The Most Tax-Friendly State for Retirees

Here's the next item I wanted to cover from Kiplinger's "The Best List". Today, we're highlighting the most tax-friendly state for retirees:

The Most Tax-Friendly State for Retirees: Delaware

People tend to focus on states with no income tax, such as Florida, Texas and Nevada. But for many retirees the biggest burden is property taxes and sales tax. That's why Delaware is a first-class bargain. There's no state sales tax, property taxes are relatively low, and homeowners 65 and older qualify for a tax credit on half of their school taxes, up to $500. Delaware does have a maximum state income tax of 5.95%, but Social Security benefits are exempt, and so is up to $12,500 of investment and pension income for residents 60 and older.

Yeah, but you have to live in Delaware. ;-)

Ok, all of you readers who live in Delaware -- don't write me. I was only kidding.

If you want to see where your state compares, check out this map that lists tax burdens across the U.S. Some (warmer) places with low tax burdens: Tennessee, Alabama, and South Carolina.

For more thoughts on retirement, see Best of Free Money Finance: Retirement Posts.

Comments

[Blaine Moore (First Time Homeowner)]

Maine, unsurprisingly, is near the top of the list.

[Lord]

The form of tax matters a lot as well as details on what may be exempt. Property taxes are probably more important for most retirees. California's 2% or Florida's 3% property tax increase limitation work out well for retirees over time.