10 Most Tax-Friendly States For Retired Taxpayers

10th Best: Tennessee

The downside: With combined state and local sales tax rates averaging 9,55 percent, the “Volunteer State” has one of the highest overall tax rates in the country, if not the highest. Local taxes are also something to watch out for, especially when it comes to groceries which are subject to a 4 percent tax.

Why it’s still a good place to move: For starters, Tennessee has no state income tax. More than that, Social Security benefits, pensions and distributions from other types of retirement plans are also exempt from taxes. Also, there’s no estate or inheritance tax.

In 2021, the tax on interest and dividends was fully repealed after being reduced to 1 percent between 2016 and 2020. And the icing on the cake: The median home cost is $636 per $100,000 of assessed home value, with certain categories of seniors eligible for property-tax reimbursements.

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