16. Iowa
- State’s ranking: Not tax-friendly 🙁
- State income tax: between 0.36 percent (on up to $1,598 of taxable income) and 8.98 percent (on taxable income over $71,910); last year, between 0.33 percent (on up to $1,638 of taxable income) and 8.53 percent (on taxable income over $73,710)
- The average property tax: $1,678 in taxes per $100,000 of assessed home value
- The average state and local sales tax: 6.82 percent
- Estate tax/inheritance tax: Yes/No
Iowa is not tax-friendly at all. For example, Iowa’s average property tax rate is the 12th-highest in the U.S. For a house worth $400,000, you’ll have to pay approximately $6,711 per year translated to property taxes. So, homeowners don’t have much of a choice here…
17. Kansas
- State’s ranking: Least tax-friendly 🙁
- State income tax: between 3.1 percent (on $2,500 or less of taxable income for those who file as individuals and $5,000 or less for those who file jointly) and 5.7 percent (on more than $30,000 of taxable income for residents who file as individuals and more than $60,000 for joint filers).
- The average property tax: $1,491 in taxes per $100,000 of assessed home value
- The average state and local sales tax: 8.68 percent
- Estate tax/inheritance tax: No/No
We don’t advise Dorothy to retire in her hometown as the Wicked Witch of the South has conquered the state. In Kansas, distributions from private pensions are taxed entirely. The state is mean and harsh to those who have a federal adjusted gross income of $75,000 (or more); therefore, it taxes Social Security benefits.
However, military pensions, federal government pensions, and in-state public pensions are all exempt from state income taxes. Enjoying a shopping spree is quite expensive in the Sunflower State, as the average state and local sales tax is 8.68 percent, the 8th-highest in the nation.
18. Kentucky
- State’s ranking: Mixed tax situation
- State income tax: Flat 5 percent
- The average property tax: $925 in taxes per $100,000 of assessed home value
- State sales tax: 6 percent
- Estate tax/inheritance tax: No/Yes
Just like most U.S. states, Kentucky exempts Social Security benefits as well. Also, up to $31,110 per individual are exempt from both public and private pensions, as well as annuities. So far, so good. But what’s wrong with the Bluegrass State? Its inheritance tax!
Although parents, siblings, children, grandchildren, and a decedent’s spouse are all exempt, sons/daughters-in-law, nieces, aunts, nephews, uncles, and great-grandchildren are actually taxed (and punished) at rates between 4 percent and 16 percent.
The tax rate is actually based on the real value of the property you inherited. However, the first one thousand dollars from the value of the property are exempt.
19. Louisiana
- State’s ranking: Tax-friendly 🙂
- State income tax: between 2 percent (on $12,500 or less of taxable income for those who file as individuals; and $25,000 for joint filers) and 6 percent (on more than $50,000 of taxable income for residents who file individually; and $100,000 for joint filers).
- The average property tax: $555 in taxes per $100,000 of assessed home value
- The average state and local sales tax: 9.45 percent
- Estate tax/inheritance tax: No/No
Louisiana offers a lot of tax breaks for its retired residents. Civil-service, Social Security, military, local, and state government pensions are ALL exempt from the state’s income taxes. Approximately $6,000 per individual regarding annuity and pension income are exempt from income taxes.
If your income is above that level, don’t be scared: you will face low rates. However, the problem comes when you’ll have to deal with the Pelican State’s sales taxes on almost everything you buy.
20. Maine
- State’s ranking: Mixed tax situation
- State income tax: between 5.8 percent (on taxable income less than $21,450 for residents who file as individuals; less than $42,900 for those who file jointly) and 7.15 percent (on taxable income of $50,750 or more for single filers, $101,550 for joint filers)
- The average property tax: $1,424 in taxes per $100,000 of assessed home value
- State sales tax: 5.5 percent
- Estate tax/inheritance tax: Yes/No
Maine exempts Social Security benefits from its income taxes. Also, the Pine Tree State offers up to $10,000 per individual when it comes to pension deductions. If you’re way above that level, you will deal with tough income taxes.
