When planning retirement, you may immediately think of Florida or Texas as havens for retirees. After all, these sunny Southern states are income-tax free, which may sound appealing at first glance. However, upon closer inspection, it can often be most cost-effective to choose a state with an income tax, but one that offers retirees many exemptions. Cue the Commonwealth of Pennsylvania!
Did you know that Pennsylvania is one of only two states in the nation that exempts all retirement income from state tax? That’s one of the reasons Kiplinger ranked Pennsylvania #4 as a place to retire. Embracing its Quaker roots, Pennsylvania is one of the most generous states when it comes to offering 
income tax exclusions on a wide variety of retirement income. Pennsylvania does not tax Social Security benefits or any eligible public or private pension plan. Additionally, 401(k)s, IRAs, deferred-compensation plans or other retirement accounts are not taxed. While the state sales tax is 6%, food, clothing, textbooks, heating fuels, and prescription and nonprescription drugs are excluded. Another thing to keep in mind is property taxes. Texas, for example, was ranked 6th highest in the nation for property taxes, compared to Pennsylvania at 25th. These results may seem surprising if you’ve been thinking about leaving the Northeast, but states have to pay for their costs somehow. Often, it’s through higher sales or property taxes and few exemptions. For all these reasons, Pennsylvania is an extremely tax-friendly state and a prime location to consider for retirement.
In addition to heightened protection from taxation, Kiplinger points out that the Keystone State has reasonably priced housing for seniors. Also noteworthy is Kiplinger’s selection of Pittsburgh and State College as two of the most desirable locations for 55+ living in Pennsylvania– both locations offer Traditions of America communities.
For all those looking to the Northeast for retirement, Pennsylvania far surpasses any of its neighbors, including Maryland, New Jersey, Connecticut, and New York. Kiplinger ranked New York as fourth worst in the nation for retirement, and categorized New Jersey as “Least Friendly” for retirees. Good thing Pennsylvania is right around the corner! While flocking to year-round sun down South may be initially appealing, if you’re looking to stretch those retirement dollars Pennsylvania may be the winning bet.
By Molly McCarthy, Traditions of America Marketing
