Low-cost states for retirement relocation

The cost of living and tax rates are important factors for retirees to consider when deciding where to relocate. While some states offer low income taxes or no state income tax at all, they may have a higher cost of living. Other states have a lower cost of living but may tax Social Security benefits or have higher income tax rates. West Virginia has the lowest cost of living according to a recent survey. However, it also has moderately higher state income taxes, with rates ranging from 2.36% to 5.12%. The state plans to end taxes on Social Security in 2026. Mississippi, Arkansas, Oklahoma, and Missouri also rank among the states with the lowest cost of living. Their income tax rates vary, with Arkansas having rates from 2% to 4.4%, Oklahoma from 1.85% to 4.25%, and Missouri from 0.25% to 4.75%. Mississippi has a flat income tax rate of 4.70%.

Balancing taxes and cost of living

Tennessee, which has no state income tax, ranks sixth for lowest cost of living. Alabama, with income tax rates from 4.40% to 5.70%, is seventh. Indiana, Kentucky, and Michigan round out the top ten states with the lowest cost of living. Indiana’s income tax rates are 2% to 4.8%, Kentucky’s are 2.75% to 3.5%, and Michigan has a flat rate of 3.05%. Some states have no state income taxes at all, including Texas and South Dakota. North Dakota and Pennsylvania have relatively low income tax rates, with North Dakota at 1.95% to 2.50% and Pennsylvania at a flat 3.07%. Retirees must balance factors like income taxes and cost of living when choosing where to relocate. A state with no income tax may have a higher cost of living, while a state with a lower cost of living may tax Social Security benefits or have higher income tax rates. Careful research and planning can help retirees find the best location for their financial situation.