Say, for example, you decide to move to a state that doesn't collect income tax -- Alaska, Florida, Nevada, South Dakota, Texas, Washington, Wyoming, Tennessee or New Hampshire. In general, that's a sound way to tax-proof your retirement income. But if you move to a couple of these locales, you might find you've outsmarted yourself.

"New Hampshire and Tennessee have no general wage income tax, but do tax stock and bond income, a prime source of income for many retirees," says John Logan, senior tax analyst with CCH Tax and Accounting. "So one of the main considerations is what type of income will you be relying on in retirement."

It works the other way, too. A state that might look unappealing at first tax glance could, in fact, be a tax-smart retirement move.

"New York is considered a big tax state for good reason," says Scharin. "But it also has exclusions for certain types of retirement income. The pension income of government employees -- teachers, postal workers, fire department employees -- is not taxed by New York state, so although they're living in a high-tax state, these people are exempt from state tax."

That's why, says Scharin, "it's kind of misleading to look at a table that says you're in a high-tax state, because it depends."

Don't forget other state taxes
Illinois, too, exempts most federally qualified retirement-plan income and offers very broad exceptions from taxation for other retirement income, say Logan, who's based in CCH's Riverwoods, Ill., office.

Coupled with the state's low income tax rate, 3 percent of federal adjusted-gross income, Illinois might be a tempting place to retire. But when you start spending your income-tax-exempt retirement money, look out. The state and many of its local taxing jurisdictions will get their piece of it through the sales tax.

"The amount of the tax varies considerably," says Logan. "You can't just look at the state sales tax rate. When you factor in local taxes, in Illinois, some combined sales taxes are at 9 percent."

It can go that high because, in part, there are so many local taxing jurisdictions. The 2005 Illinois Sales Tax Rate Reference Manual says that, along with the state's general 6.25 percent sales tax, the department of revenue also might collect combinations of one or more of the following locally imposed taxes: mass transit tax, water commission tax, municipal home rule tax, municipal non-home rule tax, county home rule tax, county public safety or transportation tax, metro-east park and recreation district tax and business district tax.

Then there's the issue of exactly what goods and services are taxed when purchased. Most states exempt prescription drugs from tax, a relief for many retirees, but other items, even food and over-the-counter medications, are taxed in some states. If you plan to spend your retirement cooking gourmet meals for friends, make sure the local grocery won't be collecting tax on more of your pension check than you had planned.