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State Tax 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.


Del Webb Charleston

States With No Sales Tax

Alaska, 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.

The highest 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.

 

 

Click here to review a table comparing the income and sales tax structures for each State.

 

 

Click here to get an analysis of the income and sales tax structures on a State-by-State basis.

 

Property Taxes     .

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:.

            Arkansas ($191)

            Alabama ($285)

            Kentucky ($376)

            New Mexico ($380)

           

 States with the highest local property taxes per capita:

            New Jersey ($1,871)

            Connecticut ($1,733)

            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 of Living.

 

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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:

 States with Highest Tax Burden

 

 Total Taxes
  ($ million)

   Per Capita

  Rank

 

  % of
Pers. Income

Rank

Vermont

2,243

3,600

1

11.4

1

Hawaii

4,434

3,478

2

10.8

2

Wyoming

1,740

3,418

3

10.0

3

Arkansas

6,552

2,358

18

9.2

4

West Virginia

4,301

2,367

16

9.2

5

Delaware

2,725

3,229

5

9.2

6

New Mexico

4,471

2,319

20

9.0

7

Minnesota

15,881

3,094

6

8.6

8

Alaska

1,851

2,787

8

8.3

9

Kentucky

9,091

2,179

23

8.1

10

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