Retirees Beware: 6 States That Collect Over $9,000 in Taxes Every Year

State and local taxes are headline news right now, with New York City Mayor Zohran Mamdani proposing a 9.9% property tax hike to cover a budget shortfall.

New York City’s proposal of new taxes highlights the fact that residents of states pay both state and local taxes. So we looked at what the overall tax burden is beyond Federal taxes in each state.

We used data from the Tax Foundation and applied our own weighting to detail which five states have the highest tax burdens both in absolute terms and adjusted for income levels.

6. Massachusetts

• State and Local Tax Collections Per Capita: 6th
• Per Capita Collection: $9,341
• Adjusted for Income Levels: 15th

Massachusetts taxes most retirement income, including pensions and distributions from IRAs and 401(k)s. Property taxes in desirable suburban areas often exceed $10,000 annually on modest homes. Social Security is exempt, but nearly everything else is fair game.

When adjusted for income levels, Massachusetts’ tax burden improves, ranking 15th in the country.

5. Connecticut

• State and Local Tax Collections Per Capita: 3rd
• Per Capita Collection: $9,781
• Adjusted for Income Levels: 12th

Connecticut’s burden comes from some of the nation’s highest property taxes and a progressive income tax topping out at 6.99%. Property taxes average over $6,000 annually statewide, and in wealthier towns they can double. Social Security is exempt for most retirees, but pension income and retirement account distributions are taxed.

Like Massachusetts, Connecticut’s taxes don’t look quite as onerous when adjusting for income; the state has the 12th highest tax burden.

4. New Jersey

• State and Local Tax Collections Per Capita: 5th
• Per Capita Collection: $9,781
• Adjusted for Income Levels: 9th

New Jersey combines crushing property taxes with a progressive income tax reaching 10.75%. Property bills in many counties exceed $10,000 annually. Social Security is exempt, but 401(k) and IRA withdrawals face full state income tax. Sales taxes add another layer on goods and services retirees rely on daily.

3. California

• State and Local Tax Collections Per Capita: 2nd
• Per Capita Collection: $10,319
• Adjusted for Income Levels: 6th

California’s top marginal income tax rate of 13.3% is the highest in the nation. The state taxes all retirement income except Social Security, meaning pension distributions, IRA withdrawals, and investment income all face steep rates. Sales taxes in some counties exceed 10%, hitting everyday expenses hard.

2. Hawaii

• State and Local Tax Collections Per Capita: 4th
• Per Capita Collection: $9,503
• Adjusted for Income Levels: 2nd

While California has higher taxes per capita in total, its tax collections are lower when adjusting for income. Hawaii has an estate tax that ranges from 10% to 20% after an exemption, which could make it a questionable location for retirees whose assets exceed certain levels.

1. New York

• State and Local Tax Collections Per Capita: 1st
• Per Capita Collection: $12,685
• Adjusted for Income Levels: 1st

New York carries the highest combined state and local tax burden. The state income tax reaches 10.9%, and New York City layers its own income tax on top. Property taxes in suburban counties like Westchester and Nassau routinely exceed $15,000 annually. The state taxes most retirement income, including pensions and IRA distributions, with only a partial exemption for some pension income.

Worst of all for New York residents concerned about increasing tax loads, it looks like New York City will continue increasing property tax rates in the years ahead.

Other States With High Tax Collections

• New Mexico has the 4th-highest state and local collections when adjusting for income
• North Dakota comes in 5th when adjusted for income and 7th in total collections per capita
• Washington State historically ranked lower, but a wave of new proposals and increased state spending could see it climb this list rapidly in the coming years
• Illinois ranks 9th in state and local taxes adjusted for income and 10th in overall tax collections per capita

The Geographic Decision Retirees Often Overlook

Tax-efficient retirement planning means understanding how your state treats your income streams, not just how your portfolio is structured. States like Florida, Texas, and Nevada have no income tax and don’t tax retirement distributions.

A retiree drawing $80,000 annually from retirement accounts who moves from New York to Florida could save over $8,000 per year in state income taxes alone. Factor in property tax differences, and the gap compounds quickly. Running the numbers on where you’ll live is one of the most financially meaningful decisions you can make before retiring.