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The JULY, 2002 issue of Kiplinger's Personal Finance included an informative article entitled Where You Stay = What You Pay. This article offers a state by state snapshot of tax-friendly retirement locations. THE FOLLOWING ARE EXCERPTS:

Adding It All Up...

Our map is a snapshot of what the total annual state and local tax burden -- income, property and sales taxes -- would be in the capital of each state and in the nation's capital for a retired husband and wife who are both age 65. We assume an annual income of $60,000, of which $24,000 comes from social security benefits, $21,000 from a private company pension, $10,000 from IRA distributions, and $5,000 from taxable interest and dividends. Our hypothetical couple also own their home outright, so there's no mortgage interest to pay or to deduct on their tax returns.

The Winners . . .


Okay, we won't keep you in suspense any longer. It's no secret that corporations love to set up shop in tax-friendly Delaware. Now retirees might want to do the same. Our hypothetical retired couple in Dover, DE don't spend a dime on sales taxes (there are none). Social security benefits are spared the state levy, and up to $12,500 -- per person -- of other retirement income is tax-free. Our couple's only tax obligation is a $543 property-tax bill on their $133,000 home, making the First State first on our list of tax-friendly locations for retirees.