Despite the coronavirus pandemic, almost 400,000 Americans moved to a different part of the country to retire last year according to HireAHelper, up a whopping 30% from 2019. Factors such as cost of living, healthcare, and weather tend to be high on people's list of priorities when deciding where to relocate, but taxation is crucial too and can be easily overlooked. Using a recent overview by SmartAsset, click or scroll through as we reveal the least and most tax-friendly states for retirees, taking into account levies on pension income, Social Security, property, and other key taxes that impact seniors, starting with the least tax-friendly.

Seniors are leaving the Golden State en masse to spend their golden years elsewhere. California is in the top three states that retirees are most likely to quit, and no wonder given its punishing taxes. Apart from Social Security, California taxes all forms of retirement income at rates of up to 13.3% and has one of the highest sales taxes in the country. Still, property tax rates are relatively reasonable, while estate and inheritance taxes are non-existent.

Connecticut has been described as a tax nightmare for retirees. Seniors are stung with the third-highest median property tax rate in the country and every type of retirement income is taxed, from pensions to Social Security, though lower-income retirees are entitled to an exemption. Connecticut is the only state that collects a gift tax and is one of 12 that levies an estate tax, but it's only collected on estates worth more than $5.1 million. Also on the upside, the sales tax rate is comfortably below the national average.

Maine's senior taxpayers get a similarly raw deal. Although Social Security isn't taxed, other forms of retirement income are, including pensions and 401(k) account withdrawals. Property tax rates are above the nationwide median and the state imposes an estate tax. Certain seniors, including military vets, qualify for exemptions, however, and the state sales tax is far from excessive at 5.5%. The state also prevents cities and towns from imposing their own local sales tax.

As if the state's bitterly cold winters weren't enough to put off some retirees moving there, Minnesota taxes seniors to the hilt and is one of the 13 states that places a levy on Social Security. All other forms of retirement income are taxed as well, and although military pensions are exempt, there are no other deductions or exemptions for seniors. The sales tax rate levels out at 7.5%, but property taxes are about average.

As in the case in Minnesota, all types of retirement income are fair game for Nebraska's Department of Revenue including Social Security, with only military pensions left off the list. The Cornhusker State is one of just six that imposes an inheritance tax, levying the highest top rate of them all at up to 18%, and property taxes are steep too. The one saving grace is the sales tax rate, which is around the national median.

Rhode Island may be the smallest state in America, but the tax burden it places on seniors certainly isn't. Every single form of retirement income is taxed at rates of up to 5.99%, including Social Security, though a $15,000 exclusion is granted to lower-income seniors claiming a public, private, or military pension. Property tax rates are high, sales tax is above-average, and the state levies an estate tax too. That said, proximity to the ocean and activities such as sailing do make this state an attractive place to live for some.

Social Security isn't taxed in Indiana either, but the same can't be said for private and public pensions, IRAs, 401(k)s, and other retirement account income, which are all subject to the state's income tax flat rate of 3.23%. However, sales tax isn't too high and the property tax rate stands at just 0.81%, with less well-off over-65s eligible for a large deduction and, best of all, there's no estate or inheritance taxes.

Starting with the good news, Kansas has no inheritance or estate tax and doesn't levy a dime on public pension income. All other retirement income, however, is subject to a tax rate of up to 5.7%, and seniors whose income exceeds $75,000 a year have to pay tax on Social Security. Adding to the bad news, the property tax rate is higher than the nationwide average, ditto the rate of sales tax.

Every form of retirement income including Social Security is liable to tax at rates of up to 4.9% in New Mexico, but lower-income seniors can deduct $8,000 from their annual bill. Instead of sales tax, the state has a gross receipts tax, which is imposed on businesses but often passed on to customers, with a combined state and local rate as high as 9.44%. The property tax is low, however, and neither inheritance nor estate tax is collected.

Oregon taxes income from pensions and retirement accounts at up to 9.9%, but only permits credits on pensions for those on low gross incomes. The state shares the lowest estate tax threshold in the country with Massachusetts at $1 million, but rates start at a relatively high 10% compared to Massachusetts' miniscule 0.8%. On the flipside, property taxes are reasonable, and Social Security and sales taxes don't exist.

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Illinois, on the other hand, exempts almost all types of retirement income from taxation, including Social Security, 401(k), IRA, and pension payments. Raining on the parade, however, are the state's property and sales taxes, which are among the highest in the country, along with its estate tax, which kicks in on estates valued at more than $4 million and has a top rate of 16%. As the estate tax is lower than the federal level of $11.7 million, estates that don't need to pay federal taxes will have to pay state estate tax, which may not appeal to retirees who plan to leave sizable inheritances. Illinois is also the only state that taxes prescription meds.

Michigan's Achilles heel in the tax friendliness stakes is its high property tax rate. In other areas though, the state is kind to seniors. Social Security isn't taxed, and while other forms of retirement income are, retirees can deduct most, if not all, of it. Property and sales taxes are high to moderate, but tax credits are available for some homeowners, plus essentials such as groceries and prescription drugs aren't taxed.

New Hampshire has no income, sales, inheritance, and estate taxes, but isn't a completely tax-free paradise for retirees. The state places a levy on interest and dividends earned from retirement savings, one of just two states to do so (Tennessee is the other), while property and so-called 'sin' taxes on on liquor, cigarettes, and gas are sizable.

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Retirees mulling a move to Tennessee will no doubt be delighted to discover that the state collects zero tax on retirement income and paid employment, though interest and dividends from pensions, 401(k)s, and IRAs are liable, similar to the set-up in New Hampshire. The effective property tax rate is low, plus inheritance and estate taxes aren't levied. In fact, Tennessee would be heaven for retirees from a tax standpoint were it not for its combined state and local tax rates, which average 9.55%, the highest figure in the nation.

Washington is another of those states that doesn't levy income tax, and its effective rate of property tax is lower than the national average, which makes it an enticing prospect for any retiree thinking about relocating there. What might put retirees off is the typical combined local and sales tax rate of 9.23% and the state's estate tax, which has the highest top rate in the country at 20%.

In West Virginia, all forms of retirement income are taxed at rates of up to 4.55%, including Social Security, but the deductions available to seniors are generous, which can whittle down annual bills in a big way. Sales tax is reasonable and the rate of property tax is one of the lowest in the country, and nothing at all is levied on estates and inheritances. 

Possibly the most tax-friendly state, Alaska has no income tax and doesn't levy a cent on estates, inheritances, or retail sales, though cities and boroughs can impose their own rates, but these average a tiny 1.76%. The property tax rate is slightly in excess of the US average, but this is offset considerably by the oil wealth dividend check permanent residents receive each year. The payment from the Alaska Permanent Fund was a very healthy $992 in 2020.

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Wyoming was the third most-popular state for retirees to decamp to last year, with its tax set-up without question a major draw. According to SmartAsset, it could well be the most friendly to seniors after Alaska's. Income tax isn't collected, nor are levies on inheritances and estates, and property as well as sales taxes are mega-low.

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