Most Tax-Friendly Cities in the US for Boomers

Allison Hache
FreshSplash / iStock/Getty Images
FreshSplash / iStock/Getty Images

When you think of places where people retire, chances are Florida comes to mind. For decades, the Sunshine State has attracted retirees who want to ditch their heavy winter coats and spend their golden years taking in spectacular sunsets and playing golf. Adding to its appeal, Florida is one of nine states that does not have a state income tax, which helps those retirement dollars stretch farther.

Trending Now: Suze Orman: Parents, Get Roth IRAs for Your Kids So They Can Retire Millionaires
Be Aware: 6 Unusual Ways To Make Extra Money (That Actually Work)

You have several factors to consider when choosing a place to spend your golden years. You want access to health care, pleasant weather, activities for senior citizens, and a place where you can live comfortably on a fixed income. This is why knowing how much you’ll pay in state and local taxes is helpful. To create this list of tax-friendly cities, GOBankingRates looked at tax rates across the country and analyzed what people pay for sales, gas, property, and state and local taxes in metro areas. The results may surprise you.

1. Cheyenne, Wyoming

If you don’t mind the snow in the winter, Wyoming has a lot to offer retirees. You won’t pay state income tax, and the state income tax is a nominal 4%. Wyoming also has one of the lowest property tax rates in the country. The cost of living in the state’s capital is around 16% lower than the national average, according to the Economic Research Institute. In Cheyenne, you can enjoy urban and rural living, with less traffic, more open spaces and plenty to do. You’ll also be a short drive from Denver (around an hour and a half on the interstate).

Read More: 10 Valuable Stocks That Could Be the Next Apple or Amazon

2. Florence, South Carolina

Owning property in South Carolina will cost you less compared to other parts of the country, as the state has one of the lowest property tax rates. The Palmetto State has several attractive cities for retirees, including Charleston and Columbia, but you should also check out Florence. Located in the eastern corner where I-95 and I-20 meet, Florence is a small city about an hour’s drive from the beach with an affordable housing market — the median sale price was $272,500 in 2023. The cost of living here is about 13% lower than the rest of the country.

3. Houston, Texas

Like Wyoming and South Carolina, Texas has no state income tax, and the state’s gas tax is low compared to other parts of the country. Retirees considering the Lone Star State should look at Houston and its suburbs, like Katy and Clear Lake. The cost of living here is higher than other cities on our list (around 4% higher than the national average), but much of this stems from high food and housing costs. Lower health care, transportation costs, and property tax exemptions may help balance expenses.

4. Memphis, Tennessee

Memphis has been a popular choice for retirees for years, partly because Tennessee consistently ranks one of the most tax-friendly states. There’s no state income tax, and the 7.6% tax burden is the second most affordable in the country. Nashville and Knoxville are also great spots to consider, but lower housing, utilities and health care costs give it an edge for retirees. The cost of living in Memphis is more than 11% lower than the national average.

5. Montgomery, Alabama

The property tax rates in Montgomery, Alabama, are some of the lowest in the country. Alabama also has one of the lowest state sales tax rates in the U.S. This historic city is home to several VA medical facilities, making it a popular choice for retired servicemembers who appreciate a laid-back lifestyle and mild weather. As a bonus, you’ll find the cost of living in Alabama’s third-largest city affordable — around 16% lower than other areas.

Tax Rate Comparison

Although some states have a higher tax burden than others, you likely won’t completely escape paying them. Alaska has the lowest tax burden, with an overall rate of 4.6%, and Wyoming leads the lower 50 states with an overall rate of 7.5%. State and local governments collect taxes for expenses like health care programs, public education, transportation and law enforcement — and they find ways to get the money they need.

For this reason, you may find it helpful to find out what taxes your state and city levies and how much they charge for them. If you expect to drive around town, you may prefer living in an area with a low gas tax. If you own a home, your annual property taxes will likely make up the bulk of your housing expenses — a lower property tax rate can keep those expenses in check. Here is a closer look at how taxes compare in different states.

States With the Lowest Gas Taxes

If you’re moving to a car-dependent area, fuel costs will take a bigger chunk of your budget compared to a city with a robust public transportation system. The following states have the lowest gas taxes in the country, and here’s a look at how much of each gallon of gas goes to the state:

  • Alaska: $0.09

  • Missouri: $0.17

  • Mississippi: $0.18

  • Hawaii: $0.19

  • Arizona: $0.19

  • New Mexico: $0.19

  • Texas: $0.20

  • Louisiana: $0.21

  • North Dakota: $0.23

  • Nevada: $0.24

States With the Lowest Property Tax Rates

Property taxes pay for several public services, including education and law enforcement. Although the size of your home directly influences what you’ll pay each year, knowing the tax rate can help you decide how much home you can afford in retirement. Here are the states with the lowest property tax rates in the country:

  • Hawaii: 0.32%

  • Alabama: 0.40%

  • Colorado: 0.55%

  • Wyoming: 0.56%

  • Louisiana: 0.56%

  • South Carolina: 0.57%

  • West Virginia: 0.57%

  • Utah: 0.57%

  • Nevada: 0.59%

  • Washington, DC: 0.62%

  • Arizona: 0.63%

States With the Lowest Sales Tax Rates

You may be surprised to discover how quickly sales tax can add up and how much you can save living in an area with a low sales tax. Alaska, Delaware, Montana, New Hampshire and Oregon have no state sales tax, so we’ve excluded them from this list of states with the lowest sales tax rates:

  • Colorado: 2.90%

  • Alabama: 4.00%

  • Georgia: 4.00%

  • New York: 4.00%

  • Wyoming: 4.00%

  • South Dakota: 4.20%

  • Missouri: 4.23%

  • Louisiana: 4.45%

  • Oklahoma: 4.50%

  • North Carolina: 4.75%

More From GOBankingRates

This article originally appeared on GOBankingRates.com: Most Tax-Friendly Cities in the US for Boomers

Advertisement