People relocating to Texas frequently cite its cost of living as a lure, but retirees on a fixed income may want to look elsewhere — especially if they’re worried about high taxes.
A new study by financial advisor Kiplinger ranked the Lone Star State as the 10th Least-Tax Friendly State for Retirees, pointing out that both its property and sales taxes are usually high compared to the national average.
While Texas is one of just nine states without an income tax, the report notes that most states don’t tax Social Security, pensions, 401(k)s, IRAs and other retiree income streams. Instead, retirees' primary concern should property and sales taxes, Texas' chief way of keeping state government in operation.
Texas is tied with tax-heavy New York for having the seventh-highest median property tax in the country, and it also has the 14th-highest combined sales tax, averaging 8.19%, according to Kiplinger's number crunching.
And that situation likely won't change any time soon.
In 2019, Texas voters overwhelmingly passed an amendment to the state constitution prohibiting lawmakers from ever instituting an income tax. That Republican-backed proposal ensures the state's primary money generators will remain property and income taxes, both of which disproportionately impact low- and middle-income residents.
If retirees are looking for lower taxes, they might want to consider Delaware, Hawaii and Wyoming, which Kiplinger ranked as the top three best states for retirees when it comes to taxes.
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