Information To Help In Your Retirement Planning
Obviously, one factor to be taken into consideration by anyone searching for the best place
to retire is an analysis of the tax consequences of retirement in a new domicile and the tax ramifications
that will accrue as a result of relocating to a new State. Clearly, there are some States that can be deemed to
be the best places to retire for tax purposes.
While it is not our intent to provide
a detailed tax analysis for each of the 50 different States, this page should serve as a readily available resource whereby
retirees can compare the various taxes imposed at the State level and make a choice based on their personal circumstances.
Although many retirees are primarily concerned about the personal income taxes which may
be imposed at the State level, it is also important to consider the property tax burdens and sale taxes which you may encounter
in moving to a new retirement location.
States With No Personal Income Taxes
Several States, notably Alaska, Florida, Nevada,
South Dakota, Texas, Washington, and Wyoming have no personal income taxes, and in Tennessee and New Hampshire,
income taxes are imposed only on dividends and interest.
States With No Sales Tax
Delaware, Montana, New Hampshire and Oregon do not have a sales taxes. While some States have a uniform rate. others
allow counties and municipalities impose a local option tax onto the base tax rate. States with a single rate include
Connecticut, Hawaii, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, Mississippi, New Jersey, Rhode Island, Vermont,
Virginia, and West Virginia.
sales tax are found in California (7.25%), Mississippi (7.0%), New Jersey (7.0%), Tennessee (7.0%), Rhode Island (7.0%), Minnesota
(6.5%), Nevada (6.5%), and Washington (6.5%). The final tax will be higher, though, in those jurisdictions which permit
a local option tax.
Property taxes remain the biggest source of revenue for most county and
municipal governments throughout the U.S. However, the basis for assessing such taxes and the specific rates will vary
greatly. Once you have identified an area that is being considered for relocation, it is best to study the tax situation
for that locale in detail before making your final decision.
Statistics obtained from
the U.S. Census Bureau do give some insight into which States have the lowest and highest property taxes.
States with the lowest local property taxes per capita, based on figures for 2002, are:.
New Mexico ($380)
States with the highest local property taxes per capita:
New Jersey ($1,871)
New York ($1,402)
Rhode Island ($1,369)
A quick reference site with specific rates for property, income and sales taxes in any given
zip code can be found at Sperling's Best Places. Property tax rates will be included under data for Housing and income and sales taxes information in listed under Cost
For a more accurate picture of the true tax burden that retirees will
incur in each State, it may be helpful to review the ratio of tax revenues as a percentage of personal income.
This calculation reveals these States as the ten with the highest tax burden: