I originally posted this topic "Tax Friendly Retirement" in Sept 2009. Kiplinger has updated the interactive state-by-state map as of Oct 2010. There are links to slideshows of the "10 most tax-friendly states" and the "10 least tax-friendly states", on the website (Kiplinger). I found some of them quite surprising, and thought it would be helpful to post the links again:
The most (and least) tax-friendly places to retire
Where you live can make a lot of difference in how far your retirement dollars stretch, and the story goes way beyond which states have no income tax.
By Kiplinger Personal Finance Magazine, November 2010
Best and worst states for retirees
Where's the best state for you to retire? A lot will depend on your sources of income. For retirees, while relocating to an income tax-free state such as Florida or Texas may sound appealing, sometimes the best retirement destination is a state that imposes an income tax but offers generous exemptions for Social Security benefits, pensions and other types of typical retirement income.
Here are five of the most -- and least -- tax-friendly states for retirees. Just make sure that, before you move anywhere in retirement, you factor in local taxes, too. Municipalities can impose hefty property taxes or other assessments. Federal taxes? They'll be about the same no matter where you live.
Excellent interactive tax map for all states, plus search function for full description of any state's tax positions: http://kiplinger.com/tools/retiree_map/index.html
For income and property taxes with generous exemptions for those over 65, check out South Carolina.
A. Penuel, Mt. Pleasant, SC
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