A dozen cities with top-notch services, plenty to do, and a tax-friendly climate that lets retirees hang on to more of their money. When it comes to choosing a retirement destination, the big challenge is whittling down the possibilities. One critical factor to consider: how much of a bite local taxes will take out of your nest egg. This year we (Money Magazine) went in search of the tax-friendliest small cities in the country—places big enough to have the amenities that retirees prize, such as access to great health care and recreation, but still affordable and compact enough to be manageable. Starting with states that have the lowest overall tax burdens, we zeroed in on locales that offer breaks on income, Social Security, pension, estate, and other taxes. These 12—a winner and runner-up in each region of the country—rose to the top.
Best in the Southeast: Hollywood. Florida• In the 1920s developer Joseph Young arrived in Florida with a vision of turning the pine forests and marshland 20 miles north of Miami into a “dream city,” with wide boulevards, grand hotels, and a promenade stretching along the Atlantic Ocean. A devastating hurricane and the Great Depression were major setbacks for Young, who died in 1934, but the foundation was laid for the place he called Hollywood. Between 1955 and 1975, the population grew from 23,000 to more than 120,000. Mid-century beach bungalows and ocean-view condos from that era continue to attract new buyers. “It’s the location, the style, the lifestyle, the beach, the architecture— all contribute to Hollywood’s appeal,” says Lloyd Feinberg, a real estate agent and lifelong local resident.