No state income tax including no taxes on Social Security benefits help place Alaska, South Dakota and Wyoming among the best places to retire in the U.S. in 2018. We analyzed tax policies in all 50 states to find the most tax-friendly states for retirees. The best places to retire exempt Social Security from state taxes, and most exempt at least a portion of other retirement income.
Most have relatively low property taxes. Here are the three best states for taxes on retirees.
1. Wyoming. Wyoming has no state income tax and the average state and local sales tax is 5.42%. It also has no estate or inheritance tax. Property taxes are modest, and there is a tax refund available to older residents who meet income requirements. Healthy revenues generated from oil and mineral rights keep taxes low for Wyoming residents, especially retirees.
2. Alaska. Retirees in Alaska enjoy one of the tiniest tax bites in the nation. Alaska has no state income tax, estate tax or inheritance tax. The average state and local sales tax is just 1.78%. Although property taxes are above average, residents receive an annual dividend check from the state ($1,100 in 2017).
3. South Dakota. Social Security benefits and other forms of retirement income get a free ride in the Mount Rushmore State, since there is no state income tax. Sales taxes are relatively low, too, which helps offset the relatively high property taxes. The state does not levy taxes on estates or inheritances.