Recently, we have had three families of relatives move from New Jersey to Florida, with more planning to do so. While I think living in Florida is wonderful for a host of reasons, Kiplinger’s has rated the States from a tax standpoint for retirees. Here is what they found:
For those choosing to stay in New Jersey:
Our ranking: Mixed tax picture
State income tax: 1.4% (on up to $20,000 of taxable income) — 8.97% (on taxable income over $500,000).
Average state sales tax: 6.97%
Estate tax/inheritance tax: No/Yes
Go to New Jersey’s full state tax profile
The Garden State has been taking big steps to reduce its tax burden on retirees. It does not tax Social Security benefits or military pensions. And a law passed in 2016 means seniors may also qualify to exclude part of their retirement income from state income taxes. By 2020, a couple filing jointly, with an income of $100,000, could exclude all of that. To top that off, the estate tax is being phased out. What’s keeping New Jersey from being a retirement idyll? Stubbornly high property taxes—the highest in the country, in fact.
For the contingent that has decided to join us in Florida:
Our ranking: Most tax-friendly
State income tax: None
Average state and local sales taxes: 6.80%
Estate tax/inheritance tax: No/No
Go to Florida’s full state tax profile
One of Kiplinger’s top ten most tax-friendly states for retirees, the Sunshine State is very popular with retirees, not just because of its abundant sunshine but also because of the absence of a state income tax. Permanent residents are entitled to a homestead exemption of up to $50,000, regardless of age, and seniors may qualify for an additional exemption.
We welcome the transplants from New Jersey and all of the other unfriendly tax States.