HOUGHTON — Of the 10 most tax-friendly places in Michigan for retirees, only two Upper Peninsula cities made the list, according to Alyssa Annunziato, of the financial company SmartAsset.

SmartAsset, a New York financial technology company, released its sixth annual study on the “Places That Are Most Tax-friendly For Retirees.” SmartAsset analyzed sales, property, income, fuel and Social Security tax data to rank locations on how friendly they are for retirees. To equally compare the cities in our study, we looked at a hypothetical retiree who receives $50,000 in annual income.

Across the state, income tax totals $6,602, and sales tax paid, all things being equal, amounts to $911, and Social Security is not taxed.

According to the study, however, the city paying the lowest property tax in Michigan is paid in Temperance, at a tax rate of 1.27 percent. The highest property tax rate is in the city of Houghton, at 1.79 percent, while in Marquette, it is 1.40.

Fuel tax paid is another category listed, for which Houghton was the second lowest, at $223, while the highest was downstate South Monroe, at $403. Marquette, the only other Upper Peninsula city listed, came in at $404.

The study reveals that overall, Allegan ranked the lowest in the Retirement Tax Friendliness Index, at 61.15, while Houghton ranked second, at 61.63 percent. Marquette ranked 62.22, while the highest, St. Louis, is recorded at a whopping 63.91 percent.

To find the most tax friendly places for retirees, SmartAsset said in their analysis that their study analyzed how the tax policies of each city would impact a theoretical retiree with an annual income of $50,000.

The analysis assumes a retiree receiving $15,000 from Social Security benefits, $10,000 from a private pension, $10,000 in wages and $15,000 from a retirement savings account like a 401(k) or IRA.

To calculate the expected income tax this person would pay in each location, SmartAsset applied the relevant deductions and exemptions. This included the standard deduction; personal exemption; and deductions for each specific type of retirement income. They then calculated how much this person would pay in income tax at federal, state, county and local levels.

The group calculated the effective property tax rate by dividing median property tax paid by median home value for each city.

In order to determine sales tax burden, an estimate of 35% of take-home (after-tax) pay is spent on taxable goods. They multiplied the average sales tax rate for a city by the household income after subtracting income tax. This product is then multiplied by 35% to estimate the sales tax paid.

For fuel taxes, the study first distributed statewide vehicle miles traveled to the city level using the number of vehicles in each county. They then calculated miles driven per capita in each city. Using the nationwide average fuel economy, they stated, they calculated the average gallons of gas used per capita in each city and multiplied that by the fuel tax.

For each city they determined whether or not Social Security income was taxable.

Finally, they created an overall index weighted to best capture the taxes that most affect retirees. The income tax category made up 40% of the index, property taxes accounted for 30%, sales taxes 20% and fuel taxes 10%.