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The 10 Least Tax-Friendly States for Retirees
Kiplinger ^ | 01/01/2022 | DAVID MUHLBAUM, ROCKY MENGLE

Posted on 01/01/2023 8:45:43 PM PST by SeekAndFind

Most people have a dream home in mind for retirement. It might be a quaint beach house, a log cabin deep in the woods, or a penthouse high in the sky. But no matter where you plan to live during your golden years, make sure you check out the local tax situation in your dream destination before packing your bags and relocating. If you don't, and you end up in one of the least tax-friendly states for retirees, you might end up with a hefty state and local tax bill.

State and local taxes can vary greatly from one place to another. The difference can easily exceed $10,000 or more per year for some people, which is enough to break the bank for a lot of seniors if you wind up in one of the worst states to retire in for taxes. To avoid this kind of bombshell, do your homework before settling on a new location. You can start with our State-by-State Guide to Taxes on Retirees (opens in new tab). This tool maps out the tax landscape for each state and the District of Columbia.

We also identified the 10 least tax-friendly states for retirees, which are listed below (we saved the worst state for last). Our results are based on the estimated state and local tax burden in each state for two hypothetical retired couples with a mixture of income from wages, Social Security, 401(k) plans, traditional and Roth IRAs, private pensions, interest, dividends, and capital gains. One couple had $50,000 in total income and a $250,000 home, while the other had $100,000 of income and a $350,000 home. Take a look to see if your state — or the state you've been dreaming about for retirement — made our list of the "least tax-friendly" states for retirees (we hope it didn't).



TOPICS: Business/Economy; Society
KEYWORDS: retirees; taxes
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1 posted on 01/01/2023 8:45:43 PM PST by SeekAndFind
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To: SeekAndFind

They list Delaware as the most friendly state for retirees.

The only downside is that you have to live in Delaware.


2 posted on 01/01/2023 8:55:56 PM PST by chaosagent (Remember, no matter how you slice it, forbidden fruit still tastes the sweetest!)
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To: SeekAndFind

While Arkansas may not be on the list, the one thing we have that most states do not have is any Debt and by Law we can’t anything but a State Balanced Budget and not State Debt is allowed. So we are pretty stable and have been.


3 posted on 01/01/2023 8:59:09 PM PST by Captain Peter Blood
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To: SeekAndFind

This is a good example of selectively using information to demonize states that a reporter doesn’t like - Texas in this case:

“You might be surprised to see the Lone Star State on the list of least tax-friendly states for retirees...Texas’ main problem is with its property taxes. The state’s median property tax RATE is the seventh-highest in the country.”

Note the word “rate”. Yes, it’s on the high side, but a high rate for homes that cost half as much as the more expensive states pretty much negates itself. Furthermore, if you really don’t like a high property tax rate, then live in a cheaper home, or in a condo. Try doing that with income tax.

“Sales taxes are on the high end in Texas, too. The state imposes a 6.25% tax, but local governments can tack on up to 2% more. When combined, the average state and local sales tax rate in Texas is 8.2%, which is the 14th-highest combined rate in the country.”

Except one HUGE item when it comes to sales taxes is cars, and they are always taxed at 6.25%, and that tax is on the final price of the car, so if you get $5,000 cash back, you don’t pay any tax on that $5,000 - whereas in many states you do. Also, besides cars, the flat 6.25% rate also applies to campers.


4 posted on 01/01/2023 9:04:49 PM PST by BobL
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To: SeekAndFind

I often end up paying more state income tax in Oklahoma than I do feral tax. All “income” is taxed the same making qualified dividends not so great. Ditto SSI, it isn’t taxed if you are below the poverty level otherwise, taxed. Ditto for cap gains, all taxed the same.

Sales tax is also very high. Right at 10% where I live. Oklahoma is one of 14 states that still tax groceries. Stitt has begged the legislature to send him a bill repealing the tax on groceries. They have done nothing.

I have a young friend who lives in Wisconsin by choice. Moved there from Texas after much research. Taxes are similar but the public services are so much better. He is an outdoorsman when he can be and says the state parks and other public facilities are immaculate.

All states need revenue to live but how much they take and how well they use it eases the pain. Oklahoma is one giant speed bump from one side of the state to another. In a 35 state benchmarking study Oklahoma ranked dead last in on time and on budget road construction accountability. Good ole boys and kick backs still reign here. They build interstate highways without a lick of steel in them. Could that be why the fall apart?

I think most places are lousy just like our country has become. Lousy, don’t care, wasteful, low standard and low performance.


5 posted on 01/01/2023 9:18:49 PM PST by Sequoyah101 (Just my thoughts)
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To: SeekAndFind

Bump


6 posted on 01/01/2023 9:20:42 PM PST by Albion Wilde ("There is no good government at all & none possible."--Mark Twain)
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To: SeekAndFind

Of course, if you don’t own land or home in Texas, their taxes to seniors are nil. My good friends are selling the house they’ve lived in for decades and downsizing into a retirement community. I don’t think they’ve thought through the taxes but as long as their new home isn’t some type of condo, they should get a tax break for it.


7 posted on 01/01/2023 9:24:08 PM PST by OrangeHoof (No food in the stores; fuel prices too high? Thank a liberal.)
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To: OrangeHoof

One can “Homestead”1 property in Texas and the Taxes are mere pennies compared to regular Taxes.


8 posted on 01/01/2023 9:50:36 PM PST by mabarker1 ( (Congress- the opposite of PROGRESS!!! A fraud, a hypocrite, a liar. I'm a member of Congress !7)
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To: SeekAndFind

I don’t know how MD didn’t make the list for the least friendly tax states.

Sure seems like they should.


9 posted on 01/01/2023 10:04:20 PM PST by sauropod (“If they don’t believe our lies, well, that’s just conspiracy theorist stuff, there.”)
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To: chaosagent

Mississippi of the East Coast.


10 posted on 01/01/2023 10:05:03 PM PST by sauropod (“If they don’t believe our lies, well, that’s just conspiracy theorist stuff, there.”)
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To: SeekAndFind

The 10 most tax friendly states doesn’t even include Alaska, which is BS. No state sales tax, no state income tax, a hefty reduction on property taxes and no estate or inheritance tax. I pay about $1000 on a house assessed at $380,000. What more can Alaska do to crack the Top Ten?!


11 posted on 01/01/2023 10:23:37 PM PST by AlaskaErik (There are three kinds of rats: Rats, Damned Rats, and DemocRats.)
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To: SeekAndFind
If our first make-believe couple bought a $250,000 home in the state, they would pay an eye-popping $5,643 in property taxes each year based on our estimates. Our second couple would pay a sky-high $7,900 on their $350,000 New Jersey home.

LOL. Wrong. It's more like $7,900 in property taxes for a $145,000 home.

12 posted on 01/01/2023 11:38:26 PM PST by Tired of Taxes
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To: SeekAndFind
If our first make-believe couple bought a $250,000 home in the state [NJ], they would pay an eye-popping $5,643 in property taxes each year based on our estimates. Our second couple would pay a sky-high $7,900 on their $350,000 New Jersey home.

The exact tax burden (in dollars and cents) should have been stated for every one of the listed states!

Regards,

13 posted on 01/02/2023 12:15:26 AM PST by alexander_busek (Extraordinary claims require extraordinary evidence.)
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To: OrangeHoof
Of course, if you don’t own land or home in Texas, their taxes to seniors are nil.

Isn't that identical to the old, "I don't pay property taxes - my landlords pay property taxes" fallacy? The landlords simply shift the burden to the renters by "upping" the rent.

Regards,

14 posted on 01/02/2023 12:19:56 AM PST by alexander_busek (Extraordinary claims require extraordinary evidence.)
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To: alexander_busek

Yes, this is true but it is charged to the renter as “rent”, not a tax. It would be ridiculous for someone to think that their rent includes no taxes being passed along by the landlord, just as they often pass along part of the cost of the utilities, etc. It’s a cost of doing business.


15 posted on 01/02/2023 1:01:24 AM PST by OrangeHoof (No food in the stores; fuel prices too high? Thank a liberal.)
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To: BobL
Very true.

And many retirees who become empty-nesters choose to downsize, either by selling their homes and buingy smaller homes or renting. This would minimize or negate the impact of property taxes altogether.

Also, Texas homestead exemptions will lower the assessed value of your home by $25,000. Furthermore, retirees who are 65 or older can receive a senior exemption of an additional $10,000 off of their assessed value.

-PJ

16 posted on 01/02/2023 1:25:12 AM PST by Political Junkie Too ( * LAAP = Left-wing Activist Agitprop Press (formerly known as the MSM))
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To: chaosagent

I spent some time there 40 years ago. Lovely place then. Course most of the USA was then.


17 posted on 01/02/2023 2:30:48 AM PST by PghBaldy (12/14/12 - 930am -rampage begins... 12/15/12 - 1030am - Obama team scouts photo-op locations.)
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To: SeekAndFind
I am 64 and live in Connecticut, and have a great job here. But I know I have to leave when I retire in three or four years.

SC (Greenville?) and Tenn (Knoxville?) already the top two retirement destinations for me. Sad, because I love Connecticut - just can't afford to retire here once I hang up my spurs.

18 posted on 01/02/2023 2:44:52 AM PST by Psalm 73 ("You'll never hear surf music again" - J. Hendrix)
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To: SeekAndFind

Property taxes on residential property are a tax on consumption. The more expensive your house, the higher the taxes.

So you can control property taxes by controlling how expensive a property you live in.

And recently, property taxes have been largely offset by price appreciation.


19 posted on 01/02/2023 4:14:56 AM PST by FarCenter
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To: SeekAndFind

With high property taxes in TX, you cannot own a home. You essentially rent your home from government even after you “pay it off.”

Of course, you can choose to live in a shack in the desert or ghetto to reduce your government rent payment.


20 posted on 01/02/2023 4:30:19 AM PST by UnwashedPeasant (The pandemic we suffer from is not COVID. It is Marxist Democrat Leftism.)
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