In retirement, when every single dollar of income counts, moving to a tax-friendly state – a place where you'll get the most after-tax income possible – makes a good deal of financial sense.
But the most tax-friendly state for you and your household will depend on your sources of income and how states tax that income, be it Social Security, earned income, a traditional defined benefit pension plan, income from assets in IRAs, Roth IRAs and taxable investment accounts, or some other type of income.
What's more, you'll have to determine how state and local sales tax (especially if plan on being a big spender in retirement), state and local property taxes (some state and local governments offer exemptions), and state estate taxes affect your family finances as well.
You want to look at the big picture," Rocky Mengle, a senior state tax analyst at Wolters Kluwer.
You also want to understand the current state tax treatments of retirement benefits, which can be a key step in deciding where to establish new, post-career roots, according to a recent Wolters Kluwer report. Read Deciding Where to Retire: Finding a Tax-friendly State to Call Home.