26. Missouri
- State’s ranking: Mixed tax situation
- State income tax: between 1.5 percent (on taxable income $103 or more) and 5.9 percent (on more than $9,253 of taxable income)
- The average property tax: $1,026 in taxes per $100,000 of assessed home value
- The average state and local sales tax: 8.03 percent
- Estate tax/inheritance tax: No/No
Missouri doesn’t tax Social Security benefits and some may qualify for exemptions when referring to both private and public pensions, however, if they have taxable income sources they will face a pretty harsh rate, 5.4 percent. Fortunately, the rate is continuously dropping. But, when compared to other states, we can’t add Missouri to our tax-friendly state’s list.
27. Montana
- State’s ranking: Not tax-friendly 🙁
- State income tax: between 1 percent (on up to $3,000 of taxable income) and 6.9 percent (on taxable income over $17,900)
- The average property tax: $892 in taxes per $100,000 of assessed home value
- The average state and local sales tax: None
- Estate tax/inheritance tax: No/No
Indeed, Montana doesn’t impose state sales tax, but it taxes ALL types of retirement income sources; and Social Security benefits are not except.
The Treasure State offers an exemption from pension and annuity income (up to $4,110 per retired resident) and those who are 65 and older are able to exclude a certain amount of money of interest income from state taxes up: to $800 for those who file individually and up to $1,600 for those who are married and file jointly.
28. Nebraska
- State’s ranking: Least tax-friendly 🙁
- State income tax: between 2.46 percent (on up to $3,150 of taxable income for single filers and $6,290 for married couples who file jointly) and 6.84 percent (on taxable income over $30,420 for single filers and $60,480 for married couples who file jointly)
- The average property tax: $1,855 in taxes per $100,000 of assessed home value
- The average state and local sales tax: 6.89 percent
- Estate tax/inheritance tax: No/Yes
The Cornhusker State is probably the least tax-friendly U.S. state for retired people. Nebraska taxes certain Social Security benefits and almost all other types of retirement income sources. If their adjusted gross income is $58,000 or less for those who file as married couples and $43,000 for those who file as singles, Nebraska’s residents can subtract their Social Security income that’s part of their AGIs.
There is a catch though: if their income is over that threshold, their Social Security benefits will be taxed by the state the same way they are taxed on the federal level. Another unfortunate fact is that the top income tax rate in Nebraska strikes pretty fast.
29. Nevada
- State’s ranking: Most tax-friendly 🙂
- State income tax: None
- The average property tax: $693 in taxes per $100,000 of assessed home value
- The average state and local sales tax: 8.14 percent
- Estate tax/inheritance tax: No/No
Retired in Nevada? Your life must be a jackpot! In the Silver State, there’s virtually no state income, meaning that you can fully enjoy the chunk of money from your retirement plan and from your Social Security benefits.
Nevada doesn’t have inheritance or estate taxes either. Wait… There’s more: property taxes here are really low when compared to other U.S. states. However, nothing is perfect… The Silver State imposes a 6.85 percent sales tax and when it gets combined with state taxes, it can reach 8.14 percent.
Fortunately, groceries aren’t taxed, so when we weigh things out, Nevada is a great state to move to when you’re close to retirement.
30. New Hampshire
- State’s ranking: Most tax-friendly 🙂
- State income tax: None
- The average property tax: $2,296 in taxes per $100,000 of assessed home value
- The average state and local sales tax: None
- Estate tax/inheritance tax: No/No
This state deserves a smiley face too since its residents don’t have to pay taxes on their Social Security benefits, distributions from their retirement plans, or pensions. How so? Well… the Granite State has no general income tax.
New Hampshire’s residents know their favorite grocery store chains by heart because (surprise!) there’s no sales tax, either. However, median property taxes here are the 3rd-highest in the nation. The state also imposes a 5 percent tax on interest and dividends, but those who are 65 and older can benefit from a 1,200 exemption.
