12 States Where Retirement Distributions Remain Tax-Free
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In most places, taking money out of your retirement accounts after you’ve retired is considered income and taxed accordingly. So it’s important to budget for this expense when planning for retirement. Choosing a location where you won’t be taxed on your retirement income can save you a lot of money every year. Here are 12 states we’ve found that fit the bill:
- Florida: Not only does the Sunshine State have many golf courses and warm temperatures, it also boasts a large elderly population and tax benefits for retirees. However, tourism is an issue there and the summer heat can be intense.
- Mississippi: This state has one of the lowest costs of living in the country and no taxes on retirement income – although that may be because there isn’t much variety or quality when it comes to healthcare.
- Tennessee: The Volunteer State offers tax breaks for retirees and has a moderate climate year-round, but rapid urbanization and an influx of tourists are putting pressure on its infrastructure.
- Pennsylvania: Despite its harsh winters, Pennsylvania has a rich mixture of cultures throughout the state as well as low crime rates.
- New Hampshire: With beautiful landscapes, low crime rates and no taxes on retirement income, New Hampshire is a good place to live if you want to get away from it all.
- Illinois: There’s no tax on retirement income here either – plus Illinois has a diversified economy – but living expenses are high statewide while property taxes can be particularly burdensome.
- South Dakota: The Mount Rushmore State offers scenic beauty combined with low cost-of-living but long winters make it difficult to enjoy outdoors activities year-round; limited access to healthcare is another downside.
- Wyoming: National parks, cold winters (but affordable housing) make Wyoming an attractive option for those looking forward to peacefulness during their golden years
- Nevada: Besides being culturally significant nationwide due in part by Las Vegas’ reputation as “entertainment capital,” Nevada also affords residents tax-free retirement income. Unfortunately, this comes at the expense of high property taxes and a high crime rate.
- Washington: Retirees can find tax exemptions, great healthcare options and moderate weather in Washington state – but they’ll also have to deal with some of the highest property values anywhere in America along with above-average crime rates.
- Alaska: Alaska may have severe winters, but it can be very appealing during retirement thanks to low cost-of-living and taxes on retirement income being non-existent; also there’s the Permanent Fund Dividend program.
- Texas: Affordable real estate coupled with no income tax make Texas an inviting place for many people looking forward to their golden years. Some may be put off by issues related to environment (such as hurricanes) or access healthcare.
Each state has its pros and cons for retirees seeking happiness in their golden years – from the cost of living and climate, to quality of healthcare or cultural diversity.
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