6. Colorado
- State’s ranking: Tax-friendly 🙂
- State income tax: Flat 4.63 percent
- The average property tax: $607 in taxes per $100,000 of assessed home value
- The average state and local sales tax: 7.63 percent
- Estate tax/inheritance tax: No/No
Are you a mountain lover? Then, it would be great if you spent your golden years in the Centennial State. Why? Because those who are 55 and older and, of course, pay taxes can receive a great retirement-income exclusion when it comes to state taxes.
When referring to property taxes, retirees who live here may be able to qualify for an exemption of up to 50 percent of the first $200,000 of property value. However, Colorado’s sales taxes are not on the bright side; they can actually reach 11 percent in certain cities.
7. Connecticut
- State’s ranking: Least tax-friendly 🙁
- State income tax: between 3 percent (on up to $20,000 of taxable income for those who are married and file jointly and up to $10,000 for those who file individually) and 6.99 percent (on the amount over $1 million dollars for citizens who are married and file jointly and over $500,000 for those who file as individuals)
- The average property tax: $2,114 in taxes per $100,000 of assessed home value
- State sales tax: 6.35 percent
- Estate tax/inheritance tax: Yes/No
The term happily retired doesn’t exist in the Constitution State. For example, those who have their federal adjusted gross income over 75,000, or joint filers who have it $100,000, 25 percent of Social Security benefits that are taxed at the federal level, are actually taxed by the Constitution State.
If you live in Connecticut, note that Social Security payments are actually exempt if your income levels are below. Also, 14 percent of income from an annuity or from a pension is exempt for those who have their federal adjusted gross income levels below $75,000, or less than $100,000, in case you file jointly.
Things will get better as the years pass because this exemption percentage will increase until it reaches 100 percent (2025 tax year). In Connecticut, military pensions are kept out of the state taxes. However, considering other taxes imposed by Connecticut, such as gift tax, or estate tax, you’re better off living in other states.
8. Delaware
- State’s ranking: Most tax-friendly 🙂
- State income tax: between 2.2 percent (on taxable income from $2,001 to $5,000) and 6.6 percent (on taxable income above $60,000).
- The average property tax: $604 in taxes per $100,000 of assessed home value
- Sales tax: None
- Estate tax/inheritance tax: No/No
Here, Social Security benefits are exempt. All taxpayers over the age of 60 can actually exclude $12,500 of qualified pension and investment income from state income taxes.
Income sources that are above the level we’ve mentioned will have to deal with modest tax rates. Nothing can wreck retirees’ happiness, and when we remember about the state’s lack of sales and estate tax, things get even better.
9. District of Columbia
- State’s ranking: Mixed tax situation
- Income tax: between 4 percent (on taxable income up to $10,000) and 8.95 percent (on taxable income above $1,000,000)
- The average property tax: $603 in taxes per $100,000 of assessed home value
- The average state and local sales tax: 5.75 percent
- Estate tax/inheritance tax: Yes/No
Despite the fact that the District of Columbia exempts Social Security income, those who have their taxable income above $350,000 will face an 8.95 percent tax rate. However, sales taxes are pretty low, and the vast majority of retirees can take advantage of a consistent property tax break.
10. Florida
- State’s ranking: Most tax-friendly 🙂
- State income tax: None
- The average property tax: $1,041 in taxes per $100,000 of assessed home value
- The average state and local sales tax: 7.05 percent
- Estate tax/inheritance tax: No/No
When it comes to retirement, we all know that Florida is one of the most popular U.S. states and the main reason is not the sun. The Sunshine State is famous for its no state income tax. However, when referring to sales taxes, your perfect retirement dream can turn into a nightmare. The maximum sales tax percentage is 8.5.
Let’s look on the bright side—at least widows or widowers who are Florida residents can get a $500 exemption from property taxes. Plus, if you like smoking a great cigar, the Sunshine States exempts cigars from all taxation.
