STATES THAT DON’T TAX PENSIONS OR SOCIAL SECURITY INCOME ALABAMA The median property owner in Alabama paid just $383 in property taxes in 2008. Alabama’s state sales tax rate, 4%, is also below average. ALASKA Alaska is the only state with no state income tax and no state sales tax. However, property taxes here are higher than in many other parts of the country, costing the median family $2,377 in 2008. Plus, it has mosquitoes that have driven people insane in the brief summers and the winters are long, dark and below O FLORIDA Permanent summer isn’t the only perk of a Florida retirement. There is no state income tax in the sunshine state. The state sales tax in 6% and homeowners paid a median of $1,860 in property taxes in 2008. Homeowners Insurance runs higher. MISSISSIPPI Property taxes are generally low in this southern state, costing the median Mississippi homeowner just $468 in 2008. But shoppers should watch out for the 7% state sales tax. NEVADA Although it’s best known for entertainment and gambling, Nevada should also be recognized as one of seven states with no state income tax. Property taxes cost the median state resident $1,714 in 2008 and the state sales tax is 6.85 percent. NEW HAMPHIRE The only form of income New Hampshire taxes is dividend and interest income. The granite state also has no sales tax. Property taxes, however, are among the highest in the country. PENNSYLVANIA Both Social Security and pension income are exempt from tax in Pennsylvania. But property taxes ran the median household $2,207 in 2008 and the sales tax rate is 6 percent. SOUTH DAKOTA South Dakota is another income tax-free state and the sales tax is below average at 4%. The median homeowner paid $1,560 for property taxes in 2008. TENNESSEE Dividends and interest are the only forms of income that Tennessee taxes. Property taxes cost the median family $924 in 2008. The sales tax rate is an above-average 7%. TEXAS There is no income tax in Texas, but the state raises revenue in other ways. Property taxes cost the median family $2,232 in 2008. The state sales tax rate is 6.25%. WASHINGTON Washington state won’t tax your income, but it will tax your property. The median homeowner paid $2,595 in property taxes in 2008. Residents also pay a sales tax rate of 6.5 percent. WYOMING This mountainous state levies no income tax and has a low sales tax of 4%. For all of the state’s scenic beauty, property taxes cost the median family $1,012 in 2008 BEST OF THE BEST: ALABAMA FLORIDA SOUTH DAKOTA WYOMING CLOSE FINISHERS: (only because of their sales tax) MISSISSIPPI NEVADA TENNESSEE TEXAS Just a little FYI.