When considering the perfect spot to spend your golden years, you’ll likely take many factors into account: cost of living, weather, proximity to loved ones and maybe even your ability to pursue hobbies that are important to you. Nothing says comfortable retirement quite like living near your family or access to great restaurants, nightlife or outdoor activities. One piece of the retirement-planning puzzle that can easily be overlooked is taxes. Though you won’t be paying income tax anymore, there are other taxes to consider that can deplete your nest egg way too quickly. So, it’s important to know what your ideal retirement city’s tax situation looks like.
In order to determine the most and least tax-friendly cities for retirees, GOBankingRates examined the 50 biggest U.S. cities in terms of population size, according to Zillow’s December 2022 data, and scored them across five factors: estimated total taxes paid annually in retirement, the effective retirement tax rate in the state, the amount paid in property taxes annually, the estimated property tax rate and sales tax. Though many of the most tax-friendly cities owe their spot on the list to a 0% tax rate, a lack of retirement taxes didn’t necessarily make a city “tax-friendly.” For example, despite many cities having a 0% tax rate, such as Jacksonville, Florida, Chicago, Illinois and Nashville, Tennessee, to name a few, these cities are considered among the least tax-friendly due to a high sales tax and annual property taxes.
Whether your retirement is years down the road or just around the corner, it’s important to know how taxes will affect your outlook. Starting with the most tax-friendly cities for retirees, learn the best and worst places to retire when it comes to taxes.
