Tax-Friendly Retirement States: What to Know

Planning ahead for the future of your retirement, the possibility of health care expenses in the form of long-term care planning, and passing on assets to your loved ones through your estate raises important questions about how to consider where to live in older years. When evaluating potential options for entering retirement, a state’s income tax rules can have a big impact on where you choose to go.

The perception of a state as having low taxes or high taxes could influence someone’s decision to relocate, but it’s important for retirees to remember that there may be many different tax breaks that could reduce the retiree tax burden in those states, so a thorough evaluation is important. There are four primary types of state tax breaks for retirees. These include:

Every state in the country has at least one of these three kinds of tax breaks, but it’s hard to figure out the exceptions and the tax codes that may influence you. Other costs to consider in determining where to live in your golden years are medical care, housing, transportation and energy. Some states have no state income tax, making them initially appealing to move to.