41. South Carolina
- State’s ranking: Most tax-friendly 🙂
- State income tax: between 3 percent (on taxable income over $2,970) and 7 percent (on taxable income over $14,860)
- The average property tax: $601 in taxes per $100,000 of assessed home value
- The average state and local sales tax: 7.46 percent
- Estate tax/inheritance tax: No/No
South Carolina is a sweetheart when it comes to income tax breaks for retirees. First of all, Social Security benefits are FULLY exempt. Second of all, all taxpayers who are 65 or older can eliminate up to $10,000 of retirement income sources.
In addition, they can deduct $15,000 from other types of taxable income if they file individually, and $30,000 if they file jointly. These awesome pieces of information don’t end there: South Carolina also has low property tax rates. However, the bad thing here is the sales tax rate.
42. South Dakota
- State’s ranking: Most tax-friendly 🙂
- State income tax: None
- The average property tax: $1,388 in taxes per $100,000 of assessed home value
- The average state and local sales tax: 6.4 percent
- Estate tax/inheritance tax: No/No
Here, there’s virtually no state income tax. This translates to a better life for seniors as they can fully enjoy their Social Security benefits and all other types of retirement income sources. However, sales taxes in the Mount Rushmore State are on a roller coaster as well as property taxes.
And even if property tax relief programs are available, they are only for low-income South Dakota residents.
43. Tennessee
- State’s ranking: Most tax-friendly 🙂
- State income tax: None
- The average property tax: $768 in taxes per $100,000 of assessed home value
- The average state and local sales tax: 9.47 percent
- Estate tax/inheritance tax: No/No
From the beginning of 2021, you can say bye-bye to the tax on stock dividends and interest income from bonds and other types of investments. Now, this tax is waived if you’re 100 or older.
So far, so good. But everything turns upside down when we head to Tennessee’s average combined state and local sales tax rate. According to the Tax Foundation, the Volunteer State has the highest state and local sales tax rate at 9.47 percent.
Also, if you’re a beer lover, don’t move here. The state is also famous for the highest beer tax in the U.S. (1.29 dollars/gallon).
44. Texas
- State’s ranking: Mixed tax situation
- State income tax: None
- The average property tax: $1,993 in taxes per $100,000 of assessed home value
- The average state and local sales tax: 8.19 percent
- Estate tax/inheritance tax: No/No
How can you call a U.S. state with virtually no income tax? Friendly, but it doesn’t apply to Texas. Why? Because it has the fifth-highest property taxes in the U.S. And even if it gives some reasonable tax breaks for its retired residents when it comes to property taxes, it doesn’t help that much.
45. Utah
- State’s ranking: Not tax-friendly 🙁
- State income tax: Flat 4.95 percent
- The average property tax: $713 in taxes per $100,000 of assessed home value
- The average state and local sales tax: 6.78 percent
- Estate tax/inheritance tax: No/No
Utah taxes Social Security, and this is probably its biggest downfall. Additionally, almost all types of retirement income sources face the state’s flat 4.95 percent income tax. The Beehive State offers a tax credit for low-income retirees, but it is considerably small.
