Estate tax/inheritance tax: yes/no

There are no exemptions for retirement income in the Green Mountain State, except for railroad retirement benefits (which are exempt in every state). Vermont exempts medical devices and prescription and nonprescription drugs from its 6 percent sales tax. But it imposes a 9 percent tax on prepared foods, restaurant meals and lodging, and a 10 percent tax on alcoholic beverages served in restaurants. The Tax Foundation lists Vermont’s property taxes among the 10 highest in the nation.

2. Minnesota

Income tax: 5.35 percent to 7.85 percent

Sales tax: 6.875 percent (cities and counties may add another 2.65 percent)

Estate tax/inheritance tax: none

Minnesota offers retirees cold comfort. Social Security income is taxed, and your pension is taxable regardless of where it was earned. Food, clothing, and prescription and nonprescription drugs are exempt from sales taxes. Some residents 65 and older who have income of $60,000 or less may defer a portion of their property tax, but this is not a tax-forgiveness program.

3. Nebraska

Income tax: 2.56 percent to 6.84 percent

Sales tax: 5.5 percent (localities may add another 1.5 percent)

Estate tax/inheritance tax: no/yes

No tax breaks for Social Security benefits or military pensions in the Cornhusker State. Real estate is assessed at 100 percent of fair market value. Residents 65 and older qualify for a homestead exemption on property taxes. Food and prescription drugs are exempt from state sales taxes. But Nebraska imposes an inheritance tax on all transfers of property and annuities.

4. Oregon

Income tax: 5 percent to 11 percent

Sales tax: none

Estate tax/inheritance tax: no/yes

The Beaver State shares with Hawaii the distinction of imposing the highest tax rate on personal income in the nation on taxable income of $250,000 or more. Oregon does not tax Social Security benefits, but that’s it on income-tax breaks for retirees. And Oregon’s inheritance tax even applies to intangible personal property such as investments and bank accounts.

5. California

Income tax: 1.25 percent to 9.55 percent

Sales tax: 7.25 percent (localities may add 2 percent)

Estate tax/inheritance tax: none

The Golden State has lost its luster. Social Security benefits are exempt from state income taxes, but all other forms of retirement income are fully taxed. California’s top income-tax rate kicks in at $46,767 of taxable income. Food and prescription drugs are exempt from sales tax. Real estate is taxed at 100 percent of assessed value, but total taxes can’t exceed 1 percent of the home’s value.

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