Retirement calls for a shift in financial strategy. Many of our clients at Deep Blue Financial, hailing from Northbrook, IL, often express interest in states that offer more tax-friendly retirement conditions, hence the frequent questions about the “best states for tax-free retirement.” In response, let’s explore a comparative analysis of Northbrook, IL, and the popular retirement haven—Florida.
Taxation Scenario: Northbrook IL to Florida
When seeking the “best states for tax-free retirement,” it’s vital to understand the respective state tax structures. While Illinois enforces a flat income tax rate of 4.95%[^1^], it does not tax retirement income like Social Security and IRA withdrawals[^2^]. This aspect might lend some comfort to our Northbrook, IL, neighbors.
Florida emerges as a shining contender. The state levies no income tax[^3^], a decisive factor attracting many to its sun-kissed coastline post-retirement.
[^1^]: [Tax Foundation](https://taxfoundation.org/state/illinois/)
[^2^]: [Illinois Department of Revenue](https://www2.illinois.gov/rev/questionsandanswers/Pages/369.aspx)
[^3^]: [U.S. News & World Report](https://www.usnews.com/news/best-states/rankings
Property Taxes and Cost of Living: Northbrook vs. the Best States for Tax-Free Retirement
Moving beyond income taxes, property taxes form a significant part of the cost of living—key in identifying the “best state .” Illinois residents, including those in Northbrook, IL, face one of the highest property tax rates in the U.S[^1^].
On the flip side, Florida, especially retiree-friendly areas like Naples or Sarasota, boasts lower property taxes[^3^]. These savings, paired with a generally more cost-effective lifestyle, accentuate its appeal on the “best states for tax-free retirement” leaderboard. Nevertheless, costs can vary significantly between different Florida cities.
Life Quality and Other Best States for Tax-Free Retirement
Finding the “best states for tax-free retirement” goes beyond just financials; it’s also about the quality of life. Northbrook, IL, offers the charm of community, familiarity, and proximity to family. Florida, meanwhile, delivers sunny weather, scenic beaches, and a vibrant senior lifestyle, solidifying its position as one of the “best states for tax-free retirement.”
Other than Florida, Nevada, and Tennessee also rank high given their friendly tax policies and affordable living costs[^4^].
Choosing from the “best states” is a highly personal decision. And at Deep Blue Financial, we are here to guide you through this journey, always keeping your unique circumstances in mind.
Adam Faust, Founder and Chief Investment Officer
Deep Blue Financial LLC, Northbrook IL
[^4^]: [Journal of Accountancy](https://www.journalofaccountancy.com/issues/2018/may/state-tax-law-changes.html)