Taxes in Retirement: How All 50 States Tax Retirees, 2019
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Taxes in Retirement: How All 50 States Tax Retirees

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Retirees relocate for lots of different reasons, from the weather to proximity to grandchildren. Moving from a pricey part of the country to one with low housing prices could also lower your expenses and make your retirement savings last longer. But as you consider the cost of living in potential retirement destinations, don’t overlook the impact of state taxes on your bottom line.

Where does your state fit in? We’ve ranked all 50 states, plus the District of Columbia, based on how they tax retirees.

SEE ALSO: 50 Best Places to Retire in All 50 States

States are listed alphabetically. Details on tax data sources and our ranking methodology can be found in the last slide.

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Alabama

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Our ranking: Most tax-friendly

State income tax: 2% (on up to $1,000 of taxable income for married joint filers and up to $500 for all others) — 5% (on more than $6,000 of taxable income for married joint filers and more than $3,000 for all others)

Average property tax: $432 in taxes per $100,000 of assessed home value

Average state and local sales tax: 9.16%

Estate tax/inheritance tax: No/No

Go to Alabama’s full state tax profile

If you’re a college football fan, perhaps you’ve thought about retiring to Alabama. But there are also non-football reasons to spend your golden years in the Yellowhammer State—like low taxes for retirees. While most people end up paying the highest income tax rate, it’s not too bad at only 5%. Plus, Social Security benefits and payments from traditional pension plans (i.e., defined benefit plans) are exempt. There’s no tax on income from federal government, certain Alabama state and local government, or military retirement plans, either.

Alabama also boasts the second-lowest property taxes in the the country. Plus, all homeowners age 65 or older are exempt from state property taxes. Seniors with net taxable income of $12,000 or less on their combined (taxpayer and spouse) federal income tax return are exempt from all property taxes on their principal residence.

SEE ALSO: 10 States With the Highest Sales Taxes

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Alaska

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Our ranking: Most tax-friendly

State income tax: None

Average property tax: $1,234 in taxes per $100,000 of assessed home value

Average sales tax (local only): 1.76%

Estate tax/inheritance tax: No/No

Go to Alaska’s full state tax profile

The Last Frontier is a tax haven for retirees. Not only do Alaskans pay no state income tax, the state sends all permanent residents (who have lived there for at least one year) an annual dividend check from its oil wealth savings account. The 2019 payout is $1,606. While Alaska taxes real estate, homeowners 65 and older, or surviving spouses 60 and older, are exempt from municipal taxes on the first $150,000 of the assessed value of their property.

While real estate is taxable in some areas of Alaska, homeowners 65 and older, or surviving spouses 60 and older, are exempt from municipal taxes on the first $150,000 of the assessed value of their property.

SEE ALSO: All 47 Warren Buffett Stocks Ranked: The Berkshire Hathaway Portfolio

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Arizona

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Our ranking: Most tax-friendly

State income tax: 2.59% (on up to $21,202 of taxable income for married joint filers and up to $10,602 for all others) — 4.54% (on more than $317,990 of taxable income for married joint filers and more than $158,996 for all others)

Average property tax: $754 in taxes per $100,000 of assessed home value

Average state and local sales tax: 8.39%

Estate tax/inheritance tax: No/No

Go to Arizona’s full state tax profile

Sunshine, sunshine, sunshine — and low taxes. The Grand Canyon State exempts Social Security benefits from state income taxes, plus up to $2,500 of income from federal and Arizona government retirement plans. Up to $3,500 of military retirement income is also tax-free in Arizona. While plenty of other states have more generous exemptions, Arizona's low income tax rates keep the net burden down.

Sales taxes are above average in the state—the average combined (state and local) rate is 8.39% (11th-highest in the nation). However, Arizona does not have an estate or inheritance tax, which makes it a more attractive retirement destination for wealthier seniors.

SEE ALSO: Arizona’s 30 Largest Cities and Towns Ranked for Local Taxes

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Arkansas

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Our ranking: Tax-friendly

State income tax: 0.9% (on up to $4,499 of taxable income) — 6.9% (on more than $79,301)

Average property tax: $658 in taxes per $100,000 of assessed home value

Average state and local sales tax: 9.47%

Estate tax/inheritance tax: No/No

Go to Arkansas’ full state tax profile

The Natural State exempts Social Security benefits and up to $6,000 of retirement income from its state income tax. While Arkansas’ property taxes are among the lowest in the nation, its sales taxes—which are levied on food as well—are at the top.

A plus for veterans: All military pension income is tax-exempt.

SEE ALSO: 8 Ways You Might Be Cheating on Your Taxes

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California

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Our ranking: Tax-friendly

State income tax: 1% (on income less than $8,544/individual, $17,088/joint) — 13.3% (on income more than $1 million/individual, $1,145,960/joint)

Average property tax: $841 in taxes per $100,000 of assessed home value

Average state and local sales tax: 8.66%

Estate tax/inheritance tax: No/No

Go to California’s full state tax profile

California has the highest tax rate in the country, at 13.3% (for millionaires). And while it doesn’t tax Social Security income or Railroad Retirement benefits, all other retirement income is fair game. Sales taxes are high. But, there’s a significant bright spot: If you’re over 65, you get to claim an extra $118 exemption that comes right off your tax bill: It reduces what you owe directly, the same way as a federal tax credit would.

SEE ALSO: 9 States with No Income Tax

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Colorado

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Our ranking: Tax-friendly

State income tax: Flat 4.63%

Average property tax: $607 in taxes per $100,000 of assessed home value

Average state and local sales tax: 7.63%

Estate tax/inheritance tax: No/No

Go to Colorado’s full state tax profile

If you’d like to retire early in the mountains (or at their feet) the Centennial State is a promising place to do it. In Colorado, taxpayers 55 and older get a generous retirement-income exclusion from state taxes, and it gets better when they reach 65. And when it comes to property taxes, seniors may qualify for an exemption of up to 50% of the first $200,000 of property value.

But the Centennial state’s sales taxes (which have a local component) are on the high side, and can reach 11% in some places.

SEE ALSO: Early Retirement Cities: 21 Great Places Near the Mountains to Retire

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Connecticut

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Our ranking: Least tax-friendly

State income tax: 3% (on up to $20,000 of taxable income for married joint filers and up to $10,000 for those filing individually) — 6.99% (on the amount over $1 million for married joint filers and over $500,000 for those filing individually)

Average property tax: $2,114 in taxes per $100,000 of assessed home value

State sales tax: 6.35%

Estate tax/inheritance tax: Yes/No

Go to Connecticut’s full state tax profile

The Constitution State is a tax nightmare for many retirees ... but at least things are improving on the income tax front. For residents with federal adjusted gross income over $75,000 ($100,000 for joint filers), 25% of Social Security benefits taxed at the federal level are taxed by Connecticut. (Social Security payments are exempt for taxpayers below those income levels.) Starting in 2019, 14% of income from a pension or annuity is exempt for taxpayers with less than $75,000 of federal AGI (less than $100,000 for joint filers). The exemption percentage is increased 14% each year after 2019 until it reaches 100% for the 2025 tax year. Military pensions are also excluded from state taxes.

Connecticut has the fourth-highest property taxes in the U.S., so the $10,000 cap on the federal tax deduction for state and local taxes stings a bit more here.

Connecticut imposes an estate tax on estates valued at $3.6 million or more at progressive rates ranging from 7.2% to 12%. Connecticut is also the only state with a gift tax, which applies to real and tangible personal property in Connecticut and intangible personal property anywhere for permanent residents. Only the amount given since 2005 and over $3.6 million is taxed. Gift tax rates start at 7.8% and go up to 12%.

SEE ALSO: What Do You Know About Wills and Trusts?

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Delaware

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Our ranking: Most tax-friendly

State income tax: 2.2% (on taxable income from $2,001 to $5,000) — 6.6% (on taxable income above $60,000).

Average property tax: $604 in taxes per $100,000 of assessed home value

Sales tax: None

Estate tax/inheritance tax: No/No

Go to Delaware’s full state tax profile

In the First State, Social Security benefits are exempt, and taxpayers over 60 can exclude $12,500 of investment and qualified pension income from state income taxes, and income above that faces only modest tax rates. Homeowners 65 and older may qualify for a credit equal to half of school property taxes, up to $500. The biggest savings of all, though, may be Delaware’s lack of any sales tax whatsovever.

Delaware buried its estate tax at the end of 2017.

SEE ALSO: 18 States With Scary Death Taxes

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District of Columbia

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Our ranking: Mixed tax picture

Income tax: 4% (on taxable income up to $10,000) — 8.95% (on taxable income above $1,000,000)

Average property tax: $603 in taxes per $100,000 of assessed home value

Average state and local sales tax: 5.75%

Estate tax/inheritance tax: Yes/No

Go to the District of Columbia’s full state tax profile

Although the District exempts Social Security income, a steep 8.5% tax rate hits other income over $40,000. (The top income tax rate of 8.95% is reserved for taxable income over $350,000.) But many senior homeowners can get a substantial property tax break. Sales taxes are low.

SEE ALSO: States That Won’t Tax Your Retirement Income

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Florida

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Our ranking: Most tax-friendly

State income tax: None

Average property tax: $1,041 in taxes per $100,000 of assessed home value

Average state and local sales tax: 7.05%

Estate tax/inheritance tax: No/No

Go to Florida’s full state tax profile

The Sunshine State is state is very popular with retirees, not just because of its forgiving climate but also because it has no state income tax. Sales taxes, though, can go as high as 8.5%, depending on where you live. The average combined state and local tax rate is 7.05%, which is about average.

Property taxes are reasonable in Florida, and residents ages 65 and older who meet certain income, property-value and length-of-ownership restrictions can also receive an extra homestead exemption. Any widow or widower who is a Florida resident may claim an additional $500 exemption as well.

Notably, Florida is one of only two states to exempt cigars from all taxation, a reflection of its long history as a cigar-manufacturing location.

SEE ALSO: Florida Cities and Towns Ranked for Local Taxes

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Georgia

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Our ranking: Most Tax-Friendly

State income tax: 1% (on the first $1,000 of taxable net income for married couples filing jointly; on the first $750 for individual filers; and on the first $500 for married couples filing separately) — 6% (on taxable income over $10,000 for married couples filing jointly; on taxable income over $7,000 for individual filers; and on taxable income over $5,000 for married couples filing separately).

Average property tax: $1,000 in taxes per $100,000 of assessed home value

Average state and local sales tax: 7.23% (groceries taxable by localities)

Estate tax/inheritance tax: No/No

Go to Georgia’s full state tax profile

Ever wonder why so many retirees have Georgia on their minds? The Peach State’s low-tax climate may have something to do with it. Social Security income is exempt from state taxes, and so is up to $65,000 of most types of retirement income for those age 65 or older ($130,000 per couple). (For those age 62 to 64, the maximum exemption is $35,000.) Retirement income includes pensions and annuities, interest, dividends, net income from rental property, capital gains, royalties, and the first $4,000 of earned income, such as wages.

While the state doesn’t tax groceries, localities can.

SEE ALSO: The 30 Best Mutual Funds in 401(k) Retirement Plans

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Hawaii

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Our ranking: Tax friendly

State income tax: 1.4% (on taxable income up to $4,800 for married couples filing jointly; on up to $2,400 for married couples filing separately and individual filers) — 11% (on taxable income over $200,000 for married couples filing jointly and surviving spouses; on over $400,000 for married couples filing separately and individual filers)

Average property tax: $304 in taxes per $100,000 of assessed home value

Average state and local sales tax: 4.41% (but applied to virtually all transactions)

Estate tax/inheritance tax: Yes/No

Go to Hawaii’s full state tax profile

The Aloha State is known for its high cost of living, but it can be a tax paradise for retirees. It exempts Social Security benefits as well as most pension income from state income taxes. But if you have other sources of income, Hawaii will tax that income up at rates up to 11%.

The property tax situation is unusual: Tax rates are the lowest in the country, and seniors can also get big-dollar exemptions from property taxes (these vary by county). But keep in mind that Hawaiian property values are sky-high.

SEE ALSO: The Millionaire Quiz: Do You Have What It Takes?

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Idaho

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Our ranking: Mixed tax picture

State income tax: 1.125% (on taxable income up to $3,008 for married joint filers and up to $1,504 for individual filers) — 6.925% (on taxable income of $22,558 or more for married joint filers and $11,279 or more for individual filers)

Average property tax: $796 in taxes per $100,000 of assessed home value

Average state and local sales tax: 6.03% (groceries are taxed)

Estate tax/inheritance tax: No/No

Go to Idaho’s full state tax profile

The Gem State taxes all income, except Social Security and Railroad Retirement benefits. Its top tax rate of 6.925% kicks in at a relatively low level. There is a generous retirement-benefits deduction — but only for those with qualifying public pensions. Idaho does not have an inheritance tax or estate tax.

But, sales taxes are low, and since groceries are taxable, the state offers a tax credit of $100 per person to offset these—and raises it to $120 if you’re over 65.

SEE ALSO: 11 Reasons You Don't Want to Retire in Florida

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Illinois

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Our ranking: Mixed tax picture

State income tax: Flat 4.95%

Average property tax: $2,408 in taxes per $100,000 of assessed home value

Average state and local sales tax: 8.78% (groceries are taxed)

Estate tax/inheritance tax: Yes/No

Go to Illinois’ full state tax profile

There is some good tax news for retirees in Illinois: Social Security benefits and income from most retirement plans are exempt. Plus, the state’s 4.95% flat income tax rate is relatively low.

Now for the bad news: Property taxes hit retirees hard in Illinois. The state-wide average property tax rate in Illinois is the second-highest in the nation—a staggering $9,634 per year on a $400,000 home. Fortunately, there is some relief for seniors in the form of a homestead exemption of up to $5,000 ($8,000 in Cook County), the ability to "freeze" a home’s assessed value (must have income of $65,000 or less), and a tax deferral program (up to a maximum of $5,000).

Sales tax rates are high in Illinois, too. The state has the seventh-highest average combined state and local sales tax rate at 8.78%. In some locations, the rate can be as high as 11%!

Illinois also has an estate tax that applies to estates worth $4 million or more. That can be bad news for your heirs.

SEE ALSO: Tax Plans of the Democratic Presidential Candidates

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Indiana

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Our ranking: Mixed tax picture

State income tax: Flat 3.23%

Average property tax: $907 in taxes per $100,000 of assessed home value

State sales tax: 7%

Estate tax/inheritance tax:

Go to Indiana’s full state tax profile

While the The Hoosier State exempts Social Security benefits and offers limited exemptions for military pensions and federal civil-service pensions, IRAs, 401(k) plans and private pensions are fully taxable. Keep in mind, too, that counties have the authority to levy their own income taxes on top of the state’s flat tax. Rates range from 0.35% (Jefferson County) to 3.38% (Pulaski County).

SEE ALSO: 100 Most Popular Funds for 401(k) Retirement Savings

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Iowa

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Our ranking: Not tax-friendly

State income tax: 0.36% (on up to $1,598 of taxable income) — 8.98% (on taxable income over $71,910); in 2019, 0.33% (on up to $1,638 of taxable income) — 8.53% (on taxable income over $73,710)

Average property tax: $1,678 in taxes per $100,000 of assessed home value

Average state and local sales tax: 6.82%

Estate tax/inheritance tax: Yes/No

Go to Iowa’s full state tax profile

Which do you think is higher in Iowa: the corn or taxes? It might be taxes, thanks to above average income and property taxes in the state. One reason why income taxes are on the high end in the state is because over 200 school districts and Appanoose County add their own income taxes on top of the state-level tax. The average property tax rate in the Hawkeye State is the 12th-highest in the nation. For a $400,000 home in the state, the owners can expect to pay about $6,711 per year in property taxes. That certainly doesn’t help homeowners in Iowa.

Income tax rates have been lowered for 2019, and will go down further in 2023, assuming state revenues hold up.

SEE ALSO: 9 States with No Income Tax

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Kansas

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Our ranking: Least tax-friendly

State income tax: 3.1% (on $2,500 or less of taxable income for single filers and $5,000 or less for joint filers) — 5.7% (on more than $30,000 of taxable income for single filers and more than $60,000 for joint filers).

Average property tax: $1,491 in taxes per $100,000 of assessed home value

Average state and local sales tax: 8.68%

Estate tax/inheritance tax: No/No

Go to Kansas’ full state tax profile

While there’s no place like home, maybe Dorothy should think about returning to Oz when she retires to avoid Kansas’ high taxes. Distributions from private retirement plans (including IRAs and 401(k) plans) and out-of-state public pensions are fully taxed. Kansas also taxes Social Security benefits received by residents with a federal adjusted gross income of $75,000 or more. Military, federal government and in-state public pensions are exempt from state income taxes, though.

Shopping in Kansas can be expensive, too. The Sunflower State’s average combined state and local sales tax rate is the eighth-highest in the U.S. at 8.67%.

Property taxes are above the national average as well, though some breaks are available for seniors.

SEE ALSO: The 30 Best Mutual Funds in 401(k) Retirement Plans

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Kentucky

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Our ranking: Mixed tax picture

State income tax: Flat 5%

Average property tax: $925 in taxes per $100,000 of assessed home value

State sales tax: 6%

Estate tax/inheritance tax: No/Yes

Go to Kentucky’s full state tax profile

The Bluegrass State exempts Social Security benefits from state income taxes, plus up to $31,110 per person of a wide variety of retirement income, including public and private pensions and annuities. A modest 6% sales tax is imposed at the state level, and localities can’t add to it. What's not to like? An inheritance tax.

A decedent’s spouse, parents, children, grandchildren and siblings are exempt. But nieces, nephews, daughters-in-law, sons-in-law, aunts, uncles and great-grandchildren are taxed at rates ranging from 4% to 16%, depending on the value of the property inherited (the first $1,000 of property is exempt). All other heirs are taxed at rates ranging from 6% to 16% (their exemption is only for the first $500 of property).

SEE ALSO: 11 Strangest Ways States Tax You (And Don't)

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Louisiana

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Our ranking: Tax-friendly

State income tax: 2% (on $12,500 or less of taxable income for individuals, $25,000 for joint filers) — 6% (on more than $50,000 of taxable income for individuals; $100,000 for joint filers).

Average property tax: $555 in taxes per $100,000 of assessed home value

Average state and local sales tax: 9.45%

Estate tax/inheritance tax: No/No

Go to Louisiana’s full state tax profile

The Pelican State offers a bayou full of tax breaks to retirees. Social Security, military, civil-service, and state and local government pensions are exempt from state income taxes. Up to $6,000 per person of pension and annuity income are exempt from income taxes, and any income above that faces fairly low rates. But retirees will still pay some of the country’s highest sales taxes on everything they buy, potentially including groceries, which are taxable in some localities.

SEE ALSO: Great Places to Retire If You Hate the Cold 2019

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Maine

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Our ranking: Mixed tax picture

State income tax: 5.8% (on taxable income less than $21,450 for single filers; less than $42,900 for joint filers) — 7.15% (on taxable income of $50,750 or more for single filers, $101,550 for joint filers)

Average property tax: $1,424 in taxes per $100,000 of assessed home value

State sales tax: 5.5%

Estate tax/inheritance tax: Yes/No

Go to Maine’s full state tax profile

The Pine Tree State, like the majority of states, exempts Social Security benefits from state income taxes. Plus, up to $10,000 per person of eligible pension income can be deducted. Income above that threshold, though, will face stiff income taxes.

Maine is one of a few states that do not allow cities and towns to impose their own local sales tax; only state sales tax of 5.5% is due.

Though Maine does have an estate tax, its exclusion amount is quite high: $5.7 million for 2019.

SEE ALSO: 6 Great Places to Retire in New England

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Maryland

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Our ranking: Not tax friendly

State income tax: 2% (on less than $1,000 of taxable income) — 5.75% (on more than $250,000 of taxable income for single filers; more than $300,000 for joint filers)

Average property tax: $1,125 in taxes per $100,000 of assessed home value

State sales tax: 6%

Estate tax/inheritance tax: Yes/Yes

Go to Maryland’s full state tax profile

Maryland doesn’t tax Social Security benefits. If you are 65 or older or totally disabled (or your spouse is totally disabled), you qualify for an exclusion of up to $30,600 on distributions from 401(k), 403(b) and 457 plans, along with income from public and private pensions.

But here’s the hitch: Any income outside those exclusions will be heavily taxed in the Free State. In addition to the state income tax (which has a top rate of 5.75%), Maryland’s 23 counties and Baltimore City levy additional income taxes ranging from 1.75% to 3.20% of taxable income; per the Tax Foundation, the average rate is 2.9%.

Maryland’s estate tax exemption is $5 million in 2019, plus any predeceased spouse’s unused exclusion amount. ates range from 0.8% to 16%. While Maryland also has an inheritance tax (with a flat 10% rate), the list of heirs exempt from paying it is long.

SEE ALSO: 14 States That Won’t Tax Your Pension

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Massachusetts

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Our ranking: Not tax-friendly

State income tax: Flat 5.1%

Average property tax: $1,294 in taxes per $100,000 of assessed home value

State sales tax: 6.25%

Estate tax/inheritance tax: Yes/No

Go to Massachusetts’ full state tax profile

The Bay State offers a couple of breaks to retirees. Massachusetts does not tax Social Security and most government employee pension income. But all other income is taxed at a flat rate of 5.1%. Property taxes run high, although there is a refundable tax credit available to eligible homeowners 65 or older.

Massachusetts also has its own estate tax, with an exemption of only $1 million. Tax rates range from 0.8% to 16% (for estates exceeding $10,040,000). There is an unlimited marital deduction for property left to a surviving spouse and an unlimited charitable deduction for property left to a qualified charity.

SEE ALSO: 20 Dividend Stocks That Can Fund 20 Years of Retirement

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Michigan

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Our ranking: Not tax-friendly

State income tax: Flat 4.25%

Average property tax: $1,729 in taxes per $100,000 of assessed home value

State sales tax: 6%

Estate tax/inheritance tax: No/No

Go to Michigan’s full state tax profile

In recent years, the Great Lakes State has become less tax-friendly for retirees. As of 2012, for retirees born after 1945, more pension income is subject to state income tax. The state imposes a flat-rate income tax of 4.25%, but cities have income taxes as well (Detroit’s is 2.4%). Some seniors may be able to delay paying property taxes or receive a tax credit — but those property taxes are high.

SEE ALSO: 5 Ways to Avoid Taxes on Social Security Benefits

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Minnesota

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Our ranking: Least tax-friendly

State income tax: 5.35% (on less than $25,890 of taxable income for single filers and on less than $37,850 for joint filers) — 9.85% (on more than $160,020 of taxable income for single filers and on more than $266,700 for joint filers)

Average property tax: $1,224 in taxes per $100,000 of assessed home value

Average state and local sales tax: 7.43%

Estate tax/inheritance tax: Yes/No

Go to Minnesota’s full state tax profile

The North Star State offers cold comfort on the tax front to retirees. Social Security income is taxable to the same extent as it is on your federal return, though taxpayers with taxable Social Security income can deduct up to $5,150 for joint filers, up to $4,020 for single filers, and up to $2,575 for married taxpayers filing a separate return. Pensions are also taxable, unless they’re from the military. Distributions from IRAs and 401(k) plans are taxable, too.

There is a special income tax deduction for certain senior citizens. Taxpayers 65 and older can deduct up to $9,600 for single filers or $12,000 for joint filers. However, due to the deduction’s phased-out rules, seniors making more than $33,700 (single) or $42,000 (joint) can’t claim this tax break.

The North Star State’s estate tax exemption for 2019 is $2.7 million. It will rise to $3 million in 2020; tax rates are from 13% - 16%. But Minnesota looks back to include as part of your estate any taxable gifts made within three years prior to death.

SEE ALSO: 11 States Most Unprepared for the Next Recession

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Mississippi

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Our ranking: Most tax-friendly

State income tax: 3% (on taxable income of $1,000 or more) — 5% (on more than $10,000 of taxable income)

Average property tax: $862 in taxes per $100,000 of assessed home value

Average state and local sales tax: 7.07%

Estate tax/inheritance tax: No/No

Go to Mississippi’s full state tax profile

The tea is sweet in the Magnolia State, and so is the income tax environment for retirees. Mississippi not only exempts Social Security benefits from state income tax, it also excludes withdrawals from IRAs and 401(k) plans, income from public and private pensions, and other types of qualified retirement income

.

Mississippi’s state sales tax rate of 7% is the second-highest in the U.S. (only California, at 7.25%, is higher), and Mississippi is one of a minority of states that charges sales tax on groceries. But localities add very little, if anything, on top of the state’s rate, and motor vehicle sales are taxed at only 5%.

Property taxes on residential real estate aren’t too bad, at an average of $862 in taxes per $100,000 of assessed home value, which is below the U.S. average. Plus, all seniors are eligible for an exemption on the first $75,000 of taxable value.

SEE ALSO: 16 Great Places to Retire in the South

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Taxes in Retirement: How All 50 States Tax Retirees, 2019 | Slide 27 of 53

Missouri

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Our ranking: Mixed tax picture

State income tax: 1.5% (on taxable income $103 or more) — 5.9% (on more than $9,253 of taxable income)

Average property tax: $1,026 in taxes per $100,000 of assessed home value

Average state and local sales tax: 8.03%

Estate tax/inheritance tax: No/No

Go to Missouri’s full state tax profile

The Show-Me State no longer taxes Social Security benefits for many taxpayers. Taxpayers may also qualify for exemptions on public and private pensions, subject to income limits. But note that if you do have taxable income, the rate gets high quickly: 5.9% of income over $9,253 (for 2018). That rate is coming down, though. For 2019, it’s 5.4%, and it will continue to drop incrementally, to 5.1%, if the state meets revenue targets.

Some seniors may qualify for a property-tax credit.

QUIZ: How Much Do You Really Know About Roth IRAs?

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Taxes in Retirement: How All 50 States Tax Retirees, 2019 | Slide 28 of 53

Montana

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Our ranking: Not tax-friendly

State income tax: 1% (on up to $3,000 of taxable income) — 6.9% (on taxable income over $17,900)

Average property tax: $892 in taxes per $100,000 of assessed home value

Average state and local sales tax: None

Estate tax/inheritance tax: No/No

Go to Montana’s full state tax profile

The Treasure State is one of five states that do not impose a general state sales tax. That’s the good news. The bad news is that Montana taxes virtually all forms of retirement income, including Social Security. The state allows a pension- and annuity-income exemption of up to $4,110 per person, subject to certain income limitations. Residents 65 and older can exclude up to $800 for single filers (up to $1,600 for married filers) of interest income from state taxes.

On the property-tax front, rates are modest, on average, and any homeowner or renter 62 or older with total household income of less than $45,000 can apply for a refundable income tax credit worth up to $1,000.

SEE ALSO: 10 States That Are Surprisingly 'Rich' in Millionaires

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Taxes in Retirement: How All 50 States Tax Retirees, 2019 | Slide 29 of 53

Nebraska

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Our ranking: Least tax-friendly

State income tax: 2.46% (on up to $3,150 of taxable income for single filers and $6,290 for married couples filing jointly) — 6.84% (on taxable income over $30,420 for single filers and $60,480 for married couples filing jointly)

Average property tax: $1,855 in taxes per $100,000 of assessed home value

Average state and local sales tax: 6.89%

Estate tax/inheritance tax: No/Yes

Go to Nebraska’s full state tax profile

Nebraska is the least tax-friendly state in the nation for retirees, primarily because of steep income and property taxes. The Cornhusker State taxes some Social Security benefits and most other retirement income, including IRA withdrawals, 401(k) funds, and public and private pensions. Residents can subtract Social Security income included in federal adjusted gross income if their AGI is $58,000 or less for married couples filing jointly or $43,000 for single residents. However, if their income exceeds the applicable threshold, their Social Security benefits are taxed by Nebraska to the same extent that they’re taxed on the federal level. Plus, the top income tax rate kicks in pretty quickly.

Nebraska’s average property taxes are the eighth-highest in the country. Seniors can get an exemption for up to $40,000 of assessed value, but it’s restricted to single filers earning less than $28,201 and married filers earning less than $33,901.

SEE ALSO: 10 States with the Lowest Beer Taxes

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Taxes in Retirement: How All 50 States Tax Retirees, 2019 | Slide 30 of 53

Nevada

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Our ranking: Most tax-friendly

State income tax: None

Average property tax: $693 in taxes per $100,000 of assessed home value

Average state and local sales tax: 8.14%

Estate tax/inheritance tax: No/No

Go to Nevada’s full state tax profile

The Silver State offers retirees a jackpot of tax savings. There is no state income tax, so you can cash in your retirement plans and collect your Social Security checks without worrying about a big state tax bill. There are no estate or inheritance taxes in Nevada, either.

Property taxes are considerably below the national average. That’s good, as the state offers no property tax breaks for seniors.

Sales tax is one area where Nevada could do better. The state imposes a 6.85% tax, and counties may tack on up to 1.42% more. As a result, the average combined state and local sales tax rate is 8.14% (that’s the 13th-highest combined rate in the country). At least groceries are exempt from sales tax. In addition to sales taxes, vehicle owners are charged an annual “government services tax” that’s based on the vehicle’s value and age.

SEE ALSO: 13 Reasons You'll Regret an RV in Retirement

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Taxes in Retirement: How All 50 States Tax Retirees, 2019 | Slide 31 of 53

New Hampshire

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Our ranking: Most tax-friendly

State income tax: None

Average property tax: $2,296 in taxes per $100,000 of assessed home value

Average state and local sales tax: None

Estate tax/inheritance tax: No/No

Go to New Hampshire’s full state tax profile

Residents of the Granite State pay no taxes on Social Security benefits, pensions or distributions from their retirement plans—because there’s no general income tax. There’s no sales tax, either, so you can shop to your heart’s content.

Here’s the hitch: Median property taxes in New Hampshire are the third-highest in the U.S. Some relief on these is available for seniors, but the programs, run by towns and cities, are complex.

Though New Hampshire imposes a 5% tax on dividends and interest, a $1,200 exemption is available for residents 65 or older.

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Taxes in Retirement: How All 50 States Tax Retirees, 2019 | Slide 32 of 53

New Jersey

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Our ranking: Mixed tax picture

State income tax: 1.4% (on up to $20,000 of taxable income) — 8.97% (on taxable income over $500,000).

Average property tax: $2,530 in taxes per $100,000 of assessed home value

Average state sales tax: 6.97%

Estate tax/inheritance tax: No/Yes

Go to New Jersey’s full state tax profile

New Jersey has made efforts to reduce the income tax burden on retirees, with a very generous exemption for retirement income. For example, married seniors filing a joint return can exclude up to $80,000 of income from a pension, annuity, IRA, or other retirement plan if their New Jersey income is $100,000 or less. Single taxpayers and married taxpayers filing a separate return can exclude up to $60,000 and $40,000, respectively. Plus, starting in 2020, the maximum exemption increases to $100,000 for joint filers, $75,000 for single filers, and $50,000 for separate filers.

It's not enough, though, to overcome New Jersey's crushing property taxes—the highest (on average) in the county, with residents paying an average of $2,530 in taxes per $100,000 of assessed home value.

Although New Jersey recently eliminated its estate tax, the state still imposes an inheritance tax. The tax rates range from 11% to 16% on inherited property with a value of $500 or more.

SEE ALSO: 14 Expensive Places to Retire That Are Worth It

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Taxes in Retirement: How All 50 States Tax Retirees, 2019 | Slide 33 of 53

New Mexico

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Our ranking: Least tax-friendly

State income tax: 1.7% (on up to $5,500 of taxable income for single filers and $8,000 for joint filers) — 4.9% (on taxable income over $16,000 for single filers and over $24,000 for married couples filing jointly)

Average property tax: $830 in taxes per $100,000 of assessed home value

Average state and local sales tax: 7.82%

Estate tax/inheritance tax: No/No

Go to New Mexico’s full state tax profile

The Land of Enchantment is not a magical place for well-off retirees. Social Security benefits, retirement accounts and pensions are all taxable. The state does offer a retirement-income exemption of up to $8,000, but you must meet certain income restrictions to qualify. Plus, the sales tax has a broad reach, hitting most services in addition to goods. On the bright side, if you make it 100 years old, income tax is totally waived.

SEE ALSO: 7 Great Small Towns for Retirement

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Taxes in Retirement: How All 50 States Tax Retirees, 2019 | Slide 34 of 53

New York

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Our ranking: Least tax-friendly

State income tax: 4.0% (on up to $8,500 of taxable income for single filers and up to $17,150 for married couples filing jointly) — 8.82% (on taxable income over $1,070,550 for single filers and over $2,155,350 for married couples filing jointly).

Average property tax: $1,812 in taxes per $100,000 of assessed home value

Average state and local sales tax: 8.49%

Estate tax/inheritance tax: Yes/No

Go to New York’s full state tax profile

The Empire State’s heavy tax burden carries over into retirement—especially when it comes to property taxes. There are some property tax breaks for seniors, though. Local governments and public-school districts can reduce the assessed value of their home by 50%. To qualify, the homeowner must be 65 or older and meet certain income limitations and other requirements. An Enhanced STAR exemption is also available for the primary residences of senior citizens (age 65 and older) with annual household incomes of $86,300 or less for 2019. Under the program, the first $66,800 (for 2019 to 2020 school tax bills) of home value is exempt from school property taxes.

When it comes to income taxes, New York’s tax bite is less severe for retirees when compared to other states. Social Security benefits, federal and New York government pensions, and military retirement pay are exempt. However, anything over $20,000 from a private retirement plan (including pensions, IRAs and 401(k) plans) or out-of-state government plan is taxed.

SEE ALSO: 12 Smart Places to Retire

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Taxes in Retirement: How All 50 States Tax Retirees, 2019 | Slide 35 of 53

North Carolina

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Our ranking: Mixed tax picture

State income tax: Flat 5.49%

Average state and local sales tax: 6.95%

Average property tax: $894 in taxes per $100,000 of assessed home value

Estate tax/inheritance tax: No/No

Go to North Carolina’s full state tax profile

The Tar Heel State has switched from graduated income tax brackets to a flat tax and eliminated a number of breaks for retiree income. Homeowners 65 and older can choose from multiple property-tax relief programs: The Elderly Exclusion excludes the first $25,000 or 50% of the home’s appraised value plus the value of up to 1.0 acre of land, whichever is greater, from taxation. The Circuit Breaker Tax Deferment Program limits property taxes due in a given year to a percentage of the owner’s income; the balance is deferred. Residents have to choose between the two, and income limits apply.

While the state doesn’t tax groceries, localities do.

SEE ALSO: 10 Ways YouTube Can Save You Money on DIY Projects

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