States Lower Taxes to Court Retirees

The tax breaks range from property tax exemptions to tax-free retirement plan withdrawals.

Maryland is known as the Free State, reflecting its tradition of political freedom and religious tolerance, along with its resistance to Prohibition. Talk to retirees, though, and they’ll tell you the nickname is a misnomer, at least as far as taxes are concerned. While Maryland excludes from taxes up to $31,100 in income from pensions and 401(k) plans, state and local taxes on other types of income—including distributions from IRAs—can run as high as 9%.

Fortunately for Marylanders willing to relocate, a number of other states give retirees a break. For example, nearby Delaware and Virginia are both friendlier to tax-conscious seniors, according to Kiplinger’s state-by-state guide to taxes on retirees. Alternatively, Marylanders can join the thousands of retirees that have stowed their snow shovels and moved to Florida, which has no income tax and is on Kiplinger’s list of most-tax-friendly states.

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StateNet Migration
South Carolina12,001
North Carolina9,209

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Sandra Block
Senior Editor, Kiplinger's Personal Finance

Block joined Kiplinger in June 2012 from USA Today, where she was a reporter and personal finance columnist for more than 15 years. Prior to that, she worked for the Akron Beacon-Journal and Dow Jones Newswires. In 1993, she was a Knight-Bagehot fellow in economics and business journalism at the Columbia University Graduate School of Journalism. She has a BA in communications from Bethany College in Bethany, W.Va.