5 Tax Friendly Retirement States

Del Webb\'s Lake Providence in Tennessee is a popular 55+ community known for its amazing amenities, elegant homes and fantastic state tax benefits.
fasdgasgag
Del Webb’s Lake Providence in Tennessee is a popular 55+ community known for its amazing amenities, elegant homes and fantastic state tax benefits.

While searching for the best place to retire, savvy active adults begin looking for ways to stretch their savings. Choosing a tax friendly state as a retirement destination is a smart way to make the most of a fixed income, but finding the best location can take a bit of research.

Federal taxes are about the same regardless of where you choose to live. However, the amount of state and local taxes you pay can vary widely. When searching for the best place to retire, be sure to look into the individual community’s entire tax burden, including income tax, property tax, sales tax, and taxes on pension plans. Many states also offer special tax programs for seniors, which can save you money after reaching a certain age.

Which other tax-friendly states make great retirement locations? The tax benefits from one state to another will predominantly depend on your personal financial situation. For example, someone with a military pension may prefer a state with pension-friendly tax laws. While the answer will be different from one retiree to the next, here are five states to consider:

1. Alaska

Alaskan residents do not pay income tax or sales tax, and there are government refunds due to the revenue earned from oil drilling. For those who like the Alaskan climate and lifestyle, this can be an affordable retirement destination. However, not many retirees are interested in Alaska’s harsh winters and relative isolation from the rest of the nation.

2. New Hampshire

This tax-friendly state has no general income tax or sales tax. The state relies heavily on property taxes, yet there are programs to offset these taxes for adults beginning at age 65. Like Alaska, this state’s climate does not meet the popular picture of a retirement location.

3. Tennessee

There are no broad-based income taxes in Tennessee, which means no taxes on salaries, Social Security benefits, IRA distributions, or pension income. There are, however, taxes on stock dividends and interest income from investments. With rural beauty and a low cost of living, Tennessee is gaining popularity as a retirement destination.

4. Delaware

This small state is a tax-friendly location for retirees. There is no sale tax and limited income taxes. Social Security benefits are exempt from state income taxes. Older residents may also qualify for special tax credits and tax relief programs.

5. Alabama

In addition to being tax-friendly, Alabama enjoys a warm climate that appeals to many retirees. This beautiful southern state offers state income exemptions for Social Security benefits, as well as military, civil service, and government pensions. There is a 4-percent sales tax statewide, however additional local sales tax rates do raise this to up to 12-percent in some areas. Residents over the age of 65 are exempt from county property taxes.

Before making the final decision on where the best place to retire is for you, be sure to research your potential tax burden and to consider state and local taxes, including specific county and city taxes. Most states provide tax information online, which makes it easier than ever to find your own tax-friendly retirement destination. Think you know of some great tax havens, tell us about it in the comments section below.

Can you spot the $207,744 difference between these identical homes?

Financing is the difference!

Get the details in The 62+ Loan Homebuyers Guide.

55places Mortgage is a joint venture between Mutual of Omaha Mortgage and 55places.com.
Details here.

Share this post:

We're here to help! (800) 928-2055

Call us to speak with a customer service representative.

Subscribe to Our Newsletter

Get Weekly Updates

I agree that 55places and its affiliates, partner providers or agents may call, text, or email me about my inquiry, which may be made with automated means. I understand that my consent is not a prerequisite for buying a property. I may revoke my consent at any time by contacting [email protected] Message/data rates may apply. I also agree to 55places.com’s Privacy Policy and Terms of Use.

The Best Places to Snowbird in 2021

We’ve gathered 25 of the best places for snowbirds, including cities in Florida, Arizona, California, Texas, South Carolina, and Nevada. For each entry, we’ve also provided a list of recommended 55+ communities in the area. If you’re ready to find your own winter retreat this season, here are some of the best places to consider.

Interior view of the indoor pool at Del Webb Ponte Vedra in Ponte Vedra, Florida.

Jacksonville Area 55+ Communities With Indoor Pools

There’s something so luxurious about an indoor pool. Take a look at these communities in Jacksonville and the surrounding northeast Florida area. You’ll find indoor pools and much, much more.

Sunset on sandy and rocky beach in the Bay Area of California.

55+ Communities on the Beach in the Bay Area

Perhaps you’re ready to turn your dream of living by the beach into reality. In that case, we’ve got you covered, because there are a few wonderful beachside 55+ communities right in the Bay Area.

A 55+ couple with arthritis holding hands and enjoying a day at the beach.

The Best Places to Retire With Arthritis

Those with arthritis know the pain and discomfort can be difficult to manage day-to-day. While there are many remedies to manage the pain, one you may not consider is climate. 55Places has taken a look at the best regions to live if you have arthritis, and many of them are home to 55+ communities!

A bridge over a pond on the grounds of Sun City Lincoln Hills in Lincoln, California.

Large 55+ Communities in the Sacramento Area

One of the greatest benefits of living in a large community is the vast amount of amenities typically offered. If you’re looking for larger 55+ communities in Sacramento, you’ll want to check out the three following communities.

Aerial view of the Downtown Spartanburg skyline in South Carolina on a sunny day.

Living in Spartanburg, South Carolina

Located in the scenic foothills of the Blue Ridge Mountains in Northwestern South Carolina—also known as the Upstate—Spartanburg is an ideal destination for active adults who want to retire in a mid-sized city with a small-town, close-knit feel.

About 55places

We’re changing the way people 55 and older are searching for their perfect next place. With a national network of hand-selected real estate experts, plus comprehensive information, unbiased content, and on-the-go insight about thousands of communities across the country, we’re a trusted resource paving the way from here to home. Whether you’re interested in a low-maintenance single-level residence, an active lifestyle or age-qualified community, an intimate enclave, or anything in between, we can help you make your next move the best one yet.

Scroll to Top