A New York-based company has ranked Old Town as one of Maine’s best places for people to retire, at least in terms of taxes.

SmartAsset, which uses financial modeling to help people make financial decisions, recently did a study of communities across the country aimed to find the areas with the most tax-friendly policies for retirees. To do that they looked at how the tax policies of each city would impact a retiree with a $50,000 income. The hypothetical retiree was getting $15,000 from Social Security benefits, $10,000 from a private pension, $15,000 from retirement savings like a 401(k) or IRA and $10,000 in wages.

To calculate the expected income tax this person would pay in each location SmartAsset applied deductions and exemptions. This included the standard deduction, personal exemption and deductions for each specific type of retirement income. SmartAsset then calculated how much this person would pay in income tax at the federal, state, county and local levels.

For each location Smart Asset determined whether or not Social Security income was taxable. Using Census data they also identified the median property taxes paid by homeowners in each place. Smart Asset then ranked and indexed the cities by income tax paid and property tax paid. Finally, they created an overall index weighted to best capture the taxes that most affect retirees. SmartAsset gave a 3x weighting to income tax, 2x weighting to Social Security income taxability and 1x weighting to property taxes paid.

In Maine, with a uniform state tax and no staxes on Social Security income, the only factor that really made a difference was property taxes paid. When all the numbers were crunched, Skowhegan came out on top of the list, with a retirement tax friendliness index of 68.05; in a tightly clustered top ten, Old Town was sixth, at 66.70.

The communities SmartAsset listed in the top ten for Maine included Skowhegan, Caribou, Waterville, Presque Isle, Augusta, Old Town, Ellsworth, Gardiner, Belfast, and Bangor. The complete study may be found at https://smartasset.com/retirement/maine-retirement-taxes#maine.


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