Some States Reduce Tax Breaks For Older Residents

For decades, state governments have been generous with [tax breaks they give older residents], perhaps because older Americans tend to show up at the polls to vote. But mired in budget deficits, some states are starting to limit or even rescind tax exemptions for these residents—and experts say others may follow.

"It was easy to offer these breaks when senior citizens weren't such a big and growing portion of the population," says Karen Conway, an economics professor at the University of New Hampshire. But because retirees pay, on average, only half the state income tax of working families with comparable incomes, she adds, the breaks "may no longer be tenable."

For retirees contemplating relocating to a state with a lower tax burden, the trend highlights an emerging risk: The retiree tax exemptions on the books today may be gone tomorrow.