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State-By-State Comparison: Where Should You Retire?

June 13th, 2022 | Written by

This article is updated for 2022.

If you’d like to move in retirement, you must consider the impact of taxes, cost of living, lifestyle considerations, and more. Below we break down the various factors you should consider if you’d like to move!

Income Tax[1]

In green are the eight states that have no personal income tax. They are Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming. New Hampshire isn’t marked on the map since they technically do have an income tax; however, they only tax dividends and interest income at a flat rate of 5%.

In red are the ten states that have the highest top income tax. They are California (12.3%), Hawaii (11%), New York (10.9%), New Jersey (10.75%), Oregon (9.9%), Minnesota (9.85%), Washington D.C. (9.75%), Vermont (8.75%), Iowa (8.53%), and Wisconsin (7.65%). Maryland falls in the middle with a top tax bracket being taxed at 5.75%, and the lowest bracket is taxed at 2%.

Social Security Tax [2]

There are 12 states that tax Social Security benefits:

Remember, the federal government taxes up to 85% of your Social Security benefits, depending on your income. If you live in one of the states highlighted in red above, you may be taxed on the state level as well. Each of these states has its own method for taxing Social Security. Colorado, for example, only taxes people under 65 on Social Security benefits. Other states may tax Social Security only if income limits are exceeded, or they use another method.

If you’re considering retiring in one of these states, talk to your financial advisor to discuss the state’s rules on taxing Social Security.

Sales Tax[3]

You may incur sales tax when purchasing personal property such as shoes, clothes, food, etc. However, some states have unique rules on sales tax that you may want to consider if you’re thinking about moving there.

In dark green are the five states with no sales tax. These include Alaska, Delaware, Montana, New Hampshire, and Oregon.

The 12 states with the lowest sales tax of 5% or less are depicted in light green. These include Colorado (2.9%), Alabama (4%), Georgia (4%), Hawaii (4%), New York (4%), Wyoming (4%), Missouri (4.23%), Louisiana (4.45%), Oklahoma (4.5%), North Carolina (4.75%), North Dakota (5%), Wisconsin (5%).

The 16 states with the highest sales tax of above 6% are in red. These states include Utah (6.1%), Illinois (6.25%), Massachusetts (6.25%), Texas (6.25%), Connecticut (6.35%), Arkansas (6.5%), Kansas (6.5%), Washington (6.5%), New Jersey (6.63%), Nevada (6.85%), Minnesota (6.88%), Indiana (7%), Mississippi (7%), Rhode Island (7%), Tennessee (7%), California (7.25%)

Maryland falls in the middle with a sales tax of 6%.

Local tax may also be charged on top of state tax. The five states with the highest local tax rates are Alabama (5.24%), Louisiana (5.1%), Colorado (4.88%), New York (4.52%), and Oklahoma (4.47%).

Property Tax[4]

Depending on where you live in retirement, property taxes may account for a significant amount of your budget. According to the U.S. Census Bureau, the average American household spends $2,471 per year on property taxes.

The map above depicts the 10 states with the lowest property tax in green. These states are Hawaii (0.28%), Alabama (0.41%), Colorado (0.51%), Louisiana (0.55%), Washington D.C. (0.56%), South Carolina (0.57%), Delaware (0.57%), West Virginia (0.58%), Nevada (0.6%), and Wyoming (0.61%)

The 12 states with the highest property tax of above 1.5% are depicted in red. These states are New Jersey (2.49%), Illinois (2.27%), New Hampshire (2.18%), Connecticut (2.14%), Vermont (1.9%), Wisconsin (1.85%), Texas (1.8%), Nebraska (1.73%), New York (1.72%), Rhode Island (1.63%), Pennsylvania (1.58%), Iowa (1.57%), Ohio (1.56%), Michigan (1.54%).

Maryland falls in the middle with a property tax of 1.09%

Inheritance and Estate Tax[5]

Estate and inheritance tax, or “death taxes,” are taxes imposed on assets at death. Estate taxes are paid by the deceased person’s estate before the money is distributed to their beneficiaries. Inheritance taxes are paid by the person inheriting the assets.

The states in red depict the states that have an estate tax. These states are:

  • Connecticut: Estate tax of 10.8% to 12% on estates above $7.1 million
  • District of Columbia: Estate tax of 11.2% to 16% on estates above $4 million
  • Hawaii: Estate tax of 10% to 20% on estates above $5.5 million
  • Illinois: Estate tax of 0.8% to 16% on estates above $4 million
  • Maine: Estate tax of 8% to 12% on estates above $5.8 million
  • Massachusetts: 0.8% to 16% on estates above $1 million
  • Minnesota: 13% to 16% on estates above $3 million
  • New York: Estate tax of 3.06% to 16% for estates above $5.9 million
  • Oregon: Estate tax of 10% to 16% on estates above $1 million
  • Rhode Island: Estate tax of 0.8% to 16% on estates above $1.6 million
  • Vermont: Estate tax of 16% on estates above $5 million
  • Washington: Estate tax of 10% to 20% on estates above $2.2 million

The states in blue depict the states that have an inheritance tax. These states are:

  • Iowa: Inheritance tax of up to 15%
  • Kentucky: Inheritance tax of up to 16%
  • Nebraska: Inheritance tax of up to 18%
  • New Jersey: Inheritance tax of up to 16%
  • Pennsylvania: Inheritance tax of up to 15%

Note that in most states, inheritance tax will not apply to certain immediate family members of the deceased.

Maryland is the only state that can pose both an estate and an inheritance tax. Maryland has an estate tax of 0.8% to 16% on estates above $5 million and an inheritance tax of 10%. However, most heirs are exempt from paying the 10% flat inheritance tax. The descendant’s spouse, parents, grandparents, children, grandchildren, siblings, sons-in-law, or daughters-in-law are all exempt.

Cost of Living[6]

The Cost-of-Living Index compares the expenses an average person may incur. It includes groceries, housing, utilities, transportation, and health. A score of 100 on the cost-of-living index is the national average cost of living. If a state scores above or below 100, that indicates how much more or less expensive it is to live in that state compared to the national average. For example, Maryland’s score is 124. This means it is 24% more expensive to live in Maryland as compared to the national average.

In dark red are the ten states with the highest cost of living. They are Hawaii (193.3), Washington D.C. (158.1), New York (148.2), California (142.2), Massachusetts (135), Oregon (130), Alaska (127.1), Maryland (124), Connecticut (121.6), and Rhode Island (117.2). In light red and peach, we also depicted states with a cost-of-living index above 110 and 100 respectively.

In green are the ten states with the lowest cost of living. They are Mississippi (83.3), Kansas (86.5), Alabama (87.9), Oklahoma (87.9), Georgia (88.8), Tennessee (89), Missouri (98.8), Iowa (89.9), West Virginia (90.5), Indiana (90.6). In light green, we depicted additional states with a cost-of-living index under 100.


When examining the states with the best healthcare systems, we consider several factors – cost, access to healthcare, and positive outcomes. WalletHub did a great study on these factors and ranked each state with a score out of 100.

In green are the ten states with the best healthcare systems. They are Massachusetts (67.73), Rhode Island (67.08), Minnesota (66.39), Hawaii (64.9), Maryland (64.68), Vermont (63.22), Colorado (62.75), Iowa (62.27), Connecticut (62.11), and South Dakota (61.43).

In red are the ten states with the worst healthcare systems. They are Alabama (41.46), Louisiana (44.64), Arkansas (44.89), Mississippi (45.5), North Carolina (47.09), Oklahoma (47.66), Wyoming (47.9), West Virginia (47.9), Nevada (48.23), and Missouri (48.25).

Popular retirement destination, Florida, ranks 38th in overall healthcare with a score of 49.8. They rank 41st in cost, 44th in access, and 30th in outcomes. Meanwhile, Maryland ranks 5th overall with a score of 64.68. Maryland ranks 1st in cost, 9th in access, and 19th in outcomes.

Lifestyle Considerations

Remember moving isn’t just about taxes and costs. There are other considerations when moving in retirement, such as:

  • Do you want to be close to your family? How easy would it be for you to see them?
  • What climate would you like to live in? Do you want a tropical paradise or something close to the mountains?
  • Where does your health permit you to live? Can you handle a hilly city like San Francisco?
  • Do you want to be around people your age? Are there retirement communities?
  • What is the crime level of the city you’d like to move to?

Establishing a State of Residency

It’s essential to make your move legal. Buying a property in a tax-friendly state and visiting a few times a year is not enough to benefit from that state’s tax rates. This is particularly important if you plan to keep your home where you currently live and visit between two or more states throughout the year.

To ensure that you reap the benefits of living in a new state, consider these things:

  • Where your primary residence is
  • Voter registration
  • Homes: own or rent; size and value
  • How much time do you spend in your state?
  • Business: active involvement or ownership
  • Other: auto registration, bank accounts, safe-deposit boxes

Are you ready for retirement?

There are many factors to consider when moving in retirement. At Prosperity, we work with clients to help them understand how moving to various locations will impact their unique financial situation. Are you ready for retirement? Take our retirement readiness quiz to find out!









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    This information is intended for educational purposes only. It is not intended to provide any investment advice or provide the basis for any investment decisions. You should consult your financial advisor prior to making any decision based on any specific information contained herein.

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    The Prosperity Consulting Group registered as a Registered Investment Advisor (RIA) in 2005. We have with a passion for providing clients with objective investment advice and wealth management solutions. Our purpose, coupled with our fiduciary commitment, is essential in helping clients achieve their financial goals. Our firm is dedicated to providing unparalleled financial planning and investment advice to individuals, families, businesses and institutions. We have identified key areas that are critical and integral to a client’s financial success. These planning areas encompass: Investment Planning & Management Retirement Planning Estate Planning Tax Planning Business Planning Insurance Planning Income Protection & Asset Preservation Education Planning 401(k) Planning
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