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Policies concerning the growing population of seniors age 65 and older are an important challenge across the United States. According to SeniorLiving.org, approximately 47 million seniors reside in the United States, with that number expected to double by 2060.

Governments increasingly create tax exemptions and other incentives that essentially target seniors because seniors hold pivotal socio-economic and political roles in communities. However, policymakers must craft balanced policies that cater to all age demographics, ensuring that incentives geared toward seniors leave sufficient revenues for other budget areas, such as education.

A recent policy brief by the Center for State and Local Finance (CSLF) examines the determinants of how and where seniors decide to live, the influence of senior tax exemptions on their decisions, and the role of governments in creating equitable policies for seniors and other demographic groups.

Various factors affect seniors’ decisions on where to live: warmer climate areas, proximity to relatives or caregivers, affordable housing and tax rates, among others. While researchers recognize the impact of tax policies in seniors’ decisions, studies indicate that taxes on seniors must be dramatically reduced to act as a significant incentive.

Assessing whether exemptions for seniors are worth the cost to the community, CSLF’s brief discusses some trade-offs that state and local governments must weigh when deciding which tax incentives to offer. For example, seniors tend to have more property wealth—a significant tax revenue source for state and local governments—than younger age groups, and property exemptions for seniors may result in fewer resources for other public services. Beyond financial benefits, tax exemptions provide non-financial payoffs, like promoting psychological health, to seniors that positively impact the jurisdictions of government decisionmakers.

Ultimately, the brief suggests that governments should at least consider alternative ways of attracting seniors, like promoting community amenities, that eliminate losses but equitably serve all members of the community.

Beyond this brief, CSLF regularly publishes reports on tax expenditures and state and local tax policy, such as Local Tax Incentives: Examples from Metropolitan Counties and New Normal? The Declining Relative Importance of State Taxes.

Since 2014, CSLF has connected policymakers, practitioners and academics in public finance through innovative policy research and consulting, as well as premier executive education for state and local leaders.

Learn more about CSLF’s research on various aspects of government policy here: cslf.gsu.edu/research/.

Explore CSLF’s popular training courses here: cslf.gsu.edu/executive-education-public-finance/.

Submitted by:
Erin E. Oakley
Planning and Resource Manager
Public Finance Research Cluster
Center for State and Local Finance | Fiscal Research Center | International Center for Public Policy
Andrew Young School of Policy Studies | Georgia State University