• South Dakota allows federal retirees to get more value from their fixed incomes.South Dakota state contour against blurred USA flag image by Stasys Eidiejus from Fotolia.com
  
  Federal employees retire under one of two systems--Civil Service Retirement System or Federal Employee Retirement System. The amount of annual annuity that federal retirees receive is based on which system the employee retired under, the number of years worked, unused sick leave and any benefits the employees chose to carry over into retirement. South Dakota also offers some additional benefits to retirees.
  
  

No Income Tax

• South Dakota is one of a handful of states that don't have a personal income tax. This means that a federal retiree's annuity income will not have state income taxes withheld. Retirees retain a greater percentage of their income, which can mean a lot to a retiree on a fixed income.
  
  

Converting Unused Sick Time

• Federal retirees can receive credit for unused sick time when they retire. This may allow them to retire earlier or receive a greater amount of retirement income. Retirees with 2,087 hours of accrued sick time (one year) can increase their retirement income by 2 percent. Even if an employee does not have a full year of accrued sick time, credit is given for each whole month of accumulated time.
  
  

Cost-of-Living Adjustments

• Cost-of-living adjustment are made annually to federal retiree pay. According to FederalRetirement.net, "if the increase in the CPI is 2 percent or less, the cost-of-living adjustment is equal to the CPI increase. If the CPI increase is more than 2 percent but no more than 3 percent, the cost-of-living adjustment is 2 percent. If the CPI increase is more than 3 percent, the adjustment is 1 percent less than the CPI increase. The new amount is rounded down to the next whole dollar."
  
  

Property Taxes

• Federal retirees who are 65 or older in South Dakota can have their property taxes frozen or reduced depending on where they live in the state. Disabled veterans can have up to $100,000 of their property value exempt from taxes. South Dakota offers a property tax homestead tax exemptions that will delay the payment of property taxes on a retiree's property until it is sold, though the unpaid taxes and interest become a lien on the property.