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Wyoming is one of the most pension-friendly states. That's because it has no state income tax, meaning Wyoming doesn't tax any form of retirement income, including Social Security income and withdrawals from retirement accounts. Additionally, property and sales tax rates in Wyoming are some of the lowest in the country.
There's no tax on Social Security retirement benefits in Georgia. Other pension-friendly facts about the state include moderate sales and property tax rates, no inheritance or estate tax, and a $65,000 maximum deduction on most types of retirement income for anyone over the age of 65.
Like Wyoming, Florida is another of those pension-friendly states that don't have a state income tax. Therefore, there are no state taxes on pension income. In addition, Florida also has no inheritance or estate tax, and sales and property taxes are close to the national average.
Tennessee's income tax used to cover interests and dividends only, but this changed in January 2021. Tennessee has now joined the ranks of pension-friendly states with no standard income tax.
Another pension-friendly attribute of Tennessee is the lack of estate and inheritance taxes. Plus, property taxes are relatively low, though the same cannot be said for the state's sales tax rate, which is one of the highest in the country.
Delaware is friendly to pensioners since it doesn't tax Social Security and Railroad Retirement benefits. Retirement account withdrawals and private and public income are only partially taxed.
Delaware also has no state or local sales tax. To top it off, property taxes are low, there is no estate or inheritance tax, and pensioners over 60 can enjoy a maximum $12,500 exclusion.
While Alabama may have a high sales tax rate, it's included on the list of pension-friendly states because it has some of the lowest property taxes in the country. Also, Alabama exempts Social Security income from state income taxation.
Although distributions for 401 (k) plans and IRAs are taxed, there's no state income tax on government and private pensions.
Mississippi does not tax the following: Social Security income, withdrawals from retirement accounts, and public and private pension income. Another reason why it's rated as one of the top pension-friendly states is that if you are over the age of 60, it's possible to exempt the first $75,000 of the value of your home from the state's property tax.
Although South Carolina partially taxes withdrawals from retirement accounts and private and pension income, pensioners over 65 can deduct up to $15,000 from their taxable income. This is in addition to the $10,000 income deduction. Moreover, property taxes are low, and the state has no inheritance or estate tax.
Nevada is very tax-friendly to pensioners since it has no state income tax. That means your pension income will not be taxed at the state level. Nevada also has a low property tax rate, but the sales rate is somewhat high. Still, Nevada has no estate or inheritance tax, so the savings for pensioners can be pretty significant.
Starting in 2023, Iowa residents over the age of 55 will not have their retirement or pension accounts taxed. Governor Kim Reynolds signe legislations that excludes retirement income from state taxable income.
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