There are things to consider when choosing a CCRC to live in for the rest of your life. A major consideration is state and local taxes in the state where the CCRC is located.
Taxes and inflation are constantly eating away at your nest egg, but there is little you can do about it. Federal taxes follow you to any state you live in, but some states are more tax-friendly to retirees than others. People tend to only consider state income taxes, which is an important consideration, but other state and local taxes can drain your retirement resources, such as sales tax, vehicle tax, property tax, estate tax, and inheritance tax.
Some states are more tax-friendly to retirees than others. Some issues that relate to retirees are whether Social Security benefits are taxable at the state level, what property taxes will be levied, how retirement account and pension withdrawals are taxed (such as government or military pensions), and how CCRCs are taxed (since these taxes will be passed down to residents through monthly fee increases).
Here is how the different states rank regarding their tax friendliness toward retirees. They are listed under four categories: friendliest, friendlier, friendly, or unfriendly.
Friendliest
These states either have no state income tax, no tax on retirement income, or a significant tax deduction for retirement income. They have the friendliest sales, property, estate, and inheritance tax rates.
- Alabama has a low cost of living and low property taxes. There is also no estate or inheritance tax.
- Delaware has no state sales tax, inheritance tax, or estate tax. Property taxes are low.
- Florida has no state income tax, inheritance tax, or estate tax. The property taxes are also lower compared to other states.
- Georgia
- Mississippi has a low cost of living and low property taxes. It has no estate or inheritance tax.
- Nevada has no state income tax, inheritance tax, or estate tax. Property taxes are low.
- South Dakota has a state income tax, inheritance tax, or estate tax. Property taxes are low.
- Tennessee has no state income tax or inheritance tax. Property taxes are low.
- Texas has no state income tax, inheritance tax, or estate tax. Property taxes are relatively low.
- Utah has a low state income tax, but no inheritance tax or estate tax. Property taxes are relatively low.
- Wyoming has no state income tax, inheritance tax, or estate tax. Property taxes are low.
Friendlier
These states do not tax Social Security income and offer an additional deduction on some or all other forms of retirement income. They have relatively friendly sales, property, estate, inheritance, and income tax rates.
- Alaska
- Arkansas
- Colorado
- Delaware
- Idaho
- Illinois
- Kentucky
- Louisiana
- Michigan
- New Hampshire
- Oklahoma
- Pennsylvania
- South Carolina
- Virginia
- Washington
- West Virginia
Friendly
These states offer smaller deductions on some or all forms of retirement income. Their sales, property, estate, inheritance, and income tax rates are not so friendly due to the degree of retirement deductions they offer.
- Arizona
- District of Columbia
- Hawaii
- Indiana
- Iowa
- Kansas
- Maryland
- Massachusetts
- Missouri
- Montana
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Ohio
- Oregon
- Wisconsin
Unfriendly
These states offer minimal to no retirement income tax benefits. They also do not have friendly sales, property, estate, and inheritance tax rates.
- California
- Connecticut
- Maine
- Minnesota
- Nebraska
- Rhode Island
- Vermont
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