Retiring in Pennsylvania vs. Florida

Look beyond the weather when deciding where you'll retire.

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Florida's warm, sunny days beckon, but Pennsylvania's blend of big cities and rural towns is also alluring. Each of these states has plenty to offer retirees. Of course, deciding where to retire requires looking past climate and determining where you can get the most out of your retirement savings and live the lifestyle you've dreamed about. While lists both Pennsylvania and Florida as tax-friendly states for retirees, each of these locales offers its own advantages and disadvantages for seniors looking to stretch retirement dollars.

Income Taxes

Retirees have long flocked to Florida because the Sunshine State charges no state income tax. In Pennsylvania, as of publication in October 2012, seniors who planned to work during retirement should expect to be taxed on those earnings at the state income tax rate of 3.07 percent. Pennsylvania does not tax Social Security benefits, pensions or distributions from retirement investment accounts.

Sales Tax

As of October 2012, both Florida and Pennsylvania charged state sales tax amounting to 6 percent of all purchases, though local and county-level taxes in Florida could bring this tax up to 7.5 percent in some areas. Pennsylvania excluded food, clothing, heating fuel and medications from sales tax, while Florida excluded only food and medications, as of October 2012.

Property Taxes

In Pennsylvania, property tax rates are set by counties and towns. As of October 2012, state laws set maximize property tax rates at $30 per $1,000 of home value. Widows over the age of 50 and any homeowner over the age of 65 may qualify for a property tax rebate of up to $650 in some counties. Property tax rates in Florida also vary by location, but the state offered a $50,000 homestead exemption for all residents, as of October 2012. That means that if your home is worth $100,000, the first $50,000 is exempt from taxation, and you will only be taxed on the remaining $50,000. Homeowners above the age of 65 may qualify for an additional $50,000 homestead exemption.

Inheritance and Estate Taxes

An absence of inheritance and estate taxes helps draw retirees to Florida. In Pennsylvania, inheritance taxes varied from 4.5 percent to 15 percent of the total value of assets inherited in October 2012. While Pennsylvania did not have an estate tax as of 2012, the state was planning to enact an estate tax starting in 2013, Kiplinger,com reported.

Cost of Living

The cost of living in Pennsylvania was slightly higher than the U.S. average in 2012, while the cost of living in Florida was slightly lower. That means retirement savings could stretch slightly further in Florida than in Pennsylvania. The median price of a house in Florida was $127,900 as of 2012, reports Sperling's Best In 2012, the median housing price in Pennsylvania was $150,400, according to Sperling's.