3 States With Some Of The Worst Taxes For Retirees Are In New England

Retirees often worry about stretching their retirement dollars, and one strategy is to avoid living in states with a massive tax burden. Based on the relative tax burdens published by SeniorLiving.org, three of the top five are in New England: Vermont at No. 2, Connecticut at No. 4, and Rhode Island at No. 5.

Vermont has a relative tax burden of 10.73%, and it's one of the states that tax Social Security income. For example, for a couple filing jointly, the Social Security tax exemption only applies in full to an adjusted gross income (AGI) of $65,000 or less before getting reduced. AGI at or above $75,000 is fully taxed. Other retirement earnings come with tax exemptions only on the first $10,000. On top of this, Vermont state tax rates span from 3.35% to 8.75%, falling into the higher end of the range compared to other states. Average property taxes, meanwhile, are $1,908 for every $100,000 of property value, and the sales tax rate comes in at 6% — the 17th highest in the nation.

Plus, according to World Population Review, costs of living in Vermont are 13.6% higher than the national average, with housing costs a whopping 29.9% higher and utilities costing 13.3% more. The value of an average home in Vermont, according to Zillow, is $400,274 in June 2026 — in contrast with the national average of $370,320. Vermont also has limited healthcare options, and the costs are 12.9% above the national average.

Connecticut has a 9.99% relative tax burden. While all Social Security benefit recipients qualify for a tax exemption, joint filers must have an income of $100,000 or less to get the full exemption. For other filers, the benchmark is $75,000. Retirees who have paid into the Teachers' Retirement System can receive a 50% exemption regardless of the AGI, and military retirees and those getting tier I and II railroad benefits receive a full tax exemption.

Average property taxes in Connecticut are even higher than in Vermont: $2,114 per $100,000 of assessed value. The sales tax rate is 6.35%, the 12th highest in the country. Connecticut costs of living are 12.7% above than the national average, with housing costs 20% higher and utilities an eyewatering 36.4 higher. Zillow lists the average housing value in June 2026 at $447,447, more than $77,000 above the national average. Moreover, healthcare costs come in at 11.4% above the national average.

Local taxes vary between jurisdictions in the state, and Bridgeport is one of the U.S. cities with the highest property tax burdens. Using data from the U.S. Census Bureau 1-Year American Community Survey for 2024, SmartAsset lists this city as the second nationwide for property tax burden, based on the ratio of median annual property taxes to homeowner household income. On average, 7.4% of a household's income goes to property taxes, with an average annual bill of $7,187. 

Life in Rhode Island can also present financial challenges for retirees, with a relative tax burden of 9.84% in the state. Broken down, Social Security benefits and retirement plans come with tax exemptions up to certain benchmarks. Couples making $133,500 or less can qualify for the state's Social Security Modification. If a filer receives a military pension, they can qualify for a full tax exemption.

Average property taxes come in at $1,723 per $100,000 of assessed value. Plus, the sales tax is 7%, tied for the second-highest rate in the country. To add to financial challenges, the average home value in the Ocean State exceeds half a million dollars at $509,691, per Zillow, and utility costs are 36.4% above than the national average. As relative relief, healthcare costs are only 1.7% above the average.

LivingCost.org, using a proprietary calculator, ranks 18 cities in Rhode Island based on their costs of living. The highest two are Newport, at $3,210, and South Kingston, at $2,840 monthly; the two most cost-effective are Pawtucket, at $2,350, and Lincoln, at $2,422.