It’s not unusual to work in retirement. Some retirees take on part-time jobs for additional income streams if Social Security benefits and savings aren’t enough to support them. Others pursue interesting side hustles they didn’t get the chance to dig into sooner as careers.
If you plan to work in retirement, it’s important to know how tax friendly (or not) your state is when it comes to your income. Less favorable tax laws might mean you need to relocate somewhere else.
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To determine the best states to relocate to if you’re planning to work in retirement, GOBankingRates surveyed income taxes at the federal and state levels, plus property taxes and sales taxes. After calculating these taxes, GOBankingRates found each state’s total annual taxes paid, total tax burden and overall cost of living.
See which 15 states are best to relocate in if you’re planning to work in retirement.
15. South Carolina
- Median household income: $66,818
- Tax burden: 28.3%
- Cost-of-living index: 95.2
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14. North Dakota
- Median household income: $75,949
- Tax burden: 26.8%
- Cost-of-living index: 92.1
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13. Oklahoma
- Median household income: $63,603
- Tax burden: 29.4%
- Cost-of-living index: 87.9
12. New Mexico
- Median household income: $62,125
- Tax burden: 28.4%
- Cost-of-living index: 92.9
11. Louisiana
- Median household income: $60,023
- Tax burden: 28.9%
- Cost-of-living index: 93.5
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10. Indiana
- Median household income: $70,051
- Tax burden: 27.5%
- Cost-of-living index: 91.3
9. Alabama
- Median household income: $62,027
- Tax burden: 29.1%
- Cost-of-living index: 88.8
8. Arkansas
- Median household income: $58,773
- Tax burden: 29.3%
- Cost-of-living index: 89.0
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7. South Dakota
- Median household income: $72,421
- Tax burden: 25.8%
- Cost-of-living index: 92.3
6. Montana
- Median household income: $69,922
- Tax burden: 25.1%
- Cost-of-living index: 94.0
5. Wyoming
- Median household income: $74,815
- Tax burden: 24.4%
- Cost-of-living index: 95.4
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4. Kentucky
- Median household income: $62,417
- Tax burden: 26.8%
- Cost-of-living index: 92.9
3. Tennessee
- Median household income: $67,097
- Tax burden: 25.9%
- Cost-of-living index: 90.0
2. Mississippi
- Median household income: $54,915
- Tax burden: 27.3%
- Cost-of-living index: 87.5
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1. West Virginia
- Median household income: $57,917
- Tax burden: 25.7%
- Cost-of-living index: 84.8
Methodology: To generate the best and worst states to relocate to if you plan to work in retirement, GOBankingRates surveyed three key taxes: (1) income taxes at both the federal and state levels (including FICA), (2) property taxes and (3) sales taxes. Incomes are based on 2023 American Community Survey median household figures and income tax estimates were created by using an in-house calculator for a person who was filing their taxes as a single person and using the standard deduction (with 2024 tax brackets). Property taxes were calculated using each state’s average rate, as sourced from Tax Foundation and Zillow’s median home value index data as of December 2024. Sales taxes were calculated using each state’s “state and local combined sales tax rate,” sourced from the Tax Foundation, and factored against each state’s average annual consumer expenditure. Estimates on annual consumer expenditure in each state were created by taking the Bureau of Labor Statistics’ 2023 Consumer Expenditure Survey’s national average annual expenditures estimate and factoring it out for each state using the Missouri Economic Research and Information Center’s cost-of-living indices for the Q3 of 2024. Once the three above taxes were calculated as an annual amount, GOBankingRates found each state’s total annual taxes paid and (4) total tax burden. GOBankingRates also found the (5) overall cost-of-living index for each state. For final calculations, factors (1) through (5) were scored and combined, with the lowest score being best. In final calculations, factor (3) was weighted 0.5x and factor (5) was weighted 2x. All data was collected on and is up to date as of Feb. 5, 2025.
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This article originally appeared on GOBankingRates.com: 15 States To Relocate To If You Plan To Work in Retirement in 2025
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