Smart Money, Taxes

Taxes for Retirees in the Southeast States

Retirement taxes
Published on March 31, 2021

They say there are only two inevitable things in life—and one of them is taxes. Of course, you want to spend your retirement kicking back, relaxing, and not thinking about your annual amount owing. But the truth is that if you’re going to get the most out of your golden years, you need to think about how taxes will affect your retirement plans.

Not all state taxes are created equal, especially when it comes to retirees. In fact, many retirees choose to fly south for the winter, searching for a home that’s not only warmer but will also help their finances go further.

Let’s talk about tax-friendly states for retirees in 2021. We’re going to take a closer look at the southeast states and find which one is best for the budget-conscious retiree. As you’re reading, keep this in mind. There’s one thing that all these sunshine states have in common: there’s no estate tax or inheritance tax for seniors. Just one less thing to worry about when it comes to budgeting!

Retiree Taxes in South Carolina 

Not only is South Carolina home to some of the country’s most beautiful landscapes, temperate weather, and excellent community living, it’s also “the most tax-friendly” state for aspiring retirees. The state income tax range starts low at 3% for taxable income between $3,070 to $6,150 and caps at 7% for those with taxable income over $15,400.

SC retirement tax caters to the needs of seniors: social security benefits are entirely exempt from taxation. Taxpayers 65 and up are also entitled to certain tax breaks, such as $15,000 for single filers—from other taxable income, homestead exemptions, and excluding amounts of retirement income. 

Property taxes are low, at $545 per $100,000 of assessed home value. The statewide median property tax rate ranks as the sixth-lowest in the country. The only downside to taxes in South Carolina? The average rate of sales tax at both a state and local level is on the higher end at 7.46% - but on a national scale, this is pretty average.

Taxation in North Carolina for Retirees

Despite its similarities to South Carolina, North Carolina doesn’t rank quite as well when it comes to taxing retirees. Like SC, there is no social security benefits tax. Property taxes are relatively low in NC, and the median sales tax rate is actually lower than that of its southern counterpart at 6.98%! Unfortunately, there’s no variation in the state income tax range. Whereas the SC rate flexes between 3 and 7% depending on your tax bracket, North Carolina has a fixed tax rate of 5.25%, landing squarely in the middle. There are also fewer tax breaks and exemptions for retirees than in the more southerly Carolina.

Even still, North Carolina is an ideal home for retirees. Just because it can’t measure up to South Carolina, ostensibly the most tax-friendly state for seniors, doesn’t make it a bad choice.

Why Not Tennessee?

Another tax-friendly state for retirees, Tennessee has beautiful real estate that won’t break the bank. And as of 2021, there is no state income tax in Tennessee, though certain investments might still be taxable.

For seniors that qualify, there are a handful of tax breaks you can take advantage of. Property taxes are way below the national average, but what you don’t spend on your property, you’ll spend at the cash register. The combined state and local sales tax rate is 9.55% - but don’t let that dissuade you from checking out property in this beautiful state.

Retiring in Florida

There’s no question that retirees love Florida: it’s got year-round sunshine, tons of affordable real estate, golf galore, and perhaps best of all, there’s no state income tax. Although the property taxes are a little on the higher side, that isn’t a dealbreaker, considering the sheer number of retirees who move to Florida annually. Sales taxes are also slightly higher than the national average, but if you love the Sunshine State, this may be a small price to pay.

Georgia Retirement Taxes

Besides the gorgeous retirement communities, there’s another reason for retirees to flock to Georgia: the state’s tax-friendliness! Both local and state sales tax rates are average, as are property taxes. But the real selling point for Georgia is that residents can claim an exemption on their taxable retirement income up to $65,000 per person. The sales tax rates are average, and the property taxes are above average, but the income tax is - almost unbelievably - 1%, with certain caveats!

According to SmartAsset, the two ‘tax-friendliest’ southeastern states are Georgia and Florida, but NC, SC, and Tennessee aren’t far behind! It’s hard to go wrong in any of these beautiful, budget-friendly states.

Still unsure about what you’re looking for and how to find it? Community Finder offers a quick and easy way to find what you’re after, thanks to its Southeast State property tax calculator