The Most and Least Tax-Friendly Cities for Retirees
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.
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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.
1. Jacksonville, Florida
Annual retirement taxes: $0
Effective retirement tax rate: 0%
Home value: $305,332
Annual property tax estimate by county: $2,646.26
Property tax rate: 0.87%
Sales tax: 7.5%
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2. Las Vegas, Nevada
Annual retirement taxes: $0
Effective retirement tax rate: 0%
Home value: $414,386
Annual property tax estimate by county: $3,198.16
Property tax rate: 0.77%
Sales tax: 8.38%
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3. Philadelphia, Pennsylvania
Annual retirement taxes: $0
Effective retirement tax rate: 0%
Home value: $206,804
Annual property tax estimate by county: $2,118.88
Property tax rate: 1.02%
Sales tax: 8.00%
4. Louisville, Kentucky
Annual retirement taxes: $289.00
Effective retirement tax rate: 0.41%
Home value: $233,621
Annual property tax estimate by county: $2,093.98
Property tax rate: 0.90%
Sales tax: 6.00%
5. Orlando, Florida
Annual retirement taxes: $0
Effective retirement tax rate: 0%
Home value: $393,373
Annual property tax estimate by county: $3,722.32
Property tax rate: 0.95%
Sales tax: 6.50%
6. Nashville, Tennessee
Annual retirement taxes: $0
Effective retirement tax rate: 0%
Home value: $432,898
Annual property tax estimate by county: $4,345.93
Property tax rate: 1%
Sales tax: 9.25%
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7. Tampa, Florida
Annual retirement taxes: $0
Effective retirement tax rate: 0%
Home value: $394,195
Annual property tax estimate by county: $4,594.03
Property tax rate: 1.17%
Sales tax: 7.50%
8. Memphis, Tennessee
Annual retirement taxes: $0
Effective retirement tax rate: 0%
Home value: $146,610
Annual property tax estimate by county: $2,100.90
Property tax rate: 1.43%
Sales tax: 9.75%
9. Miami, Florida
Annual retirement taxes: $0
Effective retirement tax rate: 0%
Home value: $592,347
Annual property tax estimate by county: $6,115.34
Property tax rate: 1.03%
Sales tax: 7.00%
10. Atlanta, Georgia
Annual retirement taxes: $0
Effective retirement tax rate: 0%
Home value: $410,608
Annual property tax estimate by county: $4,758.77
Property tax rate: 1.16%
Sales tax: 8.90%
11. Mesa, Arizona
Annual retirement taxes: $962
Effective retirement tax rate: 1.35%
Home value: $426,050
Annual property tax estimate by county: $2,554.52
Property tax rate: 0.6%
Sales tax: 8.30%
12. Phoenix, Arizona
Annual retirement taxes: $962
Effective retirement tax rate: 1.35%
Home value: $411,674
Annual property tax estimate by county: $2,496.20
Property tax rate: 0.61%
Sales tax: 8.60%
13. Chicago, Illinois
Annual retirement taxes: $0
Effective retirement tax rate: 0%
Home value: $275.902
Annual property tax estimate by county: $4,212.52
Property tax rate: 1.53%
Sales tax: 10.25%
14. El Paso, Texas
Annual retirement taxes: $0
Effective retirement tax rate: 0%
Home value: $203,818
Annual property tax estimate by county: $4,133.94
Property tax rate: 2.03%
Sales tax: 7.25%
15. Seattle, Washington
Annual retirement taxes: $0
Effective retirement tax rate: 0%
Home value: $927,699
Annual property tax estimate by county: $8,937.83
Property tax rate: 0.96%
Sales tax: 10.25%
16. New York City, New York
Annual retirement taxes: $1,047
Effective retirement tax rate: 1.47%
Home value: $737,049
Annual property tax estimate by county: $4,625.72
Property tax rate: 0.63%
Sales tax: 8.00%
17. Fresno, California
Annual retirement taxes: $1,319.00
Effective retirement tax rate: 1.85%
Home value: $366,695
Annual property tax estimate by county: $2,455.86
Property tax rate: 0.67%
Sales tax: 7.98%
18. Columbus, Ohio
Annual retirement taxes: $362
Effective retirement tax rate: 0.51%
Home value: $247,556
Annual property tax estimate by county: $4,219.56
Property tax rate: 1.7%
Sales tax: 7.50%
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19. Colorado Springs, Colorado
Annual retirement taxes: $1,506
Effective retirement tax rate: 2.11%
Home value: $457,263
Annual property tax estimate by county: $2,279.87
Property tax rate: 0.5%
Sales tax: 8.2%
20. Tucson, Arizona
Annual retirement taxes: $962.00
Effective retirement tax rate: 1.35%
Home value: $320,002
Annual property tax estimate by county: $3,507.06
Property tax rate: 1.1%
Sales tax: 8.70%
21. Pittsburgh, Pennsylvania
Annual retirement taxes: $0
Effective retirement tax rate: 0%
Home value: $218,747
Annual property tax estimate by county: $5,117.10
Property tax rate: 2.34%
Sales tax: 7%
22. Oklahoma City, Oklahoma
Annual retirement taxes: $1,338.00
Effective retirement tax rate: 1.88%
Home value: $197,262
Annual property tax estimate by county: $1,876.20
Property tax rate: 0.95%
Sales tax: 8.63%
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23. Sacramento, California
Annual retirement taxes: $1,319.00
Effective retirement tax rate: 1.85%
Home value: $468,124
Annual property tax estimate by county: $3,429.40
Property tax rate: 0.73%
Sales tax: 8.75%
24. Tulsa, Oklahoma
Annual retirement taxes: $1,338.00
Effective retirement tax rate: 1.88%
Home value: $192,436
Annual property tax estimate by county: $2,002.52
Property tax rate: 1.04%
Sales tax: 8.52%
25. Virginia Beach, Virginia
Annual retirement taxes: $1,588.00
Effective retirement tax rate: 2.23%
Home value: $381,742
Annual property tax estimate by county: $3,096.71
Property tax rate: 0.81%
Sales tax: 6.00%
26. Denver, Colorado
Annual retirement taxes: $1,506.00
Effective retirement tax rate: 2.11%
Home value: $613,233
Annual property tax estimate by county: $3,627.12
Property tax rate: 0.59%
Sales tax: 8.81%
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27. Houston, Texas
Annual retirement taxes: $0
Effective retirement tax rate: 0%
Home value: $267,990
Annual property tax estimate by county: $6,265.99
Property tax rate: 2.34%
Sales tax: 8.25%
28. San Antonio, Texas
Annual retirement taxes: $0
Effective retirement tax rate: 0%
Home value: $264,130
Annual property tax estimate by county: $6,256.04
Property tax rate: 2.37%
Sales tax: 8.25%
29. Indianapolis, Indiana
Annual retirement taxes: $1,540.00
Effective retirement tax rate: 2.17%
Home value: $221,262
Annual property tax estimate by county: $2,587.50
Property tax rate: 1.17%
Sales tax: 7.00%
30. San Diego, California
Annual retirement taxes: $1,319.00
Effective retirement tax rate: 1.85%
Home value: $1,000,534
Annual property tax estimate by county: $6,570.04
Property tax rate: 0.66%
Sales tax: 7.75%
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31. Washington D.C.
Annual retirement taxes: $1,987.00
Effective retirement tax rate: 2.79%
Home value: $738,581
Annual property tax estimate by county: $3,735.05
Property tax rate: 0.51%
Sales tax: 6.00%
32. Dallas, Texas
Annual retirement taxes: $0
Effective retirement tax rate: 0%
Home value: $321,464
Annual property tax estimate by county: $7,408.16
Property tax rate: 2.3%
Sales tax: 8.25%
33. Long Beach, California
Annual retirement taxes: $1,319.00
Effective retirement tax rate: 1.86%
Home value: $841,257
Annual property tax estimate by county: $5,684.37
Property tax rate: 0.68%
Sales tax: 10.25%
34. Fort Worth, Texas
Annual retirement taxes: $0
Effective retirement tax rate: 0%
Home value: $310,840
Annual property tax estimate by county: $7,569.73
Property tax rate: 2.44%
Sales tax: 8.25%
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35. Los Angeles
Annual retirement taxes: $1,319.00
Effective retirement tax rate: 1.86%
Home value: $973,700
Annual property tax estimate by county: $6,777.23
Property tax rate: 0.7%
Sales tax: 9.50%
36. Baltimore, Maryland
Annual retirement taxes: $1,693.00
Effective retirement tax rate: 2.38%
Home value: $168,390
Annual property tax estimate by county: $2,339.59
Property tax rate: 1.39%
Sales tax: 6.00%
37. Kansas City, Missouri
Annual retirement taxes: $1,481.00
Effective retirement tax rate: 2.08%
Home value: $221,733
Annual property tax estimate by county: $2,870.80
Property tax rate: 1.29%
Sales tax: 8.86%
38. Raleigh, North Carolina
Annual retirement taxes: $1,832.00
Effective retirement tax rate: 2.57%
Home value: $424,846
Annual property tax estimate by county: $3,631.14
Property tax rate: 0.85%
Sales tax: 7.25%
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39. Detroit, Michigan
Annual retirement taxes: $1,263.00
Effective retirement tax rate: 1.77%
Home value: $60,045
Annual property tax estimate by county: $1,384.75
Property tax rate: 2.31%
Sales tax: 6.00%
40. Oakland, California
Annual retirement taxes: $1,319.00
Effective retirement tax rate: 1.85%
Home value: $881,575
Annual property tax estimate by county: $7,200.17
Property tax rate: 0.82%
Sales tax: 10.25%
41. San Francisco, California
Annual retirement taxes: $1,319.00
Effective retirement tax rate: 1.85%
Home value: $1,404,811
Annual property tax estimate by county: $9,114.90
Property tax rate: 0.65%
Sales tax: 8.63%
42. Charlotte, North Carolina
Annual retirement taxes: $1,832.00
Effective retirement tax rate: 2.57%
Home value: $387,021
Annual property tax estimate by county: $4,168.02
Property tax rate: 1.08%
Sales tax: 7.25%
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43. Boston, Massachusetts
Annual retirement taxes: $2,037.00
Effective retirement tax rate: 2.87%
Home value: $718,699
Annual property tax estimate by county: $5,876.74
Property tax rate: 0.82%
Sales tax: 6.25%
44. San Jose, California
Annual retirement taxes: $1,319.00
Effective retirement tax rate: 1.85%
Home value: $1,393,096
Annual property tax estimate by county: $9,956.45
Property tax rate: 0.71%
Sales tax: 9.38%
45. Albuquerque, New Mexico
Annual retirement taxes: $2,548
Effective retirement tax rate: 3.58%
Home value: $312,509
Annual property tax estimate by county: $2,518.85
Property tax rate: 0.81%
Sales tax: 7.75%
46. Austin, Texas
Annual retirement taxes: 0
Effective retirement tax rate: 0%
Home value: $582,105
Annual property tax estimate by county: $13,233.15
Property tax rate: 2.27%
Sales tax: 8.25%
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47. Buffalo, New York
Annual retirement taxes: $1,047.00
Effective retirement tax rate: 1.47%
Home value: $203,641
Annual property tax estimate by county: $5,490.38
Property tax rate: 2.7%
Sales tax: 8.75%
48. Milwaukee, Wisconsin
Annual retirement taxes: $1,955.00
Effective retirement tax rate: 2.74%
Home value: $181,593
Annual property tax estimate by county: $4,002.97
Property tax rate: 2.18%
Sales tax: 5.50%
49. Portland, Oregon
Annual retirement taxes: $3,212.00
Effective retirement tax rate: 4.51%
Home value: $557,864
Annual property tax estimate by county: $5,875.04
Property tax rate: 1.05%
Sales tax: 0%
50. Omaha, Nebraska
Annual retirement taxes: $3,146.00
Effective retirement tax rate: 4.41%
Home value: $268,257
Annual property tax estimate by county: $5,259.76
Property tax rate: 1.96%
Sales tax: 7.00%
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Erica Corbin and Laura Beck contributed to the reporting for this article.
Methodology: GOBankingRates looked at the 50 biggest cities in the U.S. by housing market according to Zillow's December 2022 data and ranked them to determine the most and least tax-friendly cities for retirees. Each city was scored on: (1) its estimated total amount paid in retirement taxes annually. This figure was calculated by state, assuming a single-filer turning 65 in 2032, receiving the national average annual amount in retirement benefits (sourced from the Social Security Administration's February 2023 Monthly Statistical Snapshot) and collecting the majority of their income from a retirement account (assuming retirement benefits account for 30% of total income, as estimated by the SSA Fact Sheet). (2) the effective retirement tax rate in each state, calculated as the percentage of total income paid in retirement taxes. (3) the average amount paid in property taxes annually, calculated by using Tax-Rates.org's Property Tax Calculator to apply the appropriate county, parish, or district's tax rates to the estimated 2023 median home value for each city (as sourced from Zillow's March 2023 Housing Data). (4) the estimated property tax rate in its county, parish, or district from Tax-Rates.org. and (5) the sales tax rate in each city, according to Avalara. All 50 cities were then ranked according to their scores on the above 5 factors, with sales tax weighted at 0.5x the other factors. All data was compiled on and up-to-date as of 04/20/23. Lead Researcher: Andrew M.
This article originally appeared on GOBankingRates.com: The Most and Least Tax-Friendly Cities for Retirees