3rd Best: District of Columbia
The downside: Living in this not-quite-a-state is definitely not cheap, as the average housing costs are nearly 2.5 times higher than the national median. There’s a state tax on retirement income, such as distributions from 401(k) plans as well as an estate tax for properties that surpass $4 million, with rates starting at 11.2%.
Why it’s still a good place to move: If the estate tax did not scare you, you should know that the District of Columbia has fairly moderate sales taxes, going as up as 6 percent, excluding groceries and prescription drugs.
Believe it or not, the property taxes are also rather low, at a median of $564 per $100,000 in assessed home value with seniors benefiting from certain property tax such as a 50% exemption for retirees with a household adjusted gross income below $135,750. What’s more, Social Security benefits are exempt and eligible senior homeowners can get a hefty income tax credit of up to $1,200.