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Kiplinger: 10 Most Tax-Friendly States for Retirees

5. Georgia

State Income Tax: 1% to 6%

State Sales Tax: 4%

Estate Tax/Inheritance Tax: None/None

Georgia is doing its part to attract retirees to the Peach State with a sizable exemption for income taxes on retirement income. Taxpayers ages 62 to 64 can exclude up to $35,000 per person from state income taxes for a total of $70,000 per couple. Georgia residents who are 65 and older can exclude up to $65,000 of retirement income (or $130,000 per couple) from state income taxes in 2012. Retirement income is broadly defined as interest, dividends, capital gains, net income from rental property, pensions, annuities and up to $4,000 of earned income. Non-retirement income is taxed at a rate as high as 6%. The statewide sales tax is 4%, but local jurisdictions can add up to 4% of their own taxes. Food and prescription drugs are exempt. Property-tax rates are close to the national average, but higher than in many neighboring southern states.

(iStock)

More From Kiplinger:
Kiplinger’s State-by-State Guide to Retiree Taxes
10 Things You Must Know About Social Security
12 Smart Year-End Tax Moves for 2012



The opinions expressed are solely those of the author and do not necessarily reflect the views of Comcast.

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