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June 2011

10 Tax-Friendly States For Retirees 2011

#4 KENTUCKY

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State Income Tax: 2%-6%
State Sales Tax: 6%
Estate Tax/Inheritance Tax: No/Yes

The home of the Kentucky Derby is a good bet for retirees. It exempts Social Security benefits from state income taxes, and it allows residents to exclude up to $41,110 per person in retirement income from a wide variety of sources, including public and private pensions and annuities. Personal income-tax rates range from 2% to 6%. A 6% sales tax is imposed at the state level only. Homeowners 65 and older qualify for a homestead provision that exempts part of the value of their property from state taxes. The Bluegrass State has an inheritance tax, but immediate family members are exempt.