The best tax states for retirees generally have no state income tax, like Florida, Texas, Nevada, Wyoming, South Dakota, Alaska, Tennessee, and Washington, avoiding taxes on Social Security, pensions, and withdrawals; while states like Illinois, Iowa, Mississippi, and Pennsylvania offer significant exemptions, especially for retirement account income, but you must balance potential higher sales or property taxes in these states. Consider your entire tax picture, including property, sales, and potential capital gains taxes, as no state is perfect.
The sales, property, estate, inheritance and income tax rates in this category range in friendliness based on the degree of retirement deductions available.
What are the best states to retire in for low taxes? States with no income tax — like Florida, Texas, and Wyoming — are often considered tax-friendly for retirees. These states typically don't tax Social Security benefits, pensions, or retirement account withdrawals, though property and sales taxes may still apply.
Alabama: Exempts seniors from the state portion of property taxes; county taxes may still apply. Alaska: Exempts the first $150,000 of assessed home value for homeowners aged 65-plus. Colorado: Exempts 50% of the first $200,000 in value of a senior's primary residence.
This is the second year in a row that New Jersey came in last on the list. Other states at the bottom of the rankings included Massachusetts, New York, Alabama and Mississippi. Massachusetts (No. 50) and New York (No. 49) both incurred high costs of living and high personal income tax burdens.
Renting in retirement offers flexibility, less maintenance, and frees up cash for travel/hobbies, while homeownership provides stability, potential equity, tax breaks, and the freedom to renovate for aging in place, but comes with upkeep costs and less mobility. The best choice depends on your financial situation, health, desire for freedom vs. stability, and long-term plans, with renting often favored for lifestyle freedom and buying for long-term financial security if the home is paid off.
The $1,000 a month rule is a retirement guideline suggesting you need about $240,000 saved for every $1,000 per month in desired income, based on a 5% annual withdrawal rate (5% of $240k is $12k/year, or $1k/month). It's a simple way to set savings goals, but it doesn't account for inflation, taxes, or other income like Social Security, so it's best used as a starting point, not a complete plan.
States With the Highest Social Security Retirement Benefits
The states with the highest monthly Social Security benefits check for retired workers are all in the Northeast or mid-Atlantic: Connecticut: $2,196. Delaware: $2,171. Maryland: $2,140.
To make sure you check the health and mobility of seniors when moving interstate, do the following: Consult healthcare professionals for assessment and guidance. Plan around medical appointments for seamless continuity of care. Seek assistance to ensure safety and well-being during the move.
Average individual retirement income: $60,000/year or $5,000/month. Median individual retirement income: $47,000/year or $3,900/month. Average retirement income for couples: $100,000/year or $8,300/month.
No U.S. state offers a complete absence of property tax for all seniors, but many provide significant exemptions, deferrals, or credits, with states like Alaska, Florida, Hawaii, Louisiana, and Washington offering substantial relief, while others like South Dakota allow deferral until sale, and states like Colorado, Texas, and New York offer significant reductions on assessed value for qualifying seniors.
#1 Illinois. Although Illinois is often thought of as a cultural hotspot, with suburban living and wine trails to enjoy, this state has significant long-term debts, unfunded pension liabilities, and big budget imbalances. These complications make Illinois our pick as the worst state for retirees.
According to the SSA, the home you live in and the land it is on are not counted as resources when determining your SSI eligibility. This is known as the “home exclusion.” Whether you own the home outright or have a mortgage, as long as it's your primary residence, it won't affect your SSI benefits.
Instead, property tax relief for seniors varies significantly depending on where you live. Most states and many local jurisdictions offer some form of property tax exemption, deferral, or credit program specifically designed for older residents, typically starting between the ages of 65 and 75.