There are 45 states plus the District of Columbia that impose a state sales tax on retirees and other residents. In addition, local sales tax is collected in 38 states. The combined levy can be hefty. In Tennessee, for example, the average combined state and local sales tax is 9.46%.
That means there are just five states with no state sales tax: Alaska, Delaware, Montana, New Hampshire and Oregon. But if you’re scouting out the best places to retire, don’t judge a state on its sales tax alone. Tennessee ranks as one of the more tax-friendly states in the U.S., despite its high sales tax, largely because it doesn’t impose a state income tax. Oregon, on the other hand, isn’t tax-friendly for retirees. The Beaver State has a top income tax rate of 9.9% and taxes most retirement income. On the plus side, you can enjoy a nice glass of Willamette Valley pinot noir, tax-free.
Learn more about what you will really pay to live in the five states with no state sales tax.
SEE ALSO: 13 States That Tax Social Security
Kiplinger’s state-by-state guide to taxes on retirees is updated annually based on information from state tax departments, CCH and the Tax Foundation. All data are for the 2017 tax year unless otherwise noted. Combined state and local sales tax rates were calculated by the Tax Foundation.
