Tax Haven for Retirement in 2025: This Is the Top Choice Revealed
In the quest for a retirement destination that provides financial security and a comfortable lifestyle, understanding a state's tax landscape is crucial. This year, Mississippi emerges as the most tax-friendly state for retirees, followed closely by Florida and Wyoming [3][2].
Mississippi stands out for its broad exemptions on retirement income and low property taxes. The state exempts many types of retirement income from state taxes, including Social Security, pensions, and retirement account distributions. Its median property tax bill is about $1,189, well below the national average [3]. Additionally, Mississippi has no estate or inheritance tax.
Florida, on the other hand, does not impose a state income tax at all, meaning retirees pay no tax on Social Security, pensions, IRAs, or other retirement income. Florida's favorable tax rules help retirees keep more of their savings. The Sunshine State also has moderate property taxes relative to many states [2].
Wyoming, along with several other states, is considered "very tax-friendly" for retirees due to no state income tax and reasonable property taxes [2].
Other noteworthy states include New Hampshire, which does not tax wages or Social Security but does have a 3% tax on interest and dividends, which could affect retirees with substantial investment income. Maine, despite offering other attractive qualities for retirees, has relatively high taxes on retirement income and property and is considered not tax-friendly [1][2].
States like California, Vermont, and Minnesota impose higher state income and/or property taxes on retirement income, making them less appealing for retirees seeking tax savings [2][5].
While Mississippi's low taxes on retirement benefits and property taxes make it an attractive option, it's essential to consider other factors such as cost of living, political climate, and crime rates when deciding to retire in the state. The cost of daily essentials, including internet and energy bills, is generally low in Mississippi compared to the national average [6].
Mississippi's sales tax rate of 7% is higher than some states but not among the ten states with the highest sales taxes [7]. The state also has one of the lowest gas taxes in the U.S. [8]. However, it's important to note that Mississippi experiences about 30 to 100 tornadoes per year and is prone to natural disasters due to its location along the Gulf Coast [9].
In conclusion, Mississippi, with its broad exemptions on retirement income and low property taxes, has been selected as the most tax-friendly state for retirees in 2025 [3][2]. As always, it's crucial to conduct thorough research and consider all factors when choosing a retirement destination.
References:
- SmartAsset
- Bankrate
- NerdWallet
- WalletHub
- Money Under 30
- Mississippi Department of Finance and Administration
- Tax Foundation
- AAA
- National Oceanic and Atmospheric Administration
In light of its extensive exemptions on retirement income and low property taxes, Mississippi is seeing an increase in interest from retirees seeking financial security and a comfortable lifestyle. Given its absence of estate or inheritance tax, this state presents a viable option for personal-finance planning in retirement. Meanwhile, states like California, Vermont, and Minnesota, with their high state income and property taxes, may be less appealing for retirees seeking tax savings.
