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Tennessee ranks high as a tax-friendly state

Your retirement is approaching quickly, and you're eager to move past your days of working a 9-to-5 job. If you're planning to retire and leave an inheritance to your children or loved ones in your estate plan, you may be looking for the best place to live to maximize the inheritance and protect it against taxation.

A 2019 list of the most tax-friendly states for retirees has been released on Nov. 5, which helps give people a better idea of inheritance-friendly states. Interestingly enough, Tennessee is among the top 10 on this list.

Tennessee is a top-ranking state for retirees

Tennessee ranks in at No. 6 on the list of tax-friendly states for retirees. There are no state or inheritance taxes in the state, so heirs won't have to worry about taxation at the state level.

Retirement will be easier in Tennessee, too. Residents of this state don't pay taxes on Social Security benefits, distributions from retirement plans or pensions. While there is a state income tax of 2%, if you have an annual income of $37,000 or less, ($68,000 for joint filers), then you won't have to pay it. This state income tax is expected to be eliminated by 2021.

While there are many benefits to living in Tennessee, remember that sales taxes will be a little higher. Though that won't necessarily affect your estate, you will be affected if you live in the state. The state has a 9.47% average combined local and state sales tax rate, and groceries are also subject to taxes at a rate of 4%.

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