Tax-Friendly States for Retirees

Kiplinger’s has sifted through state tax laws and come up with its list of the most tax-friendly states for retirees. You might find surprises. Florida, for example, only comes in 10th. The story also has a link to the 10 worst states for retirees. Be careful when using its list. It only covers how the states tax retirement income. It doesn’t look at the full tax picture, including sales and property taxes.

The Mount Rushmore State offers a friendly tax panorama for retirees. There is no state income tax, so Social Security benefits and other forms of retirement income get a free ride. Sales taxes are relatively low, although they cover a broad scope of services.

South Dakota’s average property taxes are higher than those in other tax-friendly states, according to the Tax Foundation, which ranks it 16th based on property taxes as a percentage of home value. Seniors 65 and older qualify for an assessment tax freeze and/or municipal property-tax reduction if their income is less than $26,566 for individuals ($33,208 for married couples) and the value of the home is less than $182,358.