax Foundation.
No. 5: Georgia
Georgia is a prime state for retirees even with an income tax that is 6 percent for most residents and a 4 percent sales tax. Social Security and most types of retirement income, including such things income from rental property, are exempt. Seniors also qualify for several deductions from property taxes.
No. 4: Mississippi
Mississippi imposes a 3 percent to 5 percent income tax, but Social Security and most other retirement funds and pensions are exempt. The median property tax of $778 on a median home value of $97,500 is among the lowest in the country.
No. 3: Nevada
Nevada has no income tax although the sales tax is 6.85 percent. The median property tax for the median home value of $165,300 is $1,423.
No. 2: Wyoming
Wyoming has no income tax and a 4 percent sales tax thanks to the income it receives from oil and mineral rights. Both gasoline and property taxes are low.
No. 1: Alaska
Alaska is a tax haven for retirees. It has no sales tax, no income tax and no estate or inheritance taxes and it sends every resident a dividend check once a year from its oil wealth savings account.