Comparison of Tax Burden for Retirees by State – Kiplinger Guide Review

By Bob Clark

Ever since I retired in the year 2005 I’ve been interested in moving to a place with a lower tax burden than that of Oregon, where I grew up and still reside.  So far, the farthest I have gotten is moving about four miles directly south of my last residence in the City of Portland to my current residence in the City of Milwaukie, Oregon.  Family has kept me from making a much more substantive move, totally “flying the coop,” that is.

But I still bide my time, living vicariously reviewing Kiplinger’s state-by-state-guide-to-taxes-on-retirees.  I summarize Kiplinger’s state-by-state tax burden assessment here in a table sampling four of the ten highest tax burdened states and four of the ten lowest tax burdened states.

As you can see from the table, Oregon is ranked in the group of ten highest tax burden states for retirees.  It has a stiff marginal income tax rate (9%) even for middle income folks like me.  If you are living off savings related income like me, you lose a quarter or more of your dividend income to federal and state income taxes.

But as my dear deceased mom was taken to saying: “It could be worse.”  And indeed, both California and New York not only have substantial income taxes but also stiff sales taxes.   New York is the more egregious of the two, as it really hits you with property taxes in addition to substantive income and sales taxes.

Utah is a bit surprising as it is mostly governed by those of the Republican persuasion, but is nonetheless ranked in the group of ten highest tax burden states for retirees.

Now, where might a retiree, with an evil eye for keeping more of his/her money, consider moving?  Well, Nevada, Wyoming, South Dakota and Florida are four states maybe worth considering.  Wyoming seems most attractive from a tax standpoint, but it does get kind of cold at times.  South Dakota is said to be getting kind of hip, especially the city of Sioux Falls.  It too gets bouts of stiff winter weather, though.  Florida is nice in the winter but summers are pretty hot and muggy.

I’ll keep slicing and dicing the data (even international) to find my way to a vicarious bliss of sorts.  For instance, how might happiness index levels correlate with tax burden by state (or country, for that matter)?  Or, for instance, how does political persuasion correlate with tax burden?

Stay tuned for more vicarious contemplations.

Bob Clark is a retired economist living in Milwaukie, Oregon.