Lousiana actually has the second highest homicide rate and tax burden as far as US states go. Georgia is ranked as the best state to retire in, while Maryland is ranked the worst. Tax on retirement income: Yes. In addition to high taxes, New York is placed as one of the least desirable retirement destinations because of its general unaffordable living. Worst States for Retirement: Why You Should Think Twice: 1) Illinois: Poor fiscal health: 2) California: Expensive, and its finances are in disarray: 3) New York: Very high taxes, including property taxes: 4) Rhode Island: Worst-off state in the Northeast from a financial viewpoint; high taxes: 5) New Jersey Of the 10 states above, Hawaii, New York, and South Carolina are the tax friendliest to retirees whose income is mostly pensions and SS. Rhode Island – $71,000 estate tax. Not that there's much to tax. Rhode Island is the smallest state in the United States, but that’s not the case when it comes to its property taxes. When thinking about where to retire, people often want to go south. It has good food and an incredible culture. The other 5 states which do not tax SS look better to folks who will have significant SS income. Yikes, the. Connecticut is known to be among the unfriendliest states for retirees, with high real estate taxes and taxation of retirement income. Only Nebraska and Connecticut are worse. Researchers looked at affordability, health-related factors, and overall quality of life. According to the study, the top places to retire included: Minnesota. Oklahoma ranked 46th overall on the list, making it one of the worst states in the country to retire. 10. Hawaii is considered to be the worst state to retire in. State income tax. Retiring in the Pine Tree State is not all bad: Maine doesn’t tax Social Security benefits, and retirees can deduct up to $10,000 of eligible pension income. 14 / 21. Maryland is one of the least affordable states in the U.S. to retire in — it’s the only state in the country with both an estate and inheritance tax, plus some of … Gas taxes and fees: 43 cents per gallon (varies by county) The Empire State has a hefty effective income tax rate, and its average sales tax rate is the ninth-highest in the country, according to the Tax Foundation. Retirement income is taxable. Pennsylvania – $135,000 inheritance tax. Cons: extremely high cost of living; median home rent at $2,975 a month (three times more expensive than the national average); second highest income tax at 11%. Pros: ocean and beach; warm tropical climate #8 Oregon. Withdraw Extra From Tax-Deferred Accounts in Low-Income Years. Nebraska is one of the least tax-friendly states in the nation for retirees primarily because of steep income and property taxes (although the … While New York has a good affordability index, that ratio is not solely based on retirement income. If your pension is taxable and you’re over the age of 59.5 or turn 59.5 during the year, up to $20,000 of your retirement … Highest property taxes in the United States; has … High taxes in Illinois was one of the main reasons the state received poor marks. If you are planning to move, here are the ten worst states for taxes that you might want to avoid, based on the income tax rate. #7 Vermont. New York. Oregon seniors bring in below-average household incomes—15.9% less than the national average of $53,799. Average property tax: 1.27% of home value. California: 13.3% on incomes over $1 million ($1,198,024 for married filers of joint returns), but Social Security benefits aren't taxed here. It’s one of the few states that have a flat income tax rate. New York’s high housing costs and taxes combined with a low number of hospitals earn the state a place on our list of the worst states for retirement. Its affordability’s also in the middle of the road. 1 in affordability, thanks to the combination of below-average living costs and a small burden from local and state taxes. Cons: 5. 1. Tennessee has been phasing out this tax and will no longer impose it starting in 2021. Pros: retirement income sources are exempt from taxes(401K plan and individual retirement accounts included) #7 Hawaii. Bottom line. Idaho taxes income at a flat rate of 7.4%. Effective income tax rate: 3.8%/individual, 4.3%/joint; State sales tax:7%; Gas taxes and fees:34 cents per gallon 4. Quality of Life: 45. Connecticut has been described as a tax nightmare for retirees. Relatively high marginal income tax … The exemption is per person so the estate tax would be levy on whatever is above that. While some states, like Maryland, offer booming job and economic opportunities, for example, Ostrowski says that complaints about the state’s tax burdens may be keeping potential retirees away. Affordability: 37. The high taxes and cost of living made Connecticut our 5 th worst state for retirement in a previous article and the 8 th worst state for taxes. Your retirement savings is generally safe from creditors … Consider that Hawaii has an adjusted cost-of-living index for retirees of 182.59, compared with 85.87 for Mississippi, which has the lowest, by 2.1 times. Unfortunately, that doesn’t make it particularly good for retirement. 3) New York. 4) Rhode Island. But this study went far more in-depth to look at crime rates, poverty numbers, culture, and overall health and wellbeing in the areas. The higher your marginal tax rate, the higher your tax bill on the distribution. 10. The island is only 48 miles tall and 37 miles wide, but its property taxes will run deep in your pockets. If you have any of these, come up with a debt repayment plan ASAP so you can ditch these bills before retirement. See more stories on Insider's business page. Health Care: 45. Least tax-friendly: Connecticut. Photo by Sean Pavone from Shutterstock 7. Below, check out the 11 worst states to retire in the U.S. this year, according to Bankrate. The annual spending for comfortable retirement in Hawaii is the highest of all 50 states at $117,724.18 per year. Minnesota: 9.85% on incomes over $166,040 ($276,200 for married filers of joint returns) Vermont: 8.75% on incomes over $204,000 ($248,350 for married filers of joint returns) The 10 Worst States for Retirement. Kansas is the third-worst state to retire from a tax perspective, according to Kiplinger’s, a personal finance magazine. With a housing index above 200 and above-average costs in every major cost-of-living category, California has earned its rep as a high-cost, high-tax retirement oasis. Worst of all, Connecticut is known to be one of the most inauspicious states for retirees, with high real estate taxes and taxation of retirement income. Average state and local sales tax: 5.50%. But retirement isn’t just about money or taxes. The western state of Nevada is yet another tax-friendly state for retirees with no state taxes. “While there’s no place like home, maybe Dorothy should think about returning to Oz when she retires to avoid Kansas’ high taxes,” the magazine reports. Health Care: 38. Popular for being one of the original 13 colonies, New Jersey is a northeastern U.S. state with some 130 miles of Atlantic coast. Wisconsin. 49. The fifth highest property taxes in the U.S. as a percentage of home value (average of $3,007). Expensive, and its finances are in disarray. Special mentions go to Delaware, Virginia, and Washington, which were all in the top 20 on both lists. The worst U.S. state for retirement is… Wyoming! Yes, although this state is high in natural beauty and low in crime and property prices, the long, cold winters and remoteness of the least-populated state bring it in last on the rankings. 1282. For us, Oregon is the worst state to die in. 2) California. Score: 84 The sandy beaches and blue skies of this lush, tropical state is every retiree’s dream — but you need to pay to live in paradise. In fact, when considering combined sales and income tax, Connecticut ranks as the second most expensive state. California . New Mexico. Yes, towns like Mystic, Old Saybrook, or Greenwich are captivating, but living in Connecticut on a … The state also ranks near the bottom for health care and quality of life. For anyone thinking about relocating for retirement, affordability is a big consideration.Blacktower Financial Management data shows the best states for retirees are Florida, Iowa, and Ohio.Other states include Minnesota, Texas, Wisconsin, Nebraska, and Pennsylvania.Need help with your retirement plan? ... Rhode Island. Worst-off state in the Northeast from a financial viewpoint; high taxes. State income tax: 3. The 12 states that tax Social Security are Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont and West Virginia. Kentucky has some of the worst rankings as far as quality of life and health care go. Special Treatment for Other Retirement Income: Retirement income is not taxed. New Hampshire and Tennessee don’t have income taxes, but they are the only two states that tax interest and dividend income, which may be of interest if you’re counting on these investments for your retirement income. When you take money out of a tax-deferred retirement plan, you pay income taxes on the distributions at your marginal tax rate. With the lowest life expectancy in the nation and the lowest percentage of workers age 65 and up, West Virginia is one of the worst states for retirees. Let’s see if other states are better. 5 Least Tax-Friendly States for Retirees . 29. 10. To states like Lousiana. … While New York residents don’t pay taxes on their Social Security benefits. Effective income tax rate: 5.5%/individual, 6.4%/joint. Idaho: 7.4%. Not surprisingly, this list is very similar to the most expensive states to live in. Kentucky is among the worst states to retire for a number of reasons. Average state and local sales tax: 8.49%. New Jersey. There’s really not much to say about the Bluegrass State. Davel5957/istockphoto. If it was all about taxes, we'd all retire to Alaska, the most taxpayer-friendly state. Arlene Waller / Shutterstock. Tax debt. New York. While people with a high total income can benefit from the flat rate, those who earn less might find it worse than good. 1. Massachusetts – about $40,000 in estate tax. November 14, 2019. According to the 2021 State Business Tax Climate Index, New York, California, and New Jersey were the worst states for individual and business taxes. The income tax rate is the same for everyone, and that's 5%. The top 10 on the list of states with the worst tax rates is Rhode Island. If you’re planning to retire on Social Security alone, the California dream will probably remain just that. Vermont’s highest earners can pay up to 8.75% in state income tax while a couple with 100k in income would be in the 6.6% income tax bracket. The top two states to retire in according to our formula are — drumroll please — Alaska and New Hampshire! The state’s total tax burden is 10.3%. Louisiana. Hawaii and California have the … Here’s slide one, where you can see just how bad Rhode Island’s tax burden is on retirees. The study scored each state on five factors: affordability, wellness, weather, culture, and crime. January 2022 average one-bedroom rent: $1,652. Tennessee: This state ranks No. The Nutmeg State is ranked as the fourth worst place to retire, largely because of its high taxes—even Social Security income is taxed. Some of these, like Texas and Florida, do not have an income tax at all. Retirees can cash in their retirement funds and collect their social security checks without worrying about a large tax burden. Others provide a specific deduction or exemption for Social Security retirement benefits. Very high taxes, including property taxes. Seniors are stung with the third-highest median property tax … The state also charges a minimum of $20 corporation tax, sales tax of 6% and a charge of $10 when one files their returns. Social Security income is partially taxed with withdrawals from retirement accounts being fully taxed. 5) New Jersey. Rhode Island. 9th Worst: West Virginia. 4.