ARBOR: Florida is a comparative tax haven for retirees

Staff Writer
The Destin Log

“Pennies in a stream … ski trails on a mountainside… Moonlight in Vermont.” “Moonlight in Vermont”…lyrics and music by John Blackburn and Karl Suessdor, covered by Willie Nelson on “Stardust”

If you’re anything like me, you love those articles entitled “The Best 10 Places to Retire in America.” I read about the charming retail shops, the cultural activities and continuing education opportunities, and dream about a perfect retirement. I imagine walking the beaches of Nantucket Sound in Massachusetts. Or attending tailgate parties in The Grove at Ole Miss in Oxford, Miss. Or strolling through the quaint downtown area of a small Iowa farm town, where the air is clean, folks are friendly and everybody knows your name.

There is a flip side, though. recently reprinted an article from entitled, ironically, “Ten of the Worst States to Retire In.” Top Retirements considered state income taxes, estate taxes and taxes on Social Security and pension benefits; the cost of living; the accessibility and quality of medical care; and recreational opportunities and natural beauty.

Consider New Jersey, the home of the famous television family, the Sopranos. The state maintains the highest property taxes in the nation. It also has the highest estate tax, with an exclusion beginning at $675,000. It boasts one of the highest marginal tax rates (8.97 percent) on incomes over $500,000. Throw in the fifth highest cost of living in the U.S., and it’s a wonder that Tony and Carmela remained as long as they did. 

Forget, also, my home state of Illinois. Why? The Land of Lincoln is second only to New Jersey in property tax rates, and there’s an estate tax. Illinois has the nation’s fifth highest gas tax. And Illinois is wrestling with a hugely underfunded state pension plan.

Vermont is one of the most picturesque places in America. The changing leaves amidst the rolling, verdant Green Mountains are a visual delight. But only for a short-term visitor. Vermont has high property taxes. There’s a high marginal tax rate of 8.95 percent (on incomes over $405,100). And it has the ninth highest cost of living among the 50 states. 

“Many states exempt some or all … pensions from state income taxation,” explains But “five states allow no exemption for pensions of any kind: California, Connecticut, Nebraska, Rhode Island and Vermont.” That means, for instance, that a military pension is taxed.

Speaking of the Ocean State, Rhode Island has the sixth highest cost of living and the second highest estate tax (starts on estates over $965,000).

Meanwhile, in Florida, we pay no state income tax.  There’s no estate tax. And there’s no state tax on Social Security benefits or pensions. The cost of living is comparatively decent. And medical facilities are often plentiful, owing in many cases, to our large numbers of retirees. 

Margaret R. McDowell, ChFC, AIF, a syndicated economic columnist, chartered financial consultant and accredited investment fiduciary, is the founder of Arbor Wealth Management, LLC, (850-608-6121 —, a “fee-only” and fiduciary registered investment advisory firm located near Sandestin. This column should not be considered personalized investment advice and provides no assurance that any specific strategy or investment will be suitable or profitable for an investor.