Your Home Could Be Tax-Free: 13 Senior-Friendly States That Keep Costs Down
If you’re getting closer to retirement, these 13 states are great options for you. With a nice mix of senior property tax exemption and other benefits, these low-cost retirement states should all be on the table as you prepare for your next chapter.
Alabama
Alabama is one of the best states for senior homeowners, thanks largely to its offering some of the most generous property tax exemptions in the nation. In fact, homeowners who are 65 or older can apply for a full exemption on their primary residence, which allows them to own their homes outright without the headache associated with annual property taxes. The exemption is easy to obtain and remains in effect as long as the senior qualifies.
The senior property tax exemption isn’t where the savings stop. Alabama also has a lower cost of living than the national average. Groceries, healthcare, and utilities are all considered more affordable than they are on a national level. When combined with the variety of potential landscapes, including Gulf-front properties and urban spaces, Alabama’s financial incentives make it a great spot for retirees.
Iowa
According to studies, Iowa is the eighth-cheapest state in the United States for retirees. With an annual cost of living of just over $69,000, Iowa offers property tax relief for seniors by allowing them to claim $6,500 of their home’s value as a tax exemption on their annual tax returns.
When it comes to Iowa’s cost of living, you’ll find that groceries, utilities, and healthcare costs are all lower than the national average. Overall, the state also boasts a low crime rate, which makes it even more attractive for seniors. Whether you want to live in a bigger city like Des Moines or a small town, Iowa is a great option.
Oklahoma
Oklahoma, which is the second-cheapest state in the United States for seniors to live in, offers a variety of benefits for retirees. With no tax on Social Security payments, generous senior homestead exemptions, and median home prices under $200,000, Oklahoma, with its cost of living that’s under $70,000, is one of the best states for senior homeowners.
While Oklahoma is considered high-risk for tornadoes, the weather is generally considered mild and sunny throughout the year. With beautiful views and diverse landscapes, the Sooner State is an excellent option for retirees.
Arkansas
Arkansas, with its annual cost of living of around $68,500, is considered the sixth cheapest state in the United States. However, one of the things that makes it so affordable for retirees is the fact that the state freezes the assessed value of primary residences for senior homeowners. This means that you’ll never have to worry about your property taxes increasing, even if your home’s value goes up in the future.
In addition to the state’s full exemption on Social Security and pension income, Arkansas’s home prices are incredibly affordable. This is especially true if you get out of the larger cities like Little Rock. With so many cultural community events and a rich heritage, Arkansas offers plenty for retirees to do while making sure that they can afford to enjoy their retirement.
Kentucky
While the annual cost of living in Kentucky is around $71,870, it’s still the 17th-cheapest state in the nation to live in. The Bluegrass State eases the financial strain placed on seniors by exempting Social Security and offering generous senior homestead property tax breaks. Qualifying homeowners who are 65 and older can exclude $49,100 of their property’s assessed value, one of the highest figures in the US.
Kentucky offers a diverse landscape depending on what part of the state you call home. If you prefer life in the city, Lexington and Louisville are great options. If you prefer the mountains, the eastern portion of the state is beautiful, especially when the colors start to change. The western portion of the state is ideal for those who prefer a Midwestern atmosphere. When combined with the numerous financial incentives, Kentucky is a great place for retirees.
Kansas
Kansas is the third-cheapest state in the United States, with an annual cost of living of only $67,234. While the cost of living is enough to make it an affordable place for retirees, the benefits don’t stop there. The state offers an incredible tax credit that allows homeowners to claim up to 75% of their property taxes on a principal residence.
For seniors, having access to quality healthcare is often just as important as financial stability, and Kansas has some of the best in the nation. With major hospitals in Wichita and Kansas City, residents can access quality healthcare while enjoying a diverse local culture that includes sports, music, art, and more.
Louisiana
The 14th-cheapest state in the US, Louisiana, has an annual cost of living of $71,252. When it comes to property taxes and other features that seniors look for in a place to retire, it’s among one of the best options in the nation. Eligible seniors can claim a tax assessment freeze on the first $75,000 of their home’s value. In order to claim this perk, you just have to submit proof of your age, verify that the home is your primary residence, and provide proof that you’re retired.
Louisiana has recently undergone a major tax overhaul that only makes it more appealing to retirees. The state recently approved a package that reduced individual income tax to 3% and increased standardized deductions. While many retirees don’t want to live in a bustling tourist destination like New Orleans, Louisiana has dozens of small communities that exude Southern charm, making it a great retirement destination for seniors.
North Carolina
When looking at a list of the best states for senior homeowners, you may be surprised to see North Carolina, the 28th-cheapest state when it comes to cost of living, appear on the list. However, there are several important factors that you’ll need to keep in mind. First, North Carolina’s coastal areas, which include islands off the Atlantic Coast, and cities like Charlotte, drive up the overall cost of living in the state. Secondly, in order to counteract those factors, the Tarheel State has some great tax benefits for seniors.
North Carolina takes a more customized approach to its homestead exemption. Qualified homeowners can claim the greater of $25,000 or 50% of their home’s appraised value as a tax credit. You can find affordable living in North Carolina, and the tax breaks make it even better.
South Carolina
Head just a few miles south to another Carolina, and you’ll find the next entrant on our list of best states for senior homeowners. South Carolina offers an exemption of up to $50,000 on property taxes for homeowners over the age of 65, based on income level. With such a hefty tax break on the table, it’s hard to find a better option for retirees who want to save on annual property taxes.
Outside of the tax incentives, South Carolina is largely an affordable state to call home. While it ranks as the 26th-most affordable state, that’s primarily because of increased costs in coastal areas and in major cities like Charleston. The Palmetto State has a variety of cities that are much cheaper for residents on a fixed income.
Ohio
Ohio is another great option for retirees who want to live in a state with some self-contained diversity. With cities like Cleveland and Columbus, quick access to the Great Lakes, and some more rural areas in the eastern portion of the state, Ohio has landscapes for every taste. The 20th-cheapest state in the US, Ohio has an annual cost of living of around $72,000.
When it comes to property taxes, seniors and those who are disabled can claim up to $28,000 of their home’s value on their property taxes. Eligible disabled veterans can get even bigger discounts, making it a great option for retirees.
South Dakota
While South Dakota is the 15th-cheapest state to live in, with its annual cost of living of $71,252, the real benefits for seniors who want to retire there are found in the numerous tax benefits the state provides. In South Dakota, seniors pay no income tax, no inheritance tax, and can easily claim a homestead exemption that defers taxes until they sell their home. Property taxes are moderate, coming in at around 1.09%, but the deferment makes that less problematic for long-term residents.
Tennessee
The Volunteer State is the 11th-cheapest state in the US, with an annual cost of living of just north of $69,000. There is no income tax or Social Security tax, which goes well with the moderate property tax of only 0.55%. However, Tennessee does have a high sales tax, but there are exemptions on groceries and meds that still make it a great place for seniors.
Texas
Everything is bigger in Texas, except for property taxes for seniors. The Lone Star State has a law on the books that requires school districts to offer a $10,000 homestead exemption for seniors, which they can apply to their annual property taxes. Some local taxing offices offer another exemption of up to $3,000 based on a variety of factors.
Perhaps the most impressive thing about Texas is that the state’s cost of living is still lower than the US average. It’s an affordable state with plenty of variety and tax breaks that are senior-friendly, making it one of the best options for retirees.