Because many retirees are on a fixed income, property taxes can play an important part in the decision of where to live during retirement years.
Every state imposes some form of property tax. These taxes are commonly associated with real estate, but some states tax vehicles and other assets as well. Rates can range from very low in one state to astronomically high in another, but other types of taxes can balance property tax rates so the overall impact on residents might be about the same.
"The states with the best scores on the property tax component are Indiana, New Mexico, Idaho, Delaware, Nevada, and Ohio," the Tax Foundation has recently reported. "States with the worst scores on this component are Connecticut, Vermont, Illinois, New York, New Hampshire, Massachusetts, New Jersey, plus the District of Columbia."
Many of our clients reside in Maryland, which ranks 43rd on the list (meaning 42 other states have lower property taxes), just a little higher than our friends in DC, which comes in last as having the highest property taxes. Meanwhile, our clients in Delaware are quite happy to be in a state that is listed as #4 on the list of lowest property taxes.
The Tax Foundation has released its 2022 property tax index map of the United States, shown above. The index is evaluated by state and local taxes on real and personal property, net worth, and asset transfers.
Certainly there are many other factors to consider when deciding what state to retire in, including income taxes (many states don't tax Social Security income and many other states provide some type of tax relief for other retirement income), cost of living, and overall life satisfaction. The more palm trees the better as far as I'm concerned.