The Chicago Tribune and Kiplingers has analyzed which states are most and least friendly for retirees. Their article begins as follows:
No matter where you retire, you’ll owe the same amount to Uncle Sam in federal taxes. But whether you stay put or relocate can have a significant impact on what you’ll owe in state taxes.
If you’re thinking of pulling up roots, compare the taxes in potential retirement states with those in your current state. Wherever you retire, you may be eligible for senior-related tax breaks on retirement income. (A state with no income tax is appealing, but don’t forget about sales and property taxes.)
We’ve analyzed the tax laws of the 50 states and the District of Columbia and come up with some basic recommendations. For details on the tax rules in all the states, visit kiplinger.com/links/retireetaxmap.
Retirement income. Looking for a state that doesn’t tax income? Try Alaska, Florida, Nevada, South Dakota, Texas, Washington or Wyoming. A couple of others, New Hampshire and Tennessee, tax only dividends and interest. But Tennessee exempts taxpayers 65 and older who have total annual income of $33,000 or less for single filers ($59,000 for joint filers). New Hampshire offers a $1,200 exemption for taxpayers 65 and older.