For many retired citizens, much of their expenses and daily upkeep is composed of retirement funds, investments, and savings.
Therefore, one needs to identify a state to live in after retirement where his or her funds are not heavily taxed, so as to ensure that one's retirement nest lasts him or her for a long while (and hopefully outlives them so as to transfer to one's beneficiaries).
Different states will however, have different taxation rates and rules.
This makes some states friendlier for retirees than others.
Below are 5 of the most expensive states for a retiree to live in: 1.
Vermont Vermont is one of the states that are most unfriendly for retired senior citizens.
For a start, the state does not have any exemptions for retirement incomes.
The only payout that receives some tax exemption is Railroad Retirement income.
If the senior citizen receives any retirement distributions from outside the state, the funds are fully taxed.
The income taxes for this state range between 3.
55% and 8.
95%.
The state also charges a sales tax of 6% and depending on the city or locality in which you reside, you may have to pay some further sales taxes on your purchases.
However, medical drugs and devices are exempted from the 6% sales tax.
Other punitive taxes in this state include 9% for hotel lodging and prepared foods, and 10% for alcohol served in hotels.
Vermont also has high real estate taxes and is ranked among the top 10 highest taxed states for real estate.
Vermont also charges Estate taxes but does not charge inheritance taxes.
2.
Minnesota Minnesota is another high tax state for retired citizens.
The state has sales taxes going as high as 9.
5% in some locations.
Medicine and medical devices, food, and clothes are however, not subject to sales taxes.
The income taxes for Minnesota range from between 5.
35% to 7.
85%.
The state also taxes Social Security at the same rate as applied by the IRS.
The state also levies taxes on pension distributions, whether originating from within or without the state.
The state does give retired citizens an opportunity to defer part of their property taxes to a later date.
3.
California California was traditionally a tax haven for retired citizens, but has in the recent past, lost this attribute owing to various state taxation policies.
For a start, the state has very high income tax rates.
The state income taxation goes as high as 9.
25% for citizens that earn only $46,767.
00 and above.
The state taxes retirement fund distributions (with the exception of Social Security).
Sales taxes are 7.
25% starting July 2011 with higher sale tax rates of up to 9.
25% applicable in some of the cities in California.
4.
Oregon The income taxes for Oregon range from 5%-11%.
The state's income taxes are some of the highest in the nation, especially for income earners earning more than $250,000.
00 a year.
The state of Oregon also levies taxes on inheritances for both physical assets and other assets such as bank accounts and funds.
However, Oregon does not charge any sales taxes and also charges no Estate Tax.
They also do not charge taxes on Social Security for retirees.
5.
Nebraska In Nebraska, the income taxation ranges between 2.
56% to 6.
84%, depending on one's income and the city in which one resides.
The state levies taxes on Social Security and even on military pensions.
The state sales taxes are at 5.
5%, but some cities and localities may add a further 1.
5% to bring the rate to 7%.
Food and medical expenses are however, exempt from sales taxes.
The state also charges an inheritance tax.
The advantage of Nebraska for retirees is that they offer a homestead exemption from property taxes for senior citizens aged 65 years and above.