Retirement plans? Don't forget about state, local taxes.

Retirement plans should include an appraisal of the impact of state and local taxes. Levies on income, benefits, property, purchases, and estate can make a difference in your retirement plans. 

Warm weather makes Florida a popular retirement destination – but a lack of taxes on retirement benefits and estates makes it a smart destination too.

“As more and more baby boomers are reaching retirement age, they’ll have many factors to consider in choosing where to live in retirement,” said CCH, an international accounting company, in a report last week. “Taxes are one of the things they should consider when determining the costs of different areas they are looking at.”

According to CCH, how much retirees pay in taxes can vary wildly depending on which state they chose to retire in. They found that five particular types of taxes can add up the most…

1. State taxes on benefits from retirement plans

Seven states don’t tax individual income at all and therefore don’t tax retirement income either…

• Alaska
• Florida
• Nevada
• South Dakota
• Texas
• Washington
• Wyoming

Two states only tax income from dividends and interest: New Hampshire and Tennessee. So while retirees in these states won’t have to pay taxes on Social Security or pension benefits, they will still owe some taxes to the state if they own dividend-paying stocks or bonds, for example.

n the other 41 states and in Washington, D.C., taxes on Social Security and pension benefits vary. Some states exempt pension benefits or Social Security benefits while other states tax both. For details, check out CCH’s state-by-state breakdown of taxes on pension and Social Security benefits.

2. State income taxes

There are 41 states that tax income, and if you live or plan to retire in one of them, how much of your retirement benefits you could owe depends on that state’s tax rate.

Some states have a relatively low income tax rate across all brackets. The rate for even the highest tax bracket in Arizona, New Mexico, and North Dakota, for example, is less than 5 percent. Some states – for example, Indiana (3.4 percent) and Pennsylvania (3.07 percent) – have a relatively low flat tax rate.

But in other states, income tax is a double whammy: Not only is the tax rate for the highest bracket relatively high, the bar to qualify for the highest bracket is low. In Arkansas, for example, any filer earning $33,200/year pays the highest bracket’s rate of 7 percent. In Maine, couples earning $40,700 and single filers earning $20,350 pay the highest bracket’s rate of 8.5 percent.

For more details on your state or the one you’d like to retire in, check out the state-by-state income tax breakdowns from CCH and the Federation of Tax Administrators.

3. Sales tax

Five states don’t have a sales tax, according to the FTA: Alaska, Delaware, Montana, New Hampshire, and Oregon.

In the other 45 states, the rate varies from 2.9 percent (Colorado) to 7.25 percent (California) – and that’s after California lowered its rate from 8.25 last year.

What types of goods sales tax applies to also varies from state to state. In Hawaii and New Mexico, for example, doctor services are taxed. In South Dakota, accountant and attorney services are taxed. Other goods and services taxed in some states but not others include barber services, landscaping, prescriptions, clothing, and food.

For details, check out the FTA‘s state-by-state breakdown of sales tax rates, which also lists which states exempt food, prescriptions, and over-the-counter meds.

4. State and local property taxes

Because property taxes can be significant, CCH suggests learning not only an area’s current property tax rate, but also the history of how it has changed over time.

To learn more about a state or county, try this search engine formula: [state/county] + state/county property tax. That should lead you to the applicable revenue department’s website. Here’s Florida, for example.

While reading up on a state’s property tax rates, don’t forget to check for tax breaks too. Some states and local jurisdictions offer some form of property tax exemption, credit, abatement, deferral, refund, or other benefit to senior homeowners or renters.

5. State estate tax

Wealthier retirees must also consider the estate tax of the state they’d like to retire in. If that state does tax estates, find out both the tax rate and what size estate the tax applies to.

To learn more about a state, try this search engine formula: [state] + state estate tax. Again, that should lead you to the state revenue department’s website. Here’s Florida again – where the estate tax was eliminated in 2004.

If you’re preparing for retirement, you may also want to check out Is It Too Late for a Happy Retirement? and Can a Photograph Boost Your Retirement Plan?

– Karla Bowsher is a writer for Money Talks News, a consumer/personal finance TV news feature that airs in about 80 cities as well as around the Web. This column first appeared in Money Talk News.