In this article, we are going to discuss the 5 states that don’t tax pension income in the US. You can read our detailed discussion and a more comprehensive list by visiting the 13 States That Don’t Tax Pension Income in the US.
5. Florida
Individual Income Tax Rate: 0%
Statewide Sales Tax Rate: 6%
Property Tax Rate: 0.71%
Combined State Sales & Property Tax Rate: 6.71%
Florida is one of the states with zero income tax and it also has a low property tax rate of 0.71%. Statewide sales tax rests at 6%, potentially reaching 8.25% with local additions. Florida ranks fifth among the states that don’t tax pension income in the US.
4. South Dakota
Individual Income Tax Rate: 0%
Statewide Sales Tax Rate: 4.20%
Property Tax Rate: 1.01%
Combined State Sales & Property Tax Rate: 5.21%
South Dakota is another prominent retiree haven with no income taxes and a property tax of just over 1%. Senior citizens with a minimum age of 70 years can benefit from the Homestead Exemption Program, which allows delaying property tax payment until the property is sold, with accrued taxes subject to a 4% annual interest rate. Other requirements to be part of the plan include residing in the state for a minimum of 5 years or owning a house for at least 3 years.
3. Wyoming
Individual Income Tax Rate: 0%
Statewide Sales Tax Rate: 4%
Property Tax Rate: 0.55%
Combined State Sales & Property Tax Rate: 4.55%
Wyoming is one of the best states that don’t tax any form of income. Retirees enjoy tax-free social security benefits and other retirement incomes. With low sales and property taxes, it’s a haven for retirees. Wyoming ranks third among the 13 states that don’t tax pension income in the US.
2. New Hampshire
Individual Income Tax Rate: 3%
Statewide Sales Tax Rate: 0%
Property Tax Rate: 1.61%
Combined State Sales & Property Tax Rate: 1.61%
New Hampshire has a flat 3% individual income tax rate levied only on interest and dividends income. The state doesn’t impose income taxes on social security and other retirement income. New Hampshire does not have a sales tax and charges a 1.61% tax on property. New Hampshire is one of the best states that don’t tax pension income in the US.
1. Alaska
Individual Income Tax Rate: 0%
Statewide Sales Tax Rate: 0%
Property Tax Rate: 1.07%
Combined State Sales & Property Tax Rate: 1.07%
Alaska ranks first among the states that don’t tax pension income in the US. The state does not have an income tax, making it a prime location for retirees. The only negative thing about Alaska is its harsh climate and slightly higher living costs.
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