The Top 10 Least Friendly States For Retirees
It seems like every week we get a top 10 list of things that are the best. This week, I thought I would turn the tables a bit and give you a top 10 list of the WORST 10 states for retirees.
Now remember, we are talking about the worst states from a tax perspective. They may be terrific places to live. And let’s give a big thanks to Kiplinger for putting this list together. You can find the entire article here.
10. New York: Property taxes are high, same for income tax and sales tax, and they even have an estate tax for estates over $1,000,000.
9. New Jersey: The Garden State’s combined state and local tax burden is the second-highest in the nation, and it is one of the few states with both an estate tax AND an inheritance tax.
8. California: Living in the Golden State is no day at the beach for retirees! California residents pay the highest income tax rates in the U.S. The state sales tax increased from 7.25% to 7.5% in January. (The temporary rate hike is set to expire in 2016.) Rates are even higher in cities and counties with special taxing districts; with the addition of local taxes, the total can reach 10% in some cities.
7. Nebraska: Wide open spaces, but they come with income tax, sales tax and inheritance tax. And don’t forget those property taxes!
6. Oregon: The Beaver State has no sales tax, but its income tax is one of the highest in the U.S. And don’t forget about those estate taxes.
5. Montana: The Treasure State is one of five states that do not impose a general sales tax. That’s the good news. The bad news is that it taxes most forms of retirement income. In addition, its top tax rate kicks in on taxable income of more than $16,400.
4. Minnesota: Maybe long winters aren’t the only reason seniors leave this state for warmer climes. Income tax, sales tax AND estate tax all come into play and ALL pension income is taxed, regardless of source.
3. Connecticut: The Constitution State is a tax nightmare for many retirees. Its real estate taxes are the second-highest in the nation, according to the Tax Foundation. Enough said.
2. Vermont: Prepare to pay lofty taxes if you retire in the Green Mountain State. Vermont taxes most retirement income. Some fun tidbits include a 9% tax for food in restaurants and lodging, and a 10% tax on wine or beer.
1. Rhode Island: The Ocean State is particularly tough on retirees. It’s among the minority of states that tax a portion of Social Security benefits. The state also taxes virtually all other sources of retirement income, including pension income. And when all is said and done, you get to pay an estate tax as you head up to your reward in the sky.
If you are retired and live in a different state than one of those listed, count your blessings. Remember, it can always get worse!