Great places for re­tirees to set­tle

These are the 5 most tax-friendly states

Orlando Sentinel - - SUCCESS - By Rocky Men­gle and San­dra Block Rocky Men­gle is tax edi­tor at Ki­ and San­dra Block is a se­nior edi­tor at Ki­plinger's Per­sonal Fi­nance magazine. Send your ques­tions and com­ments to mon­ey­[email protected]­ And for more on this and sim­i­lar money

Dur­ing your work­ing years, you may not have a lot of choice about where you live. Once you re­tire, the world is your oys­ter. But as you con­sider your op­tions, don't ig­nore the im­pact of state taxes on your bot­tom line.

Here are the five most tax-friendly states for re­tirees. Re­sults are based on the es­ti­mated state and lo­cal tax bur­den in each state for a re­tired cou­ple with a mix­ture of in­come from So­cial Se­cu­rity, an IRA, a pri­vate pen­sion, in­ter­est and div­i­dends, and cap­i­tal gains. We also gave them a $400,000 home (with a small mort­gage) and $10,000 in de­ductible med­i­cal ex­penses.

In­come thresh­olds are for 2019 and will change in states that in­dex them to in­fla­tion. For a com­plete break­down of state taxes on re­tirees, go to Ki­ links/re­tiree­taxmap. Wy­oming

Thanks to Wy­oming's rev­enues from oil and min­eral rights, res­i­dents shoul­der the low­est over­all state and lo­cal tax bur­den in the United States, ac­cord­ing to our cal­cu­la­tions. There are no in­come taxes, and sales taxes are low, too. You won't pay high prop­erty taxes to own a home on the range, ei­ther. For a $400,000 place in Wy­oming, the statewide av­er­age an­nual prop­erty tax bill is $2,540, the ninthlow­est amount in the coun­try.


There is no state in­come tax in Ne­vada, so you can cash in your re­tire­ment plans and col­lect So­cial Se­cu­rity checks with­out wor­ry­ing about a big state tax bill. The av­er­age an­nual prop­erty tax bill on a $400,000 home is about $2,771 per year, con­sid­er­ably be­low the na­tional av­er­age. How­ever, sales taxes are on the high side. The av­er­age com­bined state and lo­cal sales tax rate is the 14th-high­est in the coun­try.


This is one of a hand­ful of states with no sales tax, and prop­erty taxes are low, too. The av­er­age an­nual prop­erty tax bill in Delaware on a $400,000 home is just $2,414, the sixth-low­est amount in the na­tion. Res­i­dents age 60 and older can ex­clude up to $12,500 of pen­sion and other re­tire­ment in­come, in­clud­ing div­i­dends and in­ter­est, cap­i­tal gains, and IRA and 401(k) dis­tri­bu­tions.


So­cial Se­cu­rity ben­e­fits and most pen­sions are ex­empt from state taxes, and prop­erty taxes are mod­est. Av­er­age an­nual prop­erty tax bill on a $400,000 home here runs about $1,729 per year, the sec­ond-low­est amount in the coun­try. How­ever, Alabama's av­er­age com­bined state and lo­cal sales tax rate is the fifth high­est in the na­tion. Alabama is also one of the few states that taxes gro­ceries.

South Carolina

Taxpayers who are 65 or older can ex­clude up to $10,000 of re­tire­ment in­come from state taxes. Seniors can also deduct $15,000 of other tax­able in­come ($30,000 for joint fil­ers). Plus, in 2020, vet­er­ans who are age 65 or older can ex­clude up to $30,000 of in­come from a mil­i­tary re­tire­ment plan (up to $17,500 for vet­er­ans younger than 65). The statewide av­er­age prop­erty tax on a $400,000 home is only $2,404, the fourth-low­est amount in the coun­try. Sales taxes are on the high side in South Carolina. There's a 6% statewide levy, and lo­cal gov­ern­ments can add as much as 3%.


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