by Robert Borges on March 1, 2021
Everyone from economists and accountants to hedge fund managers and financial planners have levied predictions about the impact of the recent Presidential and Congressional elections on taxes. The predictions range from nominal to seismic, depending on the source and the current events of the day.
But those considering retirement can take comfort in the fact that there are several states that offer myriad of tax benefits for all residents, in general, and retirees, specifically. Here's a look at five tax-friendly states and private communities that will leave ample disposable income for living the good life.
1. Florida
The Sunshine State has historically been a haven for retirees, but it's not just the beautiful beaches and balmy winter weather that attracts those entering the third act. Florida doesn't levy state income tax, so if you opt to work part-time you'll keep more of your money. There's no tax on Social Security benefits or pension income, the average property tax was $2,035 statewide in 2019 and sales tax is a reasonable 6%. It's of little wonder that tens of thousands of people are still moving to Florida each year. Explore Florida retirement communities.
2. South Carolina
It's no secret that the Palmetto State bends over backwards to attract retirees to its diverse landscape of mountains, midlands and coastal regions. While the state does tax income, Social Security benefits are completely exempt, and taxpayers age 65 and over can exclude up to $10,000 of retirement income. What's more, seniors can deduct $15,000 of other taxable income, and veterans up to $30,000 from military retirement plans. Property taxes are among the lowest in the U.S. and there's a homestead exemption for the first $50,000 of home value. Explore South Carolina retirement communities.
3. Tennessee
The Volunteer State is as hot as Nashville's famous fried chicken these days, and soon-to-be retirees have taken notice. Tennessee doesn't tax Social Security, pension or employment income, and dividends and interest are the only forms of income that are taxable. And did we mention there's no state income tax? Property taxes are incredibly low and there's no estate or inheritance tax, making Tennessee very appealing for the affluent. Explore Tennessee retirement communities.
4. Texas
Everything is bigger in Texas, as the saying goes. But you can make the tax argument that everything is better, as well. No state income tax? Check. No taxes on Social Security income, pension payments or 401 (k) and IRA distributions? Check, check and check. Sales and property taxes are higher, on average, than other states on this list. But with such a wide variety of cities, towns and rural areas, retirees can enjoy a ton of Texas-sized value in the Lone Star State. Explore Texas retirement communities.
5. Delaware
It's nearly impossible to discuss tax friendliness without including Delaware. "The First State" may not be (excuse the pun) the first state that springs to mind for those looking to relocate for retirement. Snow and freezing temps are common from December into March. But for those who're all about saving money, there's no state or local sales tax, no estate or inheritance tax and property taxes are among the top 10 lowest in the U.S. Explore Delaware retirement communities.