Some states offer tax advantages that can help stretch retirement savings, while others exempt certain types of retirement income from taxation. Retirees planning to maintain their quality of life on a fixed income might consider moving to one of these tax-friendly states. But it's important to get the full picture of how your finances will be affected before you decide to relocate in retirement.

Factor🍰s to Consider When Choosing a Tax-Fr🥂iendly State for Retirement

Tax rates are a significant factor for older individuals considering where to settle down in retirement. States with lower property, sales, and 澳洲幸运5官方开奖结果体彩网:income tax rates may help retirees enjoy their desired lifestylဣe.

Other tax rates to note include those on 澳洲幸运5官方开奖结果体彩网:Social Security benefits, r▨etirement account withdrawals, retirement income exemptions, and inheritances.

ꦦThese are some key factors to keep in mind when looking at tax-friendly states for retirementꦓ:

Property Taxes

Higher property taxes may significantly impact the cost of living. While Hawaii, Alabama, Nevada, Colorado, and South Carolina are the states with the lowest effective property tax rates, remember that rates may vary by county.

Sales Taxes

Low 澳洲幸运5官方开奖结果体彩网:sales taxes can help to keep the cost of day-to-day purchases down, which is particularly important during periods of high inflation. Oregon, New Hampshire, Montana, Delaware, and Alaska all have no sales tax, although these states may have higher tax rates in other areas.

Retirement Income Taxes

Eight states (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, and Wyoming) do not tax income at all. For retirees, this means any income from Social Security, a pension, or distributions from a retirement account will not be taxed by the state. Similarly, any regular income from a part- or full-time job will not be taxed either.

Estate and Inheritance Taxes

Most states do not impose estate or inheritance taxes. However, the District of Columbia and 12 states do impose estate taxes in some cases, and five other states impose inheritance taxes. Only Maryland levies both estate and inheritance taxes.

Capital Gains Taxes

Most states tax capital gains at the same rate as income taxes. However, eight states tax capital gains at a lower rate than other income. These states are Arkansas, Arizona, Hawaii, Montana, New Mexico, North Dakota, South Carolina, and Wisconsin.

Best Tax-Friendly States for Retirees

Some of the most tax-friendly states for retirees include Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, and Wyoming. Each of these states has no income tax, giving them an advantage over most other states. They offer a mixture of other tax implications, such as 澳洲幸运5官方开奖结果体彩网:low property taxes, sale💛s taxes, and tax burdens. Further, they also offer 澳洲幸运5官方开奖结果体彩网:low-cost of living or quality of life benefit🍷s.

Alaska

• Retirement income taxes: None
• Capital gains taxes: None
• Inheritance/estate taxes: None
• Property taxes: 1.14% of property value
• Sales taxes: 1.821%
• Tax burden as % of income: 4.6%
• Cost of living index: 123.8
• Quality of life rank: #45

Alaska does not tax personal income, capital gains, or inheritance and estates. It also does not have a statewide sales tax, though municipalities have an average tax of 1.821%. Therefore, it’s worthwhile for retirees considering Alaska to research different 𝔉parts of the state to finꦫd the best tax environment for them.

Florida

• Retirement income taxes: None
• Capital gains taxes: None
• Inheritance/estate taxes: None
• Property taxes: 0.79% of property value
• Sales taxes: 6.948%
• Tax burden as % of income: 9.1%
• Cost of living index: 102.8
• Quality of life rank: #9

Besides offering no taxes on income, capital gains, or inheritances, Florida has a fairly low property tax rate of 0.79% of property value. Its sales tax is high, though, and the state’s location may increase the risk to retirees of weather- and climate change-related property damage. Still, there are reasons beyond just the sun and the beach that so many older individuals look to Florida when thinking about r𒉰etirement.

Nevada

• Retirement income taxes: None
• Capital gains taxes: None
• Inheritance/estate taxes: None
• Property taxes: 0.49% of property value
• Sales taxes: 8.236%
• Tax burden as % of income: 9.6%
• Cost of living index: 101.3 
• Quality of life rank: #33

Nevada also offers citizens no taxes on income, capital gains, inheritance, or their estate. Property taxes are quite low, at just 0.49% of property value. On the other hand, Nevada's sales tax of 8.236% is one of the highest rates nationwide, although the state does not tax certain everyday goods like groceries.

New Hampshire

• Retirement income taxes: None
• Capital gains taxes: None
• Inheritance/estate taxes: None
• Property taxes: 1.77% of property value
• Sales taxes: None
• Tax burden as % of income: 9.6%
• Cost of living index: 112.6
• Quality of life rank: #2

One of New Hampshire’s main appeals to tax-conscious retirees is the absence of sales tax of any kind. Couple this with no income, capital gains, or inheritance taxes, and the state offers a co♉mpelling case as a retirement destination. It also ranks very highly in overall quality of life thanks to one of the lowest crime rates in the nation and access to incredible natural sit♔es, among other benefits.

South Dakota

• Retirement income taxes: None
• Capital gains taxes: None
• Inheritance/estate taxes: None
• Property taxes: 1.09% of property value
• Sales taxes: 6.114%
• Tax burden as % of income: 8.4%
• Cost of living index: 92.2
• Quality of life rank: #11

Despite having no income, capital gains, or inheritance and estate taxes, South Dakota does have a fairly high property tax rate of 1.09%. There is a special exemption for homeowners age 70 or higher, though, which can delay property tax collection until a home is sold.

Tennessee

• Retirement income taxes: None
• Capital gains taxes: None
• Inheritance/estate taxes: None
• Property taxes: 0.55% of property value
• Sales taxes: 9.556%
• Tax burden as % of income: 7.6%
• Cost of living index: 90.5
• Quality of life rank: #27

澳洲幸运5官方开奖结果体彩网:Tennessee does not levy an income tax, capital gains tax, or inheritance tax on its residents. Further, it has one of the lower property tax levels nationwide at just 0.55% of property value. By contrast, though, Tennessee has the second-highest sales tax at 9.556%; Louisiana is the only state with a higher sales tax. Still, Tennessee’s overall co🔴st of living is quite low🅠, making it desirable as a retirement destination.

Texas

• Retirement income taxes: None
• Capital gains taxes: None
• Inheritance/estate taxes: None
• Property taxes: 1.58% of property value
• Sales taxes: 8.201%
• Tax burden as % of income: 8.6%
• Cost of living index: 92.7
• Quality of life rank: #29

Like the other states on this list, Texas will not levy income, capital gains, inheritance, or estate taxes on citizens, including retirees. Its property tax rate of 1.58% is fairly high compared to some other states on this list, though, and sales taxes are generally quite high. Like Nevada, though, groceries and prescription medications are exempt from sales tax, which helps to keep costs down. In total, Texas ༒has a below-av🔯erage cost of living of 92.7.

Wyoming

• Retirement income taxes: None
• Capital gains taxes: None
• Inheritance/estate taxes: None
• Property taxes: 0.58% of property value
• Sales taxes: 5.441%
• Tax burden as % of income: 7.5%
• Cost of living index: 95.5
• Quality of life rank: #12

Like many other top destinations for retirees, Wyoming entices prospective homebuyers with no income, capital gains, inheritance, or estate taxes. Its property tax rate of 0.58% is also low, and sales taxes are fairly middle-of-the-road at 5.441%. With easy access to Yellowstone National Park and many other scenic outdoor sites, Wyoming is ranked 12 in overall quality of life.

Tips for Retiꦰrees Planning to Relocate to a Tax-Friendly State

Though the states listed above are among the most tax-friendly, your preferred state may not be on this list. Depending on income sources, lifestyle, and goals for 澳洲幸运5官方开奖结果体彩网:retirement, there may be another destinat🃏ion that is betterꦕ for you.

This is why it is essential to thoroughly research 澳洲幸运5官方开奖结果体彩网:states ✅yཧou may be considering for retirement—not only for tax implications but for lifestyle considerations, health care accessibility, community, culture, and other factors that will impact your daily experience there. Financial advisors can be helpful when it comes to 澳洲幸运5官方🎃开奖结果体彩网:maximizing your income in retirement and taking advantage of tax incentives. 

Finally, keep in mind that changing resi✅dency has costs as well, including moving expenses, the costs associated with buying a new home and selling an old one, and so on.

The Bottom Line

Many of the most tax-friendly states for retirees have no personal income taxes as well as low 🌠property and sales taxes. They tend to also have a low overall tax burden. Many also ♈exempt estate and inheritance taxes and do not tax capital gains.

However, there are a host of other factors to consider in addition to tax rates when it comes to selecting a retirement destination. Keep in mind that the overall cost of life will be a big determinant of how far your income goes. Beyond that, quality of life rankings and evaluations differ considerably among the states on this list. Be sure to thoroughly research any tax implications of a big move and discuss your options with a trusted financial advisor.