In this article, we will take a look at the 10 best states to retire in for taxes and cost of living. If you wish to check out our detailed analysis on Retirement taxes and cost of living, you may go to 25 Best States to Retire in for Taxes and Cost of Living.
10. Georgia
Tax-friendliness: Very Tax-friendly
Cost of living: 91
One of the best states to retire in for taxes and cost of living is Georgia. There are no taxes on social security retirement benefits. Moreover, seniors aged 65 or older can receive a maximum deduction of $65,000 for other types of retirement incomes. Sales and property tax rates are moderate, while cost of living is 9% below the national average.
9. Illinois
Tax-friendliness: Tax-friendly
Cost of living: 90.8
Almost all of retirement incomes in Illinois goes untaxed, including social security retirement benefits, retirement saving accounts income, and pension incomes. Property and sales taxes are some of the highest in the US. However, a 9.2% lower-than-national-average cost of living seems to offset its impacts.
8. Tennessee
Tax-friendliness: Tax-friendly
Cost of living: 90.4
Tennessee enjoys the status of being tax-friendly as well as affordable. Living expenses are 9.6% below the national average, and there are no income taxes. Property taxes are also quite low, while sales taxes are higher than national average.
7. West Virginia
Tax-friendliness: Tax-friendly
Cost of living: 90.3
West Virginia is also a good option to consider for retirees looking for affordable living and a tax-friendly environment. While social security and other types of retirement incomes are partially taxed, a deduction can be claimed on them to offset the taxes. Costs of living are 9.7% lower than the US average, while property and sales taxes are low as well.
6. Arkansas
Tax-friendliness: Tax-friendly
Cost of living: 90.3
Arkansas also provides a good mix of affordable living and tax-friendly environment to retirees. Cost of living is 9.7% lower than the national average, with no taxes on social security benefits. Public and private pension incomes are partially taxed in the state. Moreover, while property taxes are low, sales taxes are quite high here.
5. Alabama
Tax-friendliness: Tax-friendly
Cost of living: 88.8
Social security retirement benefits are fully exempt from income taxes in Alabama. Property taxes are some of the lowest in the country too, a plus for homeowners in the state. Cost of living is 11.2% lower than the national average, another major draw for retirees. However, sales taxes are high in the state.
4. Missouri
Tax-friendliness: Moderately Tax-friendly
Cost of living: 88.4
Boasting a cost of living that is 11.6% lower than the US average, Missouri is one of the most retiree-friendly states in the US. Property taxes are below the national average too. However, social security is partially taxed in the state, and withdrawals from retirement accounts are fully taxed.
3. Kansas
Tax-friendliness: Moderately Tax-friendly
Cost of living: 87.7
The state of Kansas exempts all social security income from taxes for adjusted gross income of $75,000 or less. Other types of retirement income, except for public pension income, are taxed. Both property and sales taxes are high, too. However, these drawbacks are offset by the extremely affordable cost of living, which is 12.3% below the US average.
2. Oklahoma
Tax-friendliness: Tax-friendly
Cost of living: 86
In Oklahoma, retirees find themselves enjoying affordable living costs as well as a friendly tax environment. Cost of living is 14% lower than the national average, while social security benefits are fully exempt from taxation. Property taxes are quiet low as well, but sales taxes are high.
1. Mississippi
Tax-friendliness: Very Tax-friendly
Cost of living: 85.3
The best state to retire in for taxes and cost of living is Mississippi. The state exempts all forms of retirement income from taxation, boasts low property taxes, and even has moderate sales taxes. Cost of living is the best part, which is 14.7% lower than the national average.
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