15 Best States to Retire in a Tax-Efficient Way

Even if you have substantial savings that will see you through your retirement years, you still need to make sure you are getting the most for your money. While federal taxes will follow you wherever you go (even if you retire overseas), your state tax home will depend on the primary state(s) in which you reside during your retirement. Consequently, your location can play a big role in the amount you pay out in taxes.

Many retirees want a change of scenery, preferably in one of the most tax affordable states to retire. Not only can this help lower the tax burden and get the most out of your retirement savings, but it can also provide you with greater financial peace of mind during your retirement. Let’s take a closer look at the 15 best states, at least from a tax efficiencies standpoint.

Best States to Retire With Low State Income Tax

15. Maryland

Income Tax Rate: 2-6%

Estate Tax: 0.8%-16% (with a $5,000,000 exclusion)

Inheritance Tax: 0%-10%

Cost of Living: 13% higher than the national average


14. Georgia

Income Tax Rate: 1-6%

Estate Tax: None

Inheritance Tax: None

Cost of Living: 6% lower than the national average


13. Pennsylvania

Income Tax Rate: 3.07% flat tax

Estate Tax: None

Inheritance Tax: 0%-15%

Cost of Living: 8% lower than the national average


12. North Dakota

Income Tax Rate: 1-3%

Estate Tax: None

Inheritance Tax: None

Cost of Living: 10% lower than the national average


11. Oklahoma

Income Tax Rate: 0.5-5%

Estate Tax: None

Inheritance Tax: None

Cost of Living: 16% lower than the national average


10. Alabama

Income Tax Rate: 2-5%

Estate Tax: None

Inheritance Tax: None

Cost of Living: 18% lower than the national average


9. Indiana

Income Tax Rate: 3.23% flat tax

Estate Tax: None

Inheritance Tax: None

Cost of Living: 18% lower than the national average

Best States to Retire With No State Income Tax

8. Alaska

Income Tax Rate: 0%

Estate Tax: None

Inheritance Tax: None

Cost of Living: 25% higher than the national average


7. Washington

Income Tax Rate: 0%

Estate Tax: 10-20% (with a $2,200,000 exemption)

Inheritance Tax: None

Cost of Living: 18% higher than the national average


6. Nevada

Income Tax Rate: 0%

Estate Tax: None

Inheritance Tax: None

Cost of Living: 10% higher than the national average


5. Florida

Income Tax Rate: 0%

Estate Tax: None

Inheritance Tax: None

Cost of Living: 3% higher than the national average


4. Wyoming

Income Tax Rate: 0%

Estate Tax: None

Inheritance Tax: None

Cost of Living: 2% lower than the national average


3. Texas

Income Tax Rate: 0%

Estate Tax: None

Inheritance Tax: None

Cost of Living: 6% lower than the national average


2. South Dakota

Income Tax Rate: 0%

Estate Tax: None

Inheritance Tax: None

Cost of Living: 12% lower than the national average


1. Tennessee

Income Tax Rate: 0%

Estate Tax: None

Inheritance Tax: None

Cost of Living: 13% lower than the national average


The Bottom Line

The best states for retirees often vary based on personal preferences, the total value of assets, how much retirement income you have, and whether or not you plan to transfer your estate to any heirs. Additionally, it is important to strike a balance between your cost of living and tax obligations. For example, Alaska levies no income or estate taxes, but the cost of living is significantly higher than most other states in the country. Therefore, you will need to weigh the pros and cons of each of the 15 best states for retirees before making a move!

As you prepare to decide where you will reside in retirement, you may want to seek the help of your trusted advisors, whether it is your financial advisor, CPA, or attorney. Whatever decision you make, make sure it is a well-informed one.

We hope you enjoyed this list of the 15 best states to retire and grow your money! If you’d like more personalized financial advice or assistance with your retirement plan, be sure to contact Merit Financial Advisors today!