Retirement should be a time to relax and enjoy life. But for many retirees, high taxes can eat into their hard-earned savings. Some states are tougher on retirees’ wallets than others. This blog post looks at the 15 U.S. states with the highest tax burdens for retirees.
New York
New York has high property taxes and income taxes. The state taxes most retirement income, including pensions. New York City residents face extra local taxes. The high cost of living in New York makes the tax burden feel even heavier for many retirees.
New Jersey
New Jersey is known for its very high property taxes. The state also taxes some retirement income. New Jersey has a retirement income exclusion, but it has income limits. The state’s sales tax is lower than some others, but overall, retirees face a big tax bill.
Connecticut
Connecticut taxes most forms of retirement income, has high property taxes, and has a state estate tax. Connecticut is phasing in new tax breaks for retirees, but the overall tax burden remains high. The state’s high cost of living adds to the financial strain on retirees.
California
California has the highest state income tax rates in the country. The state taxes most forms of retirement income, including pensions. California doesn’t have an inheritance or estate tax, which is a plus. However, high sales taxes and the overall cost of living make it tough on retirees.
Illinois
Illinois doesn’t tax retirement income, which seems good at first. But the state makes up for it with very high property taxes. Illinois also has high sales taxes. The combination of these taxes creates a heavy burden for retirees, especially homeowners.
Vermont
Vermont taxes most retirement income, including Social Security benefits. The state has high property taxes compared to the national average. Vermont’s sales tax isn’t the highest, but when combined with other taxes, it adds to the overall burden on retirees.
Nebraska
Nebraska taxes Social Security benefits and other retirement income. The state’s income tax rates are not the highest, but they apply to most retiree income. Nebraska also has above-average property taxes. The combination creates a significant tax burden for retirees in the state.
Wisconsin
Wisconsin taxes pension income and applies income tax to Social Security benefits for higher earners. The state has relatively high property taxes. Wisconsin’s sales tax is lower than some states, but the overall tax picture is still tough for many retirees.
Minnesota
Minnesota taxes Social Security benefits and most other forms of retirement income. The state has a complex tax system with multiple tax brackets. Minnesota’s property taxes are also above the national average. These factors combine to create a high tax burden for retirees.
Rhode Island
Rhode Island taxes most retirement income, including Social Security benefits for higher earners. The state has high property taxes and a state estate tax. Rhode Island’s small size means it’s hard for retirees to escape high-tax areas within the state.
Massachusetts
Massachusetts doesn’t tax Social Security benefits, which helps retirees. But the state does tax most other retirement income. Massachusetts has high property taxes and a state estate tax. The high cost of living in many parts of the state adds to the overall financial burden.
Maine
Maine taxes most retirement income, including Social Security benefits. The state has relatively high property taxes. Maine’s sales tax isn’t the highest, but it applies to many services. The overall tax system in Maine can be tough on retirees, especially those with higher incomes.
Kansas
Kansas taxes Social Security benefits for higher earners and most other retirement income. The state has relatively high sales taxes. Kansas also has above-average property taxes in many areas. These factors combine to create a significant tax burden for many retirees.
Iowa
Iowa is phasing out its tax on retirement income, which will help future retirees. But for now, the state still taxes many forms of retirement income. Iowa has high property taxes in many areas. The state’s sales tax, while not the highest, adds to the overall tax burden.
Maryland
Maryland taxes most retirement income but offers some deductions for seniors. The state has a local income tax in addition to the state tax. Maryland’s property taxes are around the national average, but the overall tax system can be complex and burdensome for retirees.
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