The Covid-19 pandemic ushered in an era of migration for millions of Americans, who now worked from home and could seek out new locations that offered lower costs of living (including taxes). It’s a trend long recognized by retirees, who find themselves no longer tied to specific locations due to their employment.
If you fall into either of those groups, particularly if you’re expecting to retire soon, the following five states are considered to be the most tax-friendly in 2023.
Alaska. If you’re looking to avoid taxes, Alaska is the place to go. The state imposes no state income tax, Social Security taxes, estate taxes, or inheritance taxes. Plus, the state and local sales tax rate is set at 1.76 percent and the gas tax rate is the lowest in the nation at 9 cents per gallon. Residents also receive an annual dividend check from the state’s oil earnings.
Delaware. In Delaware, you can completely avoid state sales tax and vehicle property tax. Residents over age 60 can exclude $12,500 in pension and other retirement income from the state income tax calculations, and Social Security income is not taxed at all. You’ll also pay the sixth-lowest property taxes in the nation, and gas tax is comparatively low at 22 cents per gallon.
Wyoming. In Wyoming, residents pay no state income tax, estate tax, or inheritance tax. Sales and property taxes are some of the lowest in the nation. Gas tax is fairly low, at 24 cents per gallon, and groceries and prescriptions are exempt from sales taxes.
Florida. Florida has long been a haven for retirees, and it’s not just because of the warm, sunny weather. In exchange for braving the occasional hurricane, you can avoid state income taxes, estate tax, inheritance tax, and taxes on any income from Social Security, retirement accounts, or pensions. While the state does impose a 7 percent sales tax, groceries and prescription medications are exempt.
New Hampshire. If New England is more your type of environment, New Hampshire provides numerous tax benefits to retirees. There is no state income tax, nor are there state or local sales taxes. You won’t be paying estate or inheritance taxes, either. Of course, that means the state makes up its revenue in other ways, with the third-highest property tax in the country (at 1.86 percent). You might want to search for a smaller home in a lower-priced community.
The taxes that affect you individually might vary from another retiree’s situation. That’s why we recommend you meet with us as you plan for retirement, and we will help you choose a location that meets your income and tax needs as well as your preferred lifestyle.
