31. New Jersey
- State’s ranking: Mixed tax situation
- State income tax: between 1.4 percent (on up to $20,000 of taxable income) and 8.97 percent (on taxable income over $500,000).
- The average property tax: $2,530 in taxes per $100,000 of assessed home value
- The average state sales tax: 6.97 percent
- Estate tax/inheritance tax: No/Yes
The Garden State has made some serious efforts in order to minimize the income tax for its retired residents. It offers an exemption for retirement income with a lavish hand. For instance, those who are married and file a return jointly can eliminate up to $80,000 of income from almost all types of retirement plans, if and only if their income is $100,000 or less.
When it comes to single taxpayers they can exclude up to $75,000 and married ones who file a different return can actually exclude $50,000. All good, but when we head to its property taxes, New Jersey is a bully.
It also imposes inheritance tax, which can reach 16 percent in certain circumstances.
32. New Mexico
- State’s ranking: Least tax-friendly 🙁
- State income tax: between 1.7 percent (on up to $5,500 of taxable income for those who file individually and $8,000 for joint filers) and 4.9 percent (on taxable income over $16,000 for single filers and over $24,000 for couples who are married and file jointly)
- The average property tax: eight hundred thirty dollars in taxes per one hundred thousand dollars of assessed home value
- The average state and local sales tax: 7.82 percent
- Estate tax/inheritance tax: No/No
New Mexico is a no-no for retirees. Pensions, Social Security benefits, retirement accounts, they are ALL taxable. Indeed, the Land of Enchantment provides a retirement-income exemption of up to $8,000, but seniors must satisfy certain criteria to qualify (and it’s not easy).
If there’s a silver lining to living in New Mexico, it’s that the income tax is erased when you’re 100 years old.
33. New York
- State’s ranking: Least tax-friendly 🙁
- State income tax: between 4.0 percent (on up to $8,500 of taxable income for those who file as individuals and up to $17,150 for married couples who file jointly) and 8.82 percent (on taxable income over $1,070,550 for single filers and over $2,155,350 for married couples filing jointly).
- The average property tax: $1,812 in taxes per $100,000 of assessed home value
- The average state and local sales tax: 8.49 percent
- Estate tax/inheritance tax: Yes/No
New York has harsh taxes, especially when referring to property taxes. Fortunately, retired residents can benefit from certain property tax breaks. Public-school districts and local governments can minimize the value of your property by 50 percent.
However, in order to qualify, you must be 65 and older as well as satisfying certain criteria. When compared to other U.S. states, the Empire State’s income tax is relatively good. Plus, government and federal pensions, Social Security benefits, and military payments are exempt. However, if you own a private retirement plan, it shouldn’t exceed $20,000—it will be taxed.
34. North Carolina
- State’s ranking: Mixed tax situation
- State income tax: Flat 5.49 percent
- The average state and local sales tax: 6.95 percent
- The average property tax: $894 in taxes per $100,000 of assessed home value
- Estate tax/inheritance tax: No/No
The Tar Heel State doesn’t tax groceries, but localities can do it. When it comes to owning a home, those who are 65 or older can opt for several property-tax relief programs such as the Elderly Exclusion which eliminates the first $25,000 from taxation.
Another property-tax relief program available in North Carolina is the Circuit Breaker Tax Deferment Program that actually limits the taxes that are due in a specific year to a percentage of the homeowner’s income.
So, based on their situation, North Carolina residents must choose between the two programs mentioned above.
35. North Dakota
- State’s ranking: Tax-friendly 🙂
- State income tax: between 1.10 percent (on up to $38,700 of taxable income for single filers and up to $64,650 for married couples who file jointly) and 2.90 percent (on taxable income over $424,950)
- The average property tax: $894 in taxes per $100,000 of assessed home value
- The average state and local sales tax: 6.83 percent
- Estate tax/inheritance tax: No/No
The Peace Garden State taxes a small portion of Social Security benefits and even if it doesn’t offer tax breaks for seniors, it is still a tax-friendly state. How so? Because its income taxes are very low, making retirees’ life much easier than in other states.
