Being a senior in New Jersey comes with its burden of high property taxes. If you ever have considered or are considering a move for your golden years, here are the top 5 states that tax retirement income a lot less than New Jersey.
1. Alaska
Alaska stands out as the most tax-friendly state for retirees, with the lowest overall tax burden at just 5.06%. The state imposes no state income tax, meaning your Social Security benefits, pension distributions, and IRA withdrawals remain untaxed at the state level. Alaska also has no state sales tax, though some municipalities may impose local taxes. The state’s Permanent Fund Dividend even provides residents with annual payments, adding to retirement income rather than taxing it.
2. Florida
The Sunshine State continues to be a retirement haven, largely due to its no state income tax policy. Florida doesn’t tax Social Security benefits, pensions, or retirement account distributions, allowing retirees to keep more of their income. While property taxes exist, they’re often offset by Florida’s Homestead Exemption, which can significantly reduce property tax bills for primary residences. The state also has no estate or inheritance taxes.
3. Nevada
Nevada offers retirees a triple tax advantage: no state income tax, no estate tax, and no inheritance tax. This means your retirement income flows directly to you without state-level deductions, and your heirs won’t face state taxes on inherited assets. While Nevada does have sales tax, the absence of income taxes makes it particularly attractive for retirees with substantial retirement account balances or pension income.
4. Wyoming
The least populated state provides some of the lowest taxes in the nation. Wyoming has no state income tax, keeping your retirement distributions tax-free at the state level. Property taxes are also relatively low, and the state doesn’t impose estate or inheritance taxes. Wyoming’s wide-open spaces and peaceful lifestyle appeal to retirees seeking tranquility alongside tax savings.
5. South Dakota
South Dakota rounds out the top five with no state income tax and no inheritance tax. The state offers particularly low property taxes and reasonable sales tax rates. South Dakota also provides a stable economic environment with low debt levels, suggesting sustainable tax policies for the long term. The state’s lower cost of living helps retirement dollars stretch even further.