Retiree Tax Heaven (and Hell)
Where you live can have a huge impact on your tax bill in ways that may surprise you.
By Mary Beth Franklin, Senior Editor
From Kiplinger's Personal Finance magazine, August 2008
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Five states are particularly tough on retirees. Not only do they fully tax most pensions and other retirement income, but most of them also have fairly high top tax brackets, says Tom Wetzel, president of the Retirement Living Information Center. Those states, with their top tax brackets for 2008, are California (9.3%), Connecticut (5%), Nebraska (6.8%), Rhode Island (9.9%) and Vermont (9.5%). For a free state-by-state tax guide, including exemptions for seniors and a rundown on how various types of retirement income are taxed, go to www.retirementliving.com.
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Social Security Benefits
Most states are moving away from taxing Social Security benefits. In addition to the nine states that do not have a broad-based individual income tax, 27 states and the District of Columbia don't tax Social Security. Wisconsin was the latest to join those ranks in 2008.
The remaining 14 states -- Colorado, Connecticut, Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Rhode Island, Utah, Vermont and West Virginia -- tax Social Security benefits to some extent.
Iowa will gradually phase out its Social Security tax by 2014, starting in 2008. Missouri will increase the amount of Social Security benefits that may be deducted from taxable state income, rising from 35% in 2008 to 100% in 2012 and beyond. Kansas residents can now exclude Social Security income from their taxes if their adjusted gross income is less than $75,000, up from $50,000 in 2007.
There's no guarantee that this trend of exempting Social Security benefits from taxes will continue, says Kathleen Thies, state-tax analyst for CCH, a major provider of tax information. "But many states seem to be heading in that direction as their populations age and tax treatment of Social Security income becomes a bigger priority for voters."
Sales Taxes
If you're considering a move to another state, don't forget to take into account sales taxes that can nick your wallet every time you open it. Some states exempt food and medicine; others tax every dime you spend. Five states -- Alaska, Delaware, Montana, New Hampshire and Oregon -- have no state sales taxes. At the other extreme, five states -- Indiana, Mississippi, New Jersey, Rhode Island and Tennessee -- each have a state sales tax of 7%, the highest in the nation. Last year, South Carolina raised its statewide sales-tax rate from 5% to 6%. In 2008, Maryland went from 5% to 6%, and Indiana from 6% to 7%.
Eight states impose a sales tax only at the state level: Connecticut, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan and Rhode Island. But the retail-tax pain doesn't always stop at the state level. In many states, cities and other local governments can slap their own sales tax on top of the state levy, and they're doing so in record numbers. In 2007, 485 U.S. cities either increased their sales-tax rate or initiated a new sales tax.
That was the largest annual expansion in the past four years, according to the annual sales-tax-rate study by Vertex, of Berwyn, Pa. "It is evident from the slew of cities raising sales tax rates last year that local governments see tax revenue as a viable part of the solution in addressing revenue shortfall," says Vertex's John Minassian.
Property Taxes
Property taxes are a major factor, especially for individuals on a fixed income. Tax rates vary significantly from state to state and municipality to municipality. Don't look only at existing property-tax rates, says Thies; ask how property taxes have changed over the years. "If you're moving into an up-and-coming area versus one that is more mature, or if you are moving into an area that is gentrifying, you may find your property taxes increasing at a higher-than-anticipated rate."
It's particularly difficult to compare real estate taxes because local jurisdictions follow different assessment and reporting procedures. For example, real estate taxes in Florida are based on 100% of market value, while homes in South Carolina are assessed at 4% of market value. And some jurisdictions with relatively low real estate taxes are located in areas that have above-average real estate values.
Based on data from a 2006 Census Bureau survey and Tax Foundation calculations, the five states with the lowest median real estate taxes (from lowest to highest) are Louisiana, Alabama, West Virginia, Mississippi and Arkansas. The states with the highest median real estate taxes (from highest to lowest) are New Jersey, New Hampshire, Connecticut, New York and Massachusetts.
Reader Comments (110)
Posted by: Scott at 07/11/2008 06:09:01 AM
More, More, More please. It is this type of practical financial advice that will help me prepare for the future. Please give up more more details.
Posted by: Mark at 07/30/2008 01:13:29 PM
The retirees in my state are being killed by property taxes. School districts and local governments just keep coming back to voters for more and more. In my locality, my property taxes have doubled in 10 years. That is not sustainable for most retirees. Check those local property taxes before you pick a retirement spot!
Posted by: joel at 07/30/2008 04:13:55 PM
Don't even consider NJ for retirement. The corruption is rampant..There are 3,000 taxing sources which include the many agencies. Read the latest best seller by two Gannet reporters The Soprano State-NJ Corruption. Your retirement will go to the corrupt (there are many) politicians and political bosses. SAFNJR (Stay Away From New Jersey Retirees!)
Posted by: D. McFarland at 07/31/2008 06:07:42 AM
Thank you for this most valuable information! I agree with the previous poster...More, More, More ,please! I'm looking for information on things such as cancer rates in areas such as West Virginia. The coal burning residual pollutants are so hugely impacting. This also, must play into our decision as to where to retire. Thanks again!
Posted by: Jay Potts at 07/31/2008 11:51:30 AM
Please have more articles like this. NY State Income Tax: If over 59 1/2, qualifying pension and annuity income exclusion is limited to $20,000 max. How does this compare with Virginia?
Posted by: JOHN at 08/06/2008 09:16:28 PM
IF you are a boomer with an inheritance pending or possible, some states tax it as well...not fair at all, but they do it, and it can be substantial.
Posted by: Don at 08/13/2008 07:20:40 AM
Don't come to Texas. We have some of the highest property tax rates in this country.
Posted by: John D at 08/13/2008 07:36:03 AM
Once established, property values (not tax rates)in Florida may be increased by only 3% or the rate of inflation whichever is less; and accrued benefits are transportable from one home to another within the state.
Posted by: John Ferriter at 08/13/2008 07:52:41 AM
Stay away from New York. Oneida County has a 9% combined state and local sales tax. It also has some of the highest property taxes in the country, based on assesed value. New York state even taxes some medical services.
Posted by: mike at 08/13/2008 07:59:34 AM
The New Jersey tax gods make certain that they get retirees' money. If a retiree stays in the state his or her income is taxed, sales tax is 7% and real estate tax is the highest in the country. If the retiree decides to leave the state, he/she is subject to a 3% exit tax.
Posted by: soon to retire I hop at 08/13/2008 08:15:22 AM
I wonder what the cost for retiring in OK is like? Anyone have info on that state?
Posted by: Tom in Ohio at 08/13/2008 08:24:48 AM
Some of my friends are looking at moving out of the USA for retirement, mostly in Costa Rica. The toughest part about relocating to retire is leaving family. Other items to consider are utility and insurance costs. Homeowner insurance rates are wery high in some parts of Florida. How about $9,000 per year in some east coast areas. We're both in our 60s and our family is in Ohio, the 3rd most expensive state in the USA. It's going to be a tough decision. I'm looking for 1 or 2 acres in NO school district.
Posted by: JL at 08/13/2008 08:40:15 AM
But more importantly, where are the counties that offer the most bang for your taxes? Of course taxes are highest in New England and the NY tri-state, because the standard of living is highest there. You have to pay for the NYPD and the schools, but you also get public transportation, museums, theater, etc. You get a house in Little Rock, you may not have to pay a lot of taxes, but you'll need to drive everywhere in your own car, and you certainly won't get the public services the taxes pay for up northeast. So where's a good balance?
Posted by: Roy Tremain at 08/13/2008 08:52:33 AM
For those having to pay their fomer employer for health insurance: The HEEPS Legislation allows up to $5,000 deduction from income tax if money is paid directly to the insurance company by the pension.
Posted by: CEL at 08/13/2008 08:54:47 AM
This confirms my city in NH has real estate taxes that are out of sight. I own a ranch that is less than 1,000 sq. ft., on less than a 1/4 acre lot. My real estate taxes are close to $4,300 per year. Though it has been rated #1 city, and a portion of the taxes cover the school dept., the school system which is supposed superior for higher graduation requirements, has one of the highest drop out rates. The school board says they need more money or better facilities, which has been granted over the years, but it does not change the outcome ... just increases taxes.
Posted by: J Davis at 08/13/2008 08:58:01 AM
The statement "Seven states -- Alabama, Hawaii, Kansas, Louisiana, Massachusetts, Michigan and New York -- FULLY exempt government and military pensions from state income taxes" is misleading. Some of these, such as Kansas, do not exempt ANY government pensions except their OWN and federal pensions! And some states' partial exemptions have age restrictions on them, such as Georgia's. More information is needed.
Posted by: michael at 08/13/2008 09:05:11 AM
Louisiana may have a lower tax system all right, but we still have a state income tax coupled w/ overpriced car insurance, so all isn't rosy just yet. And if they ever replace the federal tax w/ the fair tax I think that would make a substantial difference.
Posted by: F. Chesmore at 08/13/2008 09:06:12 AM
Your article about highest sales tax? Are sales tax in the Rio Grande Valley in Texas is 8.25%.
Posted by: Sally at 08/13/2008 09:13:22 AM
New Jersey piles it on in taxes. High income tax, local/school taxes, property tax, sales tax and don't forget the grip the insurance industry has on the state with high rates. No place to live period.
Posted by: Sandy at 08/13/2008 09:20:45 AM
There was nothing specific on OKLAHOMA...:(
Posted by: Joyan at 08/13/2008 09:25:00 AM
I'm not sure where you got your stats for Illinois, but I can assure you that we are getting taxed to death here. Almost every where (except for rural areas) pay over 7% sales tax. In Chicago, they pay almost 11%, Cook County pays almost 9%, outlying suburbs 7.75%. That constitutes most of the population of Illinois and a huge amount of sales tax. You should also be looking at what is taxed. Everything here in Illinois is taxed ... food, clothing, cars, phone. I can't think of anything that isn't. I've lived in a few states and I can assure you, Illinois is not a place where I will be retiring.
Posted by: Erin C at 08/13/2008 09:29:34 AM
Don't forget Louisiana where our lovely sales tax is 9.5%!
Posted by: DAISY at 08/13/2008 09:40:06 AM
I noticed that the five highest states for property taxes were controlled by Democrats and environmentalists, the five lowest are controlled by Republicans.
Posted by: Cherie Gu;mapac at 08/13/2008 09:41:48 AM
In NJ, we pay tax on our Social Security, but I agree that we have the highest real property tax.
Posted by: Ed at 08/13/2008 10:06:39 AM
The article states that only 3 states exempt all or virtually all retirement income but, isn't that inaccurate? It should read 10 states since you would have to include the seven states that have no income taxes period.
Posted by: mombam at 08/13/2008 10:36:51 AM
We live in NJ and it is very expensive. While I'm still working full-time it is 'do-able.' However, one daughter and our only grandchildren are in northern NJ and this will effect where we can go when the time comes to give up our current home. The trade-off of being closer to them vs. a cheaper cost of living will likely mean that we remain in NJ - but we hope to find lower-cost housing in one of the OLDER senior developments in central NJ. No need for the fancy granite countertops and over-the-top clubhouse. There are really good 'bargains' in the older communities. Don't overlook those. Property taxes on those are much lower too and the 'ammenties' are 'sufficient.' If you want 'fancy' - be prepared to pay almost what you'd pay for a new single-family home + higher property taxes...to me, it's just not worth it.
Posted by: cpm at 08/13/2008 10:48:30 AM
...New Hampshire does not have a state income tax either...i know that because I live here
Posted by: Sharon Garcia at 08/13/2008 11:17:40 AM
We are paying 8 1/2 % sales tax east of Los Angeles. Cities and counties add on their little bits and suddenly we are paying way more.
Posted by: Mary Beth Franklin at 08/13/2008 11:20:22 AM
Ed, The "only three states exempt virtually all retirement income" from taxes refers to states that have a broad-based income tax. You are correct that those are in addition to the seven states that do not have an income tax and NH and TN that tax only interest and dividends.
Posted by: Mary Beth Franklin at 08/13/2008 11:21:24 AM
Scott, Hi, I'm the author this article. Stay tuned for an update on our exclusive retiree tax map. Kiplinger will be ranking the states according to tax friendliness towards retirees. It's a huge project so please be patient.
Posted by: Lake Grandma at 08/13/2008 11:22:43 AM
We seem to have a lot of people retiring in OK at the lake from everywhere. (Northeastern OK has beautiful lakes and is very green) Being from TX, I had to get used to state income tax, very high cost to tag vehicles (compared to TX), the state & local sales taxes run abt. 8-9%, but property taxes are abt. $1,400 yr. on a $200,000 home + 10 acres. Oh, you get much more house for that amount than in some states, too.
Posted by: J Cary at 08/13/2008 11:23:19 AM
Our state imposes a school tax on eveything, cable bills, water bills, electric bills, etc. as well as state & local bills. Therefore it is one of the highest taxed states for everything except real estate taxes.
Posted by: Mary Beth Franklin at 08/13/2008 11:24:07 AM
Jay, Hi, I'm the author of this article. Viriginia allows a $12,000 deduction from any income source for each spouse 65 and older.
Posted by: jim fraser at 08/13/2008 11:25:18 AM
Excellent article, but article ignores the fact that California has the highest sales tax in the country (7.75) RETIREES BEWARE!!! The Democrat Legislature, along with its turncoat governor, is trying to raise it to 8.5. California is not a place WHERE RETIREES should want to live!
Posted by: Mary Beth Franklin at 08/13/2008 11:27:02 AM
Hi, Mary Beth Franklin again, author of this Kiplinger article. Oklahoma's top tax rate is 6.25%. There is a full exemption for SS benefits and up to $10,000 exemption for pension.
Posted by: Mary Beth Franklin at 08/13/2008 11:28:42 AM
Tom in Ohio, You may want to look into an active adult community. Many of them are built in areas that have no school districts. Check out www.retirementliving.com.
Posted by: Carl at 08/13/2008 11:31:44 AM
The real key to $ at retirement is what do you get to pay for real estate and the money you have left when downsizing from the snow country. If I can buy a real nice (2,600 square foot), new townhouse on a golf course for $300K, and they have good medical facilities in the area, it is a good start. Combine low property taxes, excemptions for retirees from state tax, lower sales taxes on food makes South Carolina OK, if you do not have kids that need good schools and you can put up with red necks that have been making the wrong decitions since 1861.
Posted by: Mary Beth Franklin at 08/13/2008 11:32:23 AM
Thanks for all your comments. Let me offer a point of clarification, as the writer of the article. The sales tax rates listed in this article are STATE ONLY. Many cities and counties layer their own sales tax on top of the state tax but it isn't possible to go into such detail in such a limited space. You can check out all the individual state and local taxes at www.taxsites.com.
Posted by: Dorothy at 08/13/2008 11:35:20 AM
Good Grief, JL. WHERE do YOU LIVE? Here in Hopkinton, RI, We don't get anything except police and fire services. No bus, no public transportation, no senior center, and virtually NOTHING. I am sitting here watching the trees, and THAT is costing me by the minute! TIME TO GET OUT OF RI!
Posted by: Cathy at 08/13/2008 11:37:53 AM
The article lists Louisiana as having low state and sales tax. It fails to mention the extremely high property tax the City of New Orleans imposes as well as its 9% sales tax for everything including food and medical.
Posted by: RON BENEFIELD at 08/13/2008 11:42:28 AM
TAXES ARE HIGHEST IN STATES THAT HAVE ELECTED LIBERALS TO MAKE THE LAWS. GET RID OF THE LIBERALS AND YOU GET RID OF HIGH TAXES...
Posted by: shellbee at 08/13/2008 11:46:45 AM
This article...(throws) out some tax percentages that anyone could look up online in about 5 seconds and get for themselves...
Posted by: Griff at 08/13/2008 11:50:58 AM
Could you make it a little simpler by ranking the states in order of taxes on say a retired couple with $90K income and living in a mortgage free home worth $300,000.00. I know the City or County can make a difference with their variable tax rates so since you probably won't do all that work (and no one would blame you) can you tell us the 4 or 5 things we should check and who to contact to check those things to get the complete picture? Thanks
Posted by: Jan at 08/13/2008 11:51:14 AM
I am retired and happily living at the South Jersey seashore area. Our real estate taxes have been frozen at $3600 and we receive a homestead rebate of $1250, making our real estate taxes a low $2350 after these rebates. You are eligible for the tax freeze if your total income for a married couple is under $55,344 for 2007 with no asset test. Taxes are frozen when the first owner becomes 65. This has enabled us to continue to live in an area that we love and in our own comfortable home. It is saving the community a large sum because we have no children attending our very good schools. Also, the weather is cooler in the summer and milder in the winter with very litte snow in areas east of the parkway. There is a 7% sales tax, but not on clothes or food. We love it here!
Posted by: Nvsue at 08/13/2008 12:12:37 PM
We are looking at retiring in the Colorado Springs, CO area. Any info on that area? My husband is retired military so we want to be near a base to receive those benefits also.
Posted by: Diane Shields at 08/13/2008 12:13:45 PM
Before retiring and taking up residence in another state find out what the inheritance rules are for your survivors. These can vary greatly from state to state.
Posted by: D. Johnson at 08/13/2008 12:21:47 PM
I have recently retired and am being forced to sell my home in Connecticut and try to find a less expensive place -- strictly based on the property tax on my house. Very sad! Must admit I am also afraid of the coming heating oil bills too! We are being driven out. It's not that I dislike my home -- I love it and had intended to stay here forever. Now I must seek out someplace -- have no idea where yet.
Posted by: James Roache at 08/13/2008 12:32:53 PM
When considering the real cost of sales tax, remember you are paying these taxes with after-tax income, i.e. you have already paid income tax on the money you are now going to be paying out in sales tax.
Posted by: ALD at 08/13/2008 12:49:40 PM
@ DAISY -- FYI, New Hampshire is only recently "controlled by Democrats"; however, the State has (effectively) no individual income tax, nor does it have a sales tax, resulting in a high property tax rate. Regardless, the five states with the highest median real estate taxes (which would be median rate times median price), are states with some of the highest incomes and highest property values. Interesting, then, that most of them are controlled by Democrats and environmentalists, while the five states with the lowest median rates have some of the lowest incomes and property values. These surveys are useful, but miss a lot of relevant information and can be misleading. For example, Illinois is the only state in the country to tax prescription drugs, which has a substantial impact on retirees.
Posted by: jeff charles at 08/13/2008 12:53:25 PM
don't forget "hidden" property taxes. in AZ, paid over $600 this year for vehicle taxes. total blue book value for all vehicles less than $40,000. that rate is three times what i pay for prop tax on my home.
Posted by: Jack at 08/13/2008 01:00:39 PM
I'm just wondering when the people are going to get fed up with high taxes, both state and federal, and get out the pitch forks and torches? And to think there are actually people who want to put Obama in office and make the problem worse!
Posted by: Bill Gast at 08/13/2008 01:04:52 PM
In 2005 we moved from California to the hill country in Texas. Reason? Lower cost of living and lower cost of building. Result was a beautiful custom built home for less than the gains we made on the California property SURPRISE!! property taxes are astronomical. School district is 73% of tax burden and schools in this district are second from the bottom in TSAT ratings. Not much reward for your tax dollar.Retired get no exemption in this county. Moral; look closely at county tax structure before you make final move decision.
Posted by: jmd at 08/13/2008 01:19:05 PM
Lived in many states, but have to say CA is the worst tax-wise. ~10% state income tax with the most complicated form one can imagine - other taxes (sales, etc.) are very high too. Give me a no income tax state like TX any day - other prices in CA are out of this world as well.
Posted by: Anita Siegel at 08/13/2008 01:44:24 PM
Social Security Windfall Elimination Provision: In my state of CA, any teacher who is entitled to Social Security benefits, and STRS, teachers pension, loses the right to Social Security income. I do not believe this occurs in (other)states in the U.S.A. Can anyone tell me which states allow for both?
Posted by: Karen at 08/13/2008 01:47:40 PM
I have recently found out that Illinois is a "retirement friendl"y tax state. Two years ago, I moved from Illinois to Missouri and was very shocked at tax time that I was taxed on all my retirement income from IRA, 401K, & Social Security. I owed thousands of dollars at tax time because I had only been holding our about 20% and my actual tax rate was 32%!!!!!!!!!!!!!! I am moving back to Illinois and RENTING to avoid high property taxes!!! I hope my retirement funds don't expire before I do!!!!!!
Posted by: eileen at 08/13/2008 01:52:51 PM
New Jersey does not tax social security. MIlitary pensions are not taxable. Other pensions have an exclusion depending on filing status from $10000 to $20000 if all income not including Social security does not go beyond $100,000. Yes our state sales tax is 7% but clothing and food are not taxed....Stop giving New jersey a bad name... Most seniors pay no NJ income tax
Posted by: M. R. Anderson at 08/13/2008 02:01:14 PM
Taxes for the retired? Huntley, Illinois 60142 houses Del Webb Sun City. Approx. 5500 homes, no one under 50, no children, and the taxes are way out of control due to school board spending, etc. This place needs a revolution to get it going in the right direction.
Posted by: Kimber Edwards at 08/13/2008 02:01:33 PM
I think your readers need to know that Chicago now has the highest sales tax in the country - 10.25%. Combined with the high real estate taxes, etc. puts Chicago on the bottom of best places to retire...
Posted by: HNieves at 08/13/2008 02:06:51 PM
California has high sales taxes depending upon the city of residence. State taxes are also high. However many years ago voters passed what is called Proposition 13 which limits all property tax increases to only 2% per year. Your tax rate is determined by the price you paid for your residence. This has geatly reduced and almost totally eliminated the tragedy of elders being forced from their homes of many years due to inability to pay rising property taxes. I paid $48,500 thirty years ago for a home now worth $500,000. My taxes are $1200 a year!
Posted by: Lake Grandma at 08/13/2008 03:12:39 PM
Anita, I draw soc sec and teacher retirement both in OKLA
Posted by: HID at 08/13/2008 03:22:47 PM
How does Puerto Rico, USVI compare?
Posted by: Tom at 08/13/2008 06:48:19 PM
Anita: The WEP is no doubt a Federal position, and you can use www.ssa.gov or call Social Security to ask about it. You will perhaps find that your teacher salary was not covered by Social Security in part so that the "windfall" of collecting both sources of monthly income are eliminated. This would be the same across the country, no matter where you might move. Your's is not the only employer to present the same problem.
Posted by: RR at 08/13/2008 06:50:09 PM
Texas may not have state income tax, but the property taxes are out of control. The taxes are not just high, so a the appraisals. I built a house in 2000 for $900,000. Now is is appraised at 2,015,000. Tax bill is $34,600. Now I am about to be annexed into Austin, that will raise it an extra $5000. Oh I forgot to mention the 8.25% Sales tax.
Posted by: Meghan at 08/13/2008 09:27:27 PM
As a response to RR. I live at the Jersey Shore. If you owned your house here you would be paying double that in property taxes. New Jersey is absolutely out of control when it comes to property taxes.
Posted by: Nelia at 08/13/2008 10:03:03 PM
Texas property taxes are driving fixed income persons out of the state.
Posted by: JPS at 08/13/2008 11:47:11 PM
Washington is another state with no income tax but high property taxes. We own our house, workshop and 5.6 acres which are assessed at full value, this year $329,520. Property tax is $4146 ($345 per month), state gasoline tax is the highest in the nation and state sales tax is 8.6%. States get their revenue one way or another!
Posted by: Frank at 08/14/2008 12:38:58 AM
The state to avoid is NJ: high property tax where $10,000 annually is not uncommon for a homeowner, high state income tax, and high state sales tax, in addition to a very high cost of living in general. Fuggetaboutit!
Posted by: Dee at 08/14/2008 03:25:43 PM
We live in TX and our house went up in value, but our property taxes stayed the same last year because I am over 65. We also pay the 8.25% sales tax which includes city & county sales taxes, but the article is talking state sales tax when it states the lower rate.
Posted by: steve at 08/14/2008 04:52:46 PM
I'm a gov't retiree living in Virginia and pay full taxes on my retirement. Can U offer some help in getting me on track?
Posted by: Larry Loiselle at 08/14/2008 09:45:17 PM
I also live in Texas and since I am over 65 my school property taxes are frozen, but that is not true of County property taxes, City property taxes, ESD property taxes, and where I am, we also have a health district that levies property taxes to pay for indigent medical care. Texas also has alot of hidden taxes that they call fees. My telephone bill is 50% fees. Sheesh :-(
Posted by: Steven at 08/15/2008 09:35:38 AM
I live in New York. The article left out New York State which has the highest sales tax in the nation at 8.625% I hate New York!!!
Posted by: James at 08/15/2008 11:25:10 AM
IAD..If you have Good Supp. Health Insurance + Medicare and you have more than enough $ in savings and the area you choose has Top Quality Health Care... You won't find that in alot of those Low Taxing States or Cities... And why do you think states don't WANT RETIREE's? They cost more to take care of them and they spend 65% Less than Working Families...! Just ask states of Fla and Wisc and AZ...You get what you pay for...
Posted by: Dennis at 08/15/2008 11:29:21 AM
Sure, Go to state of Mi. , Wis. and those other rural states.. Get your Home for 50% less..But When Winter Comes? Be prepared to be like "Living On The Moon" and be couped up for 6 mos a yr...And the Health Care is about 50% Less than the better and bigger Cities! I know, We did that our 1st 5 yrs and moved back ...! In Northern Illinois? RE Taxes are Cheaper than Wi. and Mi. and we get alot more services for our Money!
Posted by: Rob at 08/15/2008 01:35:04 PM
Rapid City, SD, a Home for $525,000 (elsewhere) will cost you $15,000+ depending on how much land comes with it. No income tax, but possibly the highest property taxes in the nation...
Posted by: Illinois at 08/15/2008 02:11:18 PM
Actually, Cook County, Illinois now has the highest sales tax in the country. As of July, 2008 it is a whopping 10%.
Posted by: C-Mike at 08/15/2008 02:14:15 PM
Dee in Texas..If you own a house anywhere in Texas, the value of your house tanked last year...
Posted by: Fred at 08/15/2008 04:30:05 PM
What they left out about NYS sales tax is the additional county tax rates. The article was correct about the state sales tax rate. This means that you should investigate the county rate for whatever state, as well as such things as property taxes.
Posted by: Ann at 08/15/2008 06:07:06 PM
Since the 1970s the tariff schedules had two tariff columns; we now have three, this one is the freebie column where trillions of dollars of goods come into the US but no tariffs are assessed. This use to spread out the taxes fairly AND pay for roads, bridges, schools, military, etc. putting the burdon on individual states and taxpayers to come up with money for states that may have more of the population and less jobs. When the Senate of the US gets real and stops the million immigrants a year (legal) now that our jobs have left (up to 2.3 million to china) alone then the tide will change. Vote November - no incumbants - only those candidates with America as first priority.
Posted by: Jim at 08/15/2008 06:25:42 PM
. . . I live in Alameda County in the Bay Area and our sales tax is 8.75% and they are talking about raising it again.
Posted by: P Hacker at 08/15/2008 08:16:56 PM
what about California sales tax. The base is 7.25% and then there are amounts, depending on the county, & possibly other factors which can increase it. San Diego county is 7.75%, Los Angeles is 8.25%, the city next to us in San Diego County raised their tax just for their city,...
Posted by: Evansville, In at 08/16/2008 09:25:32 AM
I moved to Evansville from the South and it is a great place to raise a family but not so much to do for adults w//o children. Most people here are from here and are not soooo friendly. And the big negative for us is the largest big city (Louisville) is 2 hrs. away. No good farmers market, etc.
Posted by: Bob Smith at 08/17/2008 07:37:17 AM
I own a home in central Texas and they've assessed the property and raised the property tax over the past 8 years to the point that I could not afford to buy my home now if I were looking to buy a home in this area. Tanked ... Sky-rocketed I would reply here near Fort Hood. It would be impossible to sell my home for what Lampasas County says it's worth.
Posted by: J B at 08/17/2008 02:41:37 PM
...legislation was passed in 1996 baring states from collecting income taxes on pension and retirement payments to residents who have moved to other states. I'm considering relocating to Washington state and wonder if this law is affecting pension taxes in the evergreen state.
Posted by: JJ at 08/17/2008 04:04:59 PM
I live in Pennsylvania. I'm retired & pay NO state income tax of any kind. Up to $6,500.00 in interest & dividends is also exempt. Pennsylvania is the only state that maintains the PACE prescrition plan for the elderly, even if you have Medicare. ALL lottery monies is used to fund PACE & other programs for the elderly. In addition, beginning this year, the elderly receive a tax 'rebate', based on income, funded solely from the new 'slot machine' betting. In closing, a bill is now before the State Senate that would further enhance payments for people to stay in their own homes, as opposed to outside Assisted Living.
Posted by: EJ at 08/17/2008 04:55:26 PM
Come try living is Wisconsin - talk about tax hell!
Posted by: MiMi at 08/17/2008 05:43:01 PM
Hi, a comment for the author; this article was certainly very helpful. But I do have a question, if Massachusetts does not tax my city pension, would it be state taxed if I lived in Florida? Or is it exempt from state taxes everywhere? This would make a difference in my keeping my room here too. Thanks. I look forward to the map. Good luck.
Posted by: boschic at 08/17/2008 05:43:02 PM
Wonder why he failed to mention that Cook county, Illinios biggest county wich includes Chicago has a sales tax of 10.25% and restaurants are 11% in addition to raising the property tax. and all utilities. Certainly doesn't offset the lack of retirement incomes taxes.
Posted by: frank rosa at 08/17/2008 06:32:20 PM
I don't see what the problem is...we all could have taken jobs that give us summers off or 75% of salaries after 20 years...so what if the rest of us work until we're 80
Posted by: Tmarkir at 08/17/2008 06:49:27 PM
Texas will add a sales tax to every service you get. Their 8.5% sales tax is the equivilant of an income tax/consumption tax. Their property tax is a variable. It is 3% here in the DFW area and you will see a significant property value increase, by the county, every year. The tax rate is determined by several taxing agencies, school, city and hospital dist, etc. And they can and will raise the rate each year. The most taxed state I have ever lived in including Calif.
Posted by: Paul Liebenthal at 08/17/2008 07:27:27 PM
Here in Bakersfield, Kern County, CA my home value dropped 40% and they raised my property tax by over $1000 a year...
Posted by: chris at 08/17/2008 07:43:46 PM
what about missouri the property taxes are outrageous.
Posted by: James Roberson at 08/17/2008 08:07:54 PM
We wanted a small piece of land to build a home on. We wound up with 21 Acres, what a blessing. We board my son's two horses and because of that (agriculture) our taxes on the land and our $280,000 home are $95.00 a year. You might look into this where you are going to buy land to build. It might be well to buy a little more land. Sales tax is 9.25%
Posted by: Paul Podbielski at 08/17/2008 09:15:44 PM
...to C-Mike's comment that "the value of your house anywhere in Texas...tanked". Austin real estate prices most definitely not only have not tanked but continue to rise exceeding even their recent overvaluations.
Posted by: Bob at 08/17/2008 11:17:50 PM
Regarding those no income tax states; NOTE: Most make you file a return for any income that was earned out-of-state & over a certain limit. Be certain that your sources of income don't put you into this category.
Posted by: SandyM at 08/18/2008 11:42:43 AM
We have to remember that any law on the books can be changed. Our legeslators need to take responsibility for their voting. They were elected to protect THEIR people in THEIR district but most get into politics and get full of their title and forget why they were elected. Will retire in two years and I am cautious about where the money is going right now and our spending habits.
Posted by: Littleluluhc at 08/20/2008 02:48:32 AM
I am retired and like movies, music, hate snow and ice, tornado threats, also like water activities, what state and city is best for me?...I am not high income .
Posted by: Elsa at 08/24/2008 10:01:08 PM
I live in NJ...Democrat controlled. My house is assessed at $350,000. I pay $12,500.00 a year real estate tax.
Posted by: J\'taimeCartier at 08/24/2008 11:12:32 PM
...Washington state is best bet..but don't come here. No more Californians either, if you please. And OUR sales tax is highest in nation - 9%, not the 7 stated in article. Of course we have no state income tax - but the Democrats are trying to start it....
Posted by: marshall at 08/25/2008 11:40:41 PM
It isn't that hard to compare real estate taxes, just stop referring to "rates". Bottom line is how much is your house worth and how many dollars do you pay in tax. If you want a percentage, just divide. Tax rates and assesments can be all over the map (literally) but as far as I know the dollar is still worth $500,000 X .0002%. I know at least one state has no state income tax, no state sales tax, no inheritance tax, and will pay you every year you can afford to stay. Federal income tax will take a bite out of that though too. Municipal and local taxes can make dramatic changes with a new administration. If you are really doing your homework for retirement, don't rely on any information that took two years to compile. It's already outdated, yet some information is better than none if it made you think.
Posted by: kenneth Mcgill at 09/01/2008 07:52:07 PM
Don't even think about Nebraska--- also known as the "tax me state". I won't even go into the particulars but we have this wonderful unicameral legislature where you can pass any taxable legislation with just 25 votes. Believe me there is a office in Lincoln --St. Capitol--which operates 24/7/365 creating new taxation schemes. Of worst are real estate taxes which are a shell game to try and understand and automobile taxation--based on unrealistic valuation of your car--absolutely absurd...My advice---locate elsewhere where there is fiscal responsibility re taxation. Revenued-to-death cornhusker!
Posted by: mike at 09/01/2008 08:27:36 PM
Come to the tax u to death state known as Connecticut!
Posted by: steven at 09/01/2008 09:18:37 PM
I live in Orange County, California. we don't tax food here, but sales tax on other items is 7.25%, Higher than those states you quoted as being the highest. Property taxes... because of Prop 13, our house is valued at 2 Million and we pay $9,000 in annual property taxes.
Posted by: Memento2 at 09/04/2008 04:27:22 PM
Can anyone refer us to a database of actual real-estate rates? Just as Marshall says, actual tax per year / estimate real market value of the house. And indeed then simple to compare with such a database, but rather hard without one. A good project for someone to start, if no such data is available already.
Posted by: Ray at 09/08/2008 10:17:11 AM
Welcome to New York State the land of taxes. I think we have the edge on overtaxation here in the Empire State. Our municipal employees appear to be overcompenstated compared to private industry. And, let's not forget the fringe benefits.....
Posted by: Paul at 09/10/2008 01:09:33 PM
My wife and I are taking our pensions back to PA when we retire as our income will greatly exceed most state's pension exemptions. R/E taxes are relative. When we moved to VA our R/E taxes were the same, but the house cost more than twice as much. We will be in the southeast, so we will do much of our shopping in sales tax free Delaware.
Posted by: Donna at 09/10/2008 01:24:13 PM
I live in mid-northern Illinois and we pay $4,000+ for a home valued at $179,808 and we have a 7.75% sales tax. The closer you get to Chicago, the higher the sales tax, with Cook County at 10.0%.
Posted by: suzanne at 03/07/2009 10:29:05 PM
Hi, I think Arlington, Texas, has the highest property taxes anywhere... a 250,000 house will cost you 6000+ a year. what a rip off
Posted by: Pat R at 03/14/2009 05:08:06 PM
Does the state of Virginia give any tax breaks to seniors? On property taxes, etc.
Posted by: Pat at 08/26/2009 12:08:59 PM
soon to retire I hope, was asking about Oklahoma. State sales tax is 4%, each town gets to have a tax also, so some towns pay 8.25%, or 8.50%, but property taxes are low. My home is assesed at 48,000, but appraised at 100,000. My property tax is $380.00 per year if you own one home you qualify for homestead exemption. Food cost are lower in OKC, and north eastern Ok.areas like Tulsa, southwestern part of state food is higher, Ok. has 3 aiforce bases, Altus (s.w.OK) Tinker (OKC),Vance(Enid), and 1 army base, Ft. Sill (Lawton. Utilities aren't too bad, medical facilities good in the urban areas, housing cost are reasonable. Hope this helped!
Posted by: Charles Sheetz at 09/23/2009 02:41:04 PM
We live in central Illinois and our property taxes are $7000 for a $180000 home. Sales taxes are 7.75%. Unbelievably our property taxes assessment increased this year as property values supposedly declined. Some counties in Illinois are listed in the top 100 most expensive property taxed counties in the USA. Multipliers to the assessment are used if more property tax revenue is sought. Property taxes have quadrupled in 20 years with much of the increase in the last 6 years. Looking at other states for retirement at age 70.