Top 10 States with Lowest Taxes on Retirees: Kiplinger
Kiplinger has complied of a list of the top 10 tax friendly states for retirees and we want to share it with you. All of the states exempt Social Security benefits from state income taxes. We’ll start from number 10:
10. Tennessee. Kiplinger says Tennessee has no state income tax and the average state and local sales tax is 9.46%. Tennessee eliminated its inheritance tax in January 1 and reduced its tax on stock dividends and interest income from 6% to 5%, which it plans to phase out completely by 2022.
9. Louisiana. State income tax is anywhere from 2% to 6% depending on taxable income. Average state and local sales tax is 9.9%. Kiplinger finds residents 65 or older can exclude as much as $6,000 of income tax from IRA distributions, private pensions and annuity payouts.
8. Delaware. State income tax is from 2.2% to 6.6%. Delaware has no sales tax and imposes its own estate tax, which follows the federal estate tax. The maximum rate is 16%. Assets left to a surviving spouse are exempt.
7. Georgia. State income tax is 1% to 6% and the average state and local sales tax is 7.01%. Social Security income and as much as $35,000 of most other retirement income for people ages 62 to 64 is exempt from state taxes.
6. Florida. The big appeal of the Sunshine State for retirees is there is no state income tax. The average state and local sales tax is 6.66%.
5. South Dakota. South Dakota also has no state income tax. Average state and local sales tax is 5.84%.
4. Mississippi. State income tax is 3% to 5% and the average state and local sales tax is 7.07%.
3. Nevada. Another state on the list with no state income tax. The average state and local sales tax is 7.98%. The state also has the 12th lowest property tax rate in the nation.
2. Wyoming. Yet another state with no state income tax! The average state and local sales tax is 5.42%. It also happens to have the lowest beer tax in the U.S. for those of you who enjoy a nice brewski once in awhile in retirement.
1. And the most tax friendly state Kiplinger says is Alaska. It’s not too hard to figure out why once you hear these percentages: There is no state income tax in Alaska and average state and local sales tax is only 1.78%. The cherry on top? The state sends all permanent residents an annual dividend check from the state’s oil wealth savings account. Maybe wearing long johns, a parka, a sweater and a beanie in the middle of another state’s summer is worth it?