- Tennessee – Residents that live in the Volunteer State don’t have to pay any taxes on Social Security benefits, pensions, or distributions from their retirement plans. That’s due to the fact that Tennessee is one of the few states with no income tax. Also, there aren’t any estate or inheritance taxes, which could put your heirs at ease. The situation is just as good when it comes to property taxes. A hypothetical couple with a $250,000 home would have to pay about $1,590 per year in property taxes, which is well below the national average.
- Arkansas – Although you may not think that Arkansas is one of the places you’d consider as a retirement destination, maybe it should be. The Natural State has many things to offer to retirees. Arkansas has income tax rates that are structured to advantage retirees with lower incomes. Social Security benefits are tax-free, and the state gives you a broad-based exemption of up $6,000 for other types of retirement income.
- Arizona – The State of the Grand Canyon exempts Social Security benefits from state income taxes, plus up to $2,500 of income from federal and any retirement plan from the Arizona government. Plus, the income tax rates are relatively low for many retirees. The estimated property tax on a hypothetical retired couple with a $250,000 home in Arizona is no more than $1,543 per year. For a second hypothetical couple with a $350,000 residence, the estimated annual tax is only $2,160. For the record, both these amounts are below the national average.
- South Carolina – The Palmetto State can welcome you with a handful of good old southern hospitality, by offering a charming collection of income tax breaks. First, Social Security benefits are completely exempt. Second, taxpayers aged 65 or older can exclude up to $10,000 of their retirement income or deduct $15,000 of other taxable income. There are also low property tax rates that are extremely helpful. The average property tax throughout the state on a $250,000 home is only $1,363. These numbers make South Carolina the sixth lowest in the country when it comes to houses at this price point.
Medicare doesn’t cover prescription drugs – Although Medicare doesn’t provide any coverage for outpatient prescription drugs, there