Retiree Tax Traps: 15 States Where Per-Person Tax Burdens Are Over the National Average

"Where you live often determines just how much of your hard-earned money over a lifetime of work can stay in your pocket. This is especially true for those retiring on fixed incomes, as every dollar matters. According to the latest economic data from the US Census Bureau, the average per capita state and local tax burden is $7,109. Unfortunately, this number masks enormous variation, as some states can collect more than 2x this amount while others collect less than half."

"Per-capita tax collections measure how much money state and local governments are actually "extracting" from each resident on average. This number differs from tax rates or tax burden calculations because it shows real dollars leaving a very real bank account. For retirees, this metric captures the comprehensive cost of living in a particular state from a tax perspective. A state with high property taxes and low income taxes might look attractive until you realize you'll pay those property taxes every year, regardless of your income."

"Maine just barely crosses the $7,109 average threshold at $7,216 per capita, but it does, and as a result, its tax structure is a challenge for retirees. The state's income tax reaches 7.15% on relatively modest incomes as the top bracket begins at just $58,050 for single filers. It also fully taxes 401(k) and IRA withdrawals. Social Security is exempt, but property taxes are among the highest in the nation as a percentage of home value."

State and local governments collect an average per-capita tax of $7,109, but individual state collections vary widely, sometimes exceeding twice the average or falling below half. Per-capita tax collections represent the actual dollars leaving residents' bank accounts and capture the comprehensive tax-related cost of living in a state. Retirees on fixed incomes feel these effects acutely because annual taxes like property levies can persist regardless of income. Differences in per-capita collections can add up to tens of thousands of dollars over a multi-decade retirement. Maine averages $7,216 per capita, imposes a 7.15% top income tax, fully taxes 401(k) and IRA withdrawals, and has high property taxes as a share of home value.

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