The Top Ten States for Military Retirees- Part One

#1 pick for the best tax-free military retirement state goes to the sunshine state of Florida!

Are you thinking about where you want to retire? Maybe you are wondering what state will leave you paying the least amount in taxes when it comes time to file with RapidTax.

Fortunately, there’s a list of states that don’t tax US military retirement pay. Among these military tax exempt states, some are more appealing than others (for a variety of reasons). Below, you’ll find a list of ten states we find most attractive for military retirees to settle in;

The Top Ten states for military retirees, in order from one to five:

#1-Florida : Florida has no state income tax, no tax on benefits, and no tax on retirement income along with no inheritance or estate taxes. Specific tax breaks for seniors include an extra homestead exemption that can be up to $50,000, offered to those who meet certain income limits. Not to mention, Florida offers a variety of  beaches and theme park attractions, meaning the grandchildren will love visiting.

#2-Texas: Following Florida, in close second place, Texas stands as one of the top picks for military retirees. With a tax-free retirement for veterans, the Lone Star State also has no state income tax, does not tax social security benefits, or any retirement income. Tax breaks for seniors in Texas also include exemption from school taxes for homeowners.

Both Florida and Texas not only have tax-free retirement for military retirees, but also both have a variety of Veteran Administration (VA) Medical Facilities. Deciding between the two warm states? The main difference; Florida has a 6% sales tax rate while Texas has a 6.25% sales tax.

#3-Alabama: In third place, following Florida and Texas is Alabama. Alabama does not tax military retirement along with not taxing civil-service, state and local government retirements.  Qualified private pension retirements are also tax-exempt along with some out-of-state government pensions.   Alabama does not tax social security benefits and the state sales tax is 4%.  For all homeowners over the age of 65, state property taxes are exempt.

#4-Tennessee: Landing in fourth, is Tennessee. Tennessee has no state income tax. Social security benefits are not taxed along with tax exemptions on IRA distributions and pensions. Unlike the top three states for military retirees, Tennessee does not have a homestead exemption.  However, for veterans and eligible seniors, there is a property tax relief program which reimburses taxes paid on primary residences.

#5-Mississippi: Falling in fifth place is Mississippi. Mississippi exempts IRA income, 401K, 403N, Keoghs and qualified public and private pension plans. All homeowners 65 and older are exempt on the first $75,000 of property taxes. Not to mention, Mississippi does not tax social security benefits and additionally there is not an inheritance or estate tax. Mississippi sales tax is 7%, although prescription drugs, health care services and Medicare and Medicaid payments are exempt.

It’s easy to see that the top two states of Florida and Texas have attractive lures like amusement parks, beautiful beaches, warm weather, etc. At the same time, there are other fantastic retirement destination picks that also offer tax free military retirement, making them some of the best retirement states as well.

Interested in what states landed in the top ten but aren’t listed? Part two of the top ten military retirees states offers the other five. A northern state falls among the list to come. Not to mention, the complete list of tax free military retirement states is listed.

Regardless of where you end up spending your retirement days, you can file your taxed or non-taxed retirement income on RapidTax at any time.