Oklahoma Among Top 10 Best States To Retire
WASHINGTON, DC -- Every year, thousands of Americans search for a "tax-friendly destination" where they can enjoy retirement without worrying about financial constraints. Now, you can add Oklahoma to your list.
Federal taxes will be about the same no matter where you live, but state and local tax burdens can vary greatly, especially if you're retired. Kiplinger's Personal Finance has launched an exclusive interactive map to point you to the states that will take the smallest—and biggest—bites out of your assets in retirement.
Which states impose their own estate taxes? Which nine states have no income tax? What are the most pension-friendly states?
10 Most Tax-Friendly States for Retirees
• Wyoming – Wyoming is a tax haven for cowboys and retirees alike. There is no state income tax.
• Oklahoma – Oklahoma does not tax Social Security benefits or Civil Service Retirement system retirement benefits for those who receive a federal pension in lieu of Social Security.
• Louisiana – Louisiana 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.
• Mississippi – Mississippi offers a sweet income-tax deal for retirees. It not only exempts Social Security benefits from state income taxes, but it also excludes all qualified retirement income from state income taxes.
• Alabama – Alabama is very tax-friendly to retirees. Most retirement income is exempt from state income taxes.
• Georgia – Georgia is a peachy tax environment for retirees. Social Security income is exempt, and so is up to $35,000 of most types of retirement income.
• South Carolina – South Carolina extends its Southern hospitality to retirees. The Palmetto State exempts Social Security benefits from state income taxes, and it allows residents 65 and older to deduct up to $15,000 per person ($30,000 per couple) of qualified retirement income when calculating their state income tax.
• Kentucky – Kentucky exempts Social Security benefits from state income taxes plus up to $41,110 per person of a wide variety of retirement income, including public and private pensions and annuities.
• Pennsylvania – Pennsylvania shows its Quaker roots and extends a friendly hand to retirees. It is one of the most generous states in the nation when it comes to offering income-tax exclusion on a wide variety of retirement income.
• Delaware – Delaware is one of the tax-friendliest states for retirees. It has no sales tax. Its income-tax rates are modest. Social Security benefits are exempt.
10 Least Tax-Friendly States for Retirees
• Oregon – Oregon, along with Hawaii, shares the distinction of imposing the highest personal income-tax rate in the nation. Although Oregon does not tax Social Security benefits, that's the extent of its income-tax breaks for retirees.
• California – California is a retiree's tax nightmare. Although Social Security benefits are exempt, all other forms of retirement income are fully taxed.
• Nebraska – Nebraska doesn't offer any great tax breaks to retirees (unless you're a former railroad employee, as Railroad Retirement benefits are exempt).
• Iowa – Iowa allows single retirees to exclude up to $6,000 of retirement-plan distributions from state income taxes ($12,000 for married couples).
• Minnesota – Minnesota offers cold comfort on the tax front to retirees. However, the state does offer some retirees a break on property taxes.
• Wisconsin – Wisconsin exempts Social Security benefits from its state income taxes, but taxes the rest of your pension and annuity income the same way the federal government does.
• New Jersey – New Jersey's tax policies create a thicket of thorns for some retirees. Its median real estate taxes are the highest in the nation, according to the Tax Foundation.
• Connecticut – Connecticut is a tax nightmare for many retirees. Its real estate taxes are among the highest in the nation.
• Vermont – Vermont doesn't coddle retirees. Not only does it tax most retirement income, including Social Security, it has a steep top income tax rate.
• Maine – Maine, like the majority of states, exempts Social Security benefits from state income taxes. Maine residents pay a 5% sales tax statewide on everything except food and prescription drugs.
Information provided by Kiplinger's Personal Finance.