Categorized | Living, Retirement, Taxes

Tax-Friendly States For Retirees

Where should you retire? Many people will stay in their homes or they will move to retirement communities while others will move onto warmer states and places that tend to cater to seniors. Finding a place to retire to is important and you must also understand the tax consequences of moving to a new state and how much you will pay for your retirement income. There are several states and about 10 of which offer low taxes on retirees. These tax breaks you will have include exemption from Social Security benefits along with state income taxes as well. It is a great way to save money on the hard-earned retirement that you worked so hard for your entire life.

Wyoming, Florida, and Texas are some of the states that will offer you great tax benefits for retirees. It is important to consider your decision with your family members as they may not wish for you to move far away as it could make it difficult for them to see you. Narrow your search down to several states that you feel comfortable moving to and then look up information about their local taxes. Here are 7 states that will not impose income tax on retirees:

  • Alaska
  • Florida
  • Nevada
  • Wyoming
  • South Dakota
  • Texas
  • New Hampshire
  • Tennessee
  • Washington

These states may give you breaks on income but you may have other taxes that you need to worry about like steep property taxes or higher sales taxes that you must watch out for. Check with your state to see what type of tax breaks they offer to retirees. Most of them will exclude income tax for your Social Security benefits or pensions and this will help you to save money during retirement. If you have a pension there are some states that will charge taxes on them and about 9 states will not tax on pensions.

Property taxes are something that may be a big headache to you if you have a lot of land. Retirees that have several real estate investments may choose to sell them off in order to avoid dealing with the higher property taxes they face in their state. Retirees that have low incomes should consider moving to a state that will offer a property tax relief program. There are 40 states that offer homestead exemptions and this can easily reduce the property tax bill you are forced to pay.

Oregon, Alaska, Delaware, Montana, and New Hampshire are all states that do not charge sales tax or have a very low sales tax. If you are concerned about sales tax, moving to one of these states may be able to help you find relief.

Your income amount will have a big impact on which state you should choose for your retirement. It is also important to look at the specific tax issues that you face and to figure out which state will be able to save you the most money in the long run.

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