Variations in State Taxation of Retirement Income
States tax retirement income differently. Seven states have no tax on retirement income: Alaska, Florida, Nevada, South Dakota, Texas, Washington, Wyoming. New Hampshire and Tennessee only tax dividends and interest. Additionally, six states do not tax pension income: Alabama, Hawaii, Illinois, Mississippi, Pennsylvania, Tennessee. It’s important to research each state’s specific tax laws regarding retirement income since laws change frequently.
Best States for Retirement in Terms of Finances
According to Bankrate’s study, Florida is the best state for retirement in 2022, followed by Georgia, Michigan, Ohio, and Missouri. Alaska held last place in the ranking. The best state to retire in 2023 is Iowa due to its lower cost of living, affordable yet high-quality healthcare, and low crime. Delaware, West Virginia, Missouri, and Mississippi round out the top five.
Considerations for Retirement Location
When looking for the ideal state to retire in, consider factors such as the overall cost of living, average cost of goods and services, taxes, and housing costs in the state of your choice. Retirement planning should include evaluating the financial prospects of different states and personal preferences, including weather and safety concerns.