Retiring in Illinois vs. Missouri: Which Saves You More Money?

Speaker 1: (00:00)
If you are retiring in the St. Louis area and you're located here where we are, you have a decision to make, and that is, do you retire in Missouri or do you retire in Illinois? And is it possible that making the wrong decision could cost you hundreds of thousands of dollars, maybe even millions? We're gonna talk about that

Speaker 2: (00:23)
Today.

Speaker 1: (00:32)
Hello, everyone. My name's Joe Allaria. This is the Retirement Power Hour podcast, episode 45. Today, we are talking about living in the Metro East in Illinois versus living in Missouri, and more importantly, more specifically, where should you retire? What makes more sense in retirement? Either here on the east side in Illinois or over in Missouri? And obviously, we have clients in both places and h- have a lot of these conversations. And there may be other parts of the country that have similar questions. What makes more sense? Today, we're gonna score both areas and declare a winner at the end of the episode on what fits best for retirees, but there is a twist, so stay tuned. But before we jump in, I wanna mention you can go to retirementpowerhourpodcast.com. That is our website. That is where you can view past shows, give us a review or click work with me.

Speaker 1: (01:26)
That's where you can schedule a call with a member of our team or myself, and we can work through your questions and help you in any way that we can. So retirementpowerhourpodcast.com, go there and find everything that you need. So let's jump into today's episode and the different categories that we're gonna score and rank and declare a winner in each category and an overall winner, the Metro East Illinois versus St. Louis Metro area in Missouri. So let's start with retirement income tax. As you may or may not know, in Illinois, we do not have any taxes on retirement income. So that means your social security benefits, your IRA distribution, any Roth conversions that you may have, your pension income, none of that has any tax at the state level. On the other hand, Missouri also doesn't tax social security and most pension income is also excluded, but IRA distributions are taxable.

Speaker 1: (02:29)
Uh, 401 withdrawals still taxable. So in the area of retirement income tax, state income tax, Illinois gets a slight edge in that category. So Illinois is off to a great start. Let's move on to the next category and that is estate tax. And this is where the tables are gonna turn quite a bit. So Missouri is gonna get the nod here. Illinois currently does impose an estate tax. That means if you pass away and you have over a certain amount of money, then your estate is gonna owe tax to the state of Illinois. So we talked about income tax already. This is not income tax. This is estate tax. And the number specifically for Illinois is $4 million. If you're an individual and you pass away with over $4 million, you are gonna owe estate taxes. And keep in mind that doesn't just include your investments.

Speaker 1: (03:28)
It includes anything in your estate, which would also include life insurance benefits or life insurance proceeds that are paid at your death. That you, a life insurance policy that you own, the proceeds will be part of your estate. Missouri does not have an estate tax. Like many states out there does not have an estate tax. And so in that category, Missouri is gonna get the nods. So so far we've got one-to-one. Let's move on to the next category. Number three, personal property tax. So Missouri does impose a personal property tax. What does that mean? Vehicles, boats, RVs, Missouri assigns an annual tax. Illinois does not have a personal property tax. So in that regard, Illinois is gonna get the nod. But moving on to the next category number four, we're talking about real estate property tax, and that is where now Missouri is gonna get the nod there because Illinois is among the nation's highest when it comes to real estate tax.

Speaker 1: (04:32)
A rough average for real estate tax in Illinois, somewhere from two to 2.3%. Again, usually ranking about second in the country in terms of real estate taxes, whereas Missouri averages about 0.9 to 1% on property taxes. So we've got so far, Illinois is a plus on retirement income and the fact that there's no personal property tax, but Missouri gets the nod when it comes to real estate tax and no estate tax at all in Missouri. So, so far it's two to two. Let's take a look at the next category and that is gas and fuel tax. Well, I don't need to have any information in front of me to tell you because I live in Illinois that gas is cheaper in Missouri as well as gas tax is lower in Missouri than Illinois. And so Missouri is getting the nod there. Missouri's actually historically among the lowest in these categories.

Speaker 1: (05:30)
So just for those day-to-day living expenses, if you're driving a decent amount, especially in today's world, as I record this right now, gas prices have been up so far in 2026 quite a bit. Missouri gets the nod on gas, uh, and fuel tax. Okay, number six, talking about sales tax. Missouri does get the nod here when it comes to sales tax as on average sales tax is gonna be lower Missouri, but it largely depends what area you're talking about, what local area in each state that you're talking about because that does make a difference. So the base rate in Missouri is 4.225 versus Illinois' base rate of 6.25%. But when you look at local areas like the Metro East, like in Edwardsville, you might land somewhere between 8% and 9%. And there are many suburban communities in the St. Louis area that might put you somewhere seven to 8%.

Speaker 1: (06:24)
So the gap, maybe not quite as big as what those base rates reflect, but still Missouri gets the nod when it comes to sales tax. And so moving on to the final category, and that is home prices. And really here, it's tough to declare a winner because it so largely depends where are you talking about? Here in the Metro East, home prices vary when you talk about maybe between Edwardsville or O'Fallon or Belleville or Alton or Collinsville. The median is varied quite a bit as it is in the Missouri suburbs. So here we would give a tie in terms of home prices because it does depend on what community you wanna live in. For apples to apples type of comparison, uh, Missouri communities typically are similar to or higher than in the Metro East. And you do have some pockets of the Metro East that, that can be much more affordable in those higher in Missouri suburbs though, it can also be much more expensive than, than here in the Metro East.

Speaker 1: (07:21)
Prices in the city versus prices in St. Louis County also gonna impact the, the discussion here. So we'll give a tie on home prices overall. So on sheer numbers, Missouri for Illinois two plus the tie. So Missouri gets the nod in more categories, but is it necessarily the best? Well, it, it really depends. And we'll, we'll talk about, this is where the twist comes into play here. Even though Missouri wins more boxes, the two biggest line items are pulling in opposite directions. So while you're living that retirement income, if you're someone who's pulling very large IRA withdrawals, Illinois is gonna give you a huge benefit versus Missouri. However, if you're someone with large taxable accounts and someone who with, with over $4 million or over eight million if you're a married couple in Illinois, you could potentially have a large estate bill. And these are conversations that we've had with our clients in some cases where there's only so many things that you can do to protect against that the higher up you go and maybe a move right across the river is one of the best and easiest things to consider when you're talking about protecting against estate taxes.

Speaker 1: (08:34)
So where do you fall? Are you more of a, uh, I would say more of a typical retiree, one and a half million dollars, let's say in IRAs, modest home, no estate tax exposure, you're not gonna be paying estate tax. In that case, Illinois is likely more competitive despite losing in all the categories that we talked about. And that's sort of the odd dichotomy between these two areas. It's very expensive to work and to die in Illinois, but to be retired in Illinois, it's not that expensive. So we've got more information in an article about retiring in the Metro East on our firm's website at carsonAllaria.com if you'd like to read that. You can also, again, go to retirementpowerhourpodcast.com to speak with us about this or about any other questions you might have. Again, retirementpowerhourpodcast.com. You can click work with me. If you're on our firm's website at carsonAllaria.com, you can click contact us and set up a call and we can talk to you that way too.

Speaker 1: (09:32)
With that, I wanna thank you for watching this episode of the Retirement Power Hour, where we help listeners invest wiser and retire better. See you next time.

Speaker 3: (09:41)
Thank you for listening to the Retirement Power Hour Podcast. All material discussed on this podcast is for educational purposes only and should not be construed as individual tax, legal, or investment advice. Investing involves risk of loss and investors should be prepared to bear potential losses. Past performance may not be indicative of future results. Joe Allaria is an investment advisor representative of Carson Allaria Wealth Management, a registered investment advisory firm. Information discussed on this podcast may be derived from third parties that are believed to be reliable, but Carson Allaria Wealth Management does not control or guarantee the accuracy or timeliness of such information and disclaims all liability for damages resulting from such sources. Any references to third parties are provided as a convenience and do not constitute an endorsement.