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If you’re planning to retire to another state, climate and cost of living are obvious factors to consider. It’s important that you don’t overlook the impact of taxes on your pocketbook.

 

It’s little wonder that Florida is considered the best place to retire for Americans looking to live comfortably on their income: not only does the Sunshine State live up to its name, it also imposes no state income tax.

 

At first glance, it may be a more appealing option than wintery Alaska. But when you consider what Alaskans pay in state sales taxes (zero), you may think again. Floridians can pay as much as 7.5%.

 

So where are the best places to retire, from a tax point of view? The personal finance website Kiplinger ranked the ten most tax-friendly states for retirees based on their analysis of state tax rules:

 

  1. Alaska
  2. Wyoming
  3. Georgia
  4. Arizona
  5. Mississippi
  6. Delaware
  7. Nevada
  8. Louisiana
  9. South Carolina
  10. Florida

 

A couple of pointers for those of you with homes in two states:

 

  • You may be able to save money by establishing residency in the state with the lowest tax burden.
  • Seasonal residents are coming under increasing scrutiny from the state taxman, so if you spend more than six months per year in one residence, it helps if you register to vote and obtain a driver’s license there too.

 

Source: kiplinger.com "10 Most Tax-Friendly States For Retirees"

 

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Do state taxes influence your decision on where to retire? Share your thoughts with us.