Andrew Shilling at MarketWatch looked at the truth about tax-friendly retirement states: how much moving to Florida, Texas or another no-income-tax state can really save, and where the savings get offset by property and sales taxes. On a hypothetical $100,000 IRA distribution, a retiree in a low-tax state can keep about $6,600 more a year than one in a high-tax state; Oregon's combined rate tops 20% for a single filer.
My contribution was to put the number in the frame retirees actually live in. For a retiree drawing down a $1.5 million IRA over 20 years, the difference between a high-tax and no-tax state can add up to six figures. That's not nothing.
But the state income tax rate is only one line. Property taxes in some no-income-tax states are among the highest in the country, sales taxes can be steep, and some states tax Social Security while others do not. The right comparison is the full tax bill for your specific income mix and your specific house, not a headline rate.
There is also the part the calculator cannot capture. Moving away from adult children, a medical team you trust and a community you spent 30 years building has a cost too. For some retirees the tax savings are worth it. For others, the six figures are cheaper than the loneliness. Run the numbers honestly, then decide with the whole picture, not just the tax table.
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