Retirees often flock to states like Florida, Texas, and Tennessee because of the lack of income taxes, which is great if you have a pension or are drawing on retirement accounts. However, a state has to make its money somewhere, and many seniors who move find they’re actually paying more when they're hit with unexpected charges.
Related: Couple Retired to Florida and Hated It— Here's the 'Half-Back' Move That Saved Their Retirement
A couple with a large IRA or 401(k) may be eyeing those no-income-tax states and thinking they’re a great idea. As far as those taxes are concerned, it is potentially a savings of thousands of dollars over the course of retirement. It’s completely valid, and many people plan for years before retirement.
The Hidden Costs
Moving to a no-income-tax state can be financially viable as long as other forms of taxes don’t come into play. While not every retiree will encounter these issues, many do end up paying these extra costs.
Property taxes:AARP reminds us that property taxes in states like Florida and Texas are higher than in many other states.
Sales tax: If you’re moving to a high tourism state like Florida, you’ll likely pay higher sales tax than in places that don’t see a lot of visitors. Moneywise notes that Florida has a statewide sales tax of 6%, but many counties add more.
Insurance: Insurance premiums in states like Florida, Louisiana, Texas, and the Carolinas are often much higher. Some retirees find themselves paying 3 to 4 times as much for home insurance once they move to these places.
Utilities: Air conditioning isn't really an option in Florida or Texas. To live comfortably, you'll be running it much of the year. Electric bills of up to $400 a month are common for typical single-family homes. As the energy crisis continues to drive up electricity prices, this will likely rise further.
Healthcare: Where you live can affect more than your tax bill when it comes to medical care. Research from Milliman shows that while Original Medicare costs are standardized nationwide, the prices of Medicare Advantage, Medigap, and Part D plans vary significantly from state to state.
Medicare: You won’t lose your coverage as long as you stay within the United States, but costs and premiums could change. You’ll have to check your individual plan and how where you live affects it before moving to avoid surprises.
At the other end, states like Pennsylvania have fully exempt retirement income laws and may have fewer additional fees and taxes.
Related: The Real Cost of Downsizing in Retirement (It's Not What You Think)
Buying a home in another state and calling yourself a resident doesn't mean your previous state will let you go so easily. California, New York, and other high-tax states will take a deep dive into your actual residency.
If you maintain a residence for 183 days, that is considered your state of residence, and you can be taxed there. But days of residence aren't the only indication. If you're still visiting doctors in your old state, keeping meaningful belongings, banking, or spending time with relatives, you'll likely be considered a resident.
If an audit decides you never really left, you may be on the hook for years of back income tax plus interest and penalties. This affects snowbirds the most. If you keep a summer and a winter residence, you'll need to consult a tax professional.
The Type Of Account Matters
Traditional IRAs and 401(k) accounts are the most susceptible to taxation, but anyone with a Roth-heavy portfolio has more shielding. The type of retirement account you have matters, and can matter a great deal when considering tax laws in the place you choose to settle down.
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Putting It All Together: A Real-World Example
It's easy to read all of this information and get lost in the details. Here's a simplified, illustrative comparison of what a retired couple with $80,000 in annual taxable retirement income and a $400,000 home might pay in Ohio (a modest-income-tax state) versus Florida (no income tax).
State
Ohio
Florida
State Income Tax
$1,500
$0
Property Tax
$5,400
~$3,200
Home Insurance
$2,000
~$4,000-$7,000+
Total
$8,900
~$8,700-$11,700+
These numbers are averages that will vary depending on your county, insurance company, home value, and your personal tax circumstances. However, the basics are the same. The deep "savings" states like Florida brag about usually don't add up, and that's even before you factor in other costs like utilities and medical.
If you want to move in retirement, it’s best to do a full cost analysis of your new location before making a commitment. Once you understand what the taxes, insurance, utilities, and healthcare costs will look like, you can determine if that move will really save you money.
Disclaimer: This article is for informational purposes only and does not constitute advice.
Sources:
AARP, "6 Hidden Costs of Moving in Retirement"AARP, "What happens to my Medicare coverage if I move to another state?"Moneywise, "Florida homeowners drown in insurance costs — paying $3,400 more than the national average. 3 ways to stay afloat"Millman, "Comparison of annual beneficiary health care costs across Medicare coverage options, 2025"Retire Guide, "States That Don’t Tax Retirement Income"Hence then, the article about the no income tax states retirees love most are hiding a financial trap nobody warns them about was published today ( ) and is available on Parade ( Saudi Arabia ) The editorial team at PressBee has edited and verified it, and it may have been modified, fully republished, or quoted. You can read and follow the updates of this news or article from its original source.
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