Top 10 U.S. States That Have the Highest Sales Taxes

TENNESSEE

Overall Rating for Taxes on Retirees: Tax-friendly

State Sales Tax: 7% state levy. Localities can add up to 2.75%, with an average combined rate of 9.46%, according to the Tax Foundation. Groceries are taxed at 4% by the state, plus whatever local rate is in effect. Local taxes are limited, though: Only the first $1,600 of any item is taxable.

Income Tax Range: There’s no state income tax, so salaries, wages, Social Security benefits, IRA distributions and pension income are not taxed. But Tennessee does have the Hall Tax, which taxes dividends and some interest at 4% (in 2017). The first $1,250 in taxable income for individuals ($2,500 for joint filers) is exempt. The rate for the Hall Tax is set to decline annually by one percentage point until it is phased out entirely by 2021.

Taxes on Social Security: Benefits are not taxed.