Top seven states with the lowest taxes for retirees
When it comes to retirement – and living on a fixed income – people need to consider how taxes will influence their lifestyle. Which states have the lowest taxes for retirees?
For retirees living on fixed incomes, taxes can be burdensome and impact quality of life during retirement. Many financially savvy retirees move to states like Florida, not just for the sunshine, but to reap the economic benefits of low taxation. Florida is one of seven no-income tax states and makes the list of states with a marginal federal and state tax rate of under 25 percent.
Consider these seven states with the lowest retirement tax burden.
Sure, Alaska is a little lacking in the sun and warm weather many retirees seem to favor, but the state's lenient tax policies might make you want to pick up and move there, anyhow. State residents are exempt from retirement income tax, and only 24 of its 164 municipalities levy a property tax. And it gets better: Those 65 years and older residing within one of these 24 communities are exempt from property taxes on the first $150,000 of their home's assessed value. To top it all off, there is either no or low sales tax. Of the 107 municipalities reporting sales tax, the rate ranges from a low 1 percent–7 percent (typically 2 percent – 5 percent).
Two other states worth considering (but are not on this list) are New Hampshire and Tennessee. The state of New Hampshire has no income tax and 0 percent sales tax, but there's a 5 percent tax on dividend and interest income and property taxes are the third highest in the nation. Tennessee does not impose income tax but has what's called a "hall tax" of 6 percent on dividend and interest income. And its sales tax of 7 percent, as high as 9.75 percent in some municipalities, ranks highest in the nation due to the complexity of local and special purpose taxes that are levied in addition to the sales and use tax.
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