Reduce your retirement tax bills.
Retirees can help their savings last longer by moving to a place with lower taxes. These 13 states don’t tax Social Security or pension income. However, they have very different property and sales tax rates, which should also be taken into consideration, according to data from Wolters Kluwer Tax & Accounting, the Tax Foundation and the U.S. Census Bureau. Check out these low tax places to retire.
The state of Alabama doesn’t tax Social Security benefits or traditional pension payments. Property owners in Alabama paid a median of just $558 in real estate taxes in 2017. The state sales tax rate is also a relatively low 4 percent, but there may be additional local sales taxes in some areas of the state.
Alaska is the only state with no state income tax and no state sales tax. However, property taxes can be high. Homeowners paid a median of $3,117 for real estate taxes in 2017.
Year-round warm weather isn’t the only perk of retirement in Florida. The state doesn’t levy an income tax. Real estate taxes were a median of $1,752 across the state in 2017. The state sales tax rate is 6 percent.
The state of Illinois allows retiree residents to subtract their Social Security income from their adjusted gross income. Income from federally qualified pension plans and IRAs is also generally exempt from state tax. But real estate taxes are high, costing homeowners a median of $4,157 in 2017. Shoppers also pay a 6.25 percent sales tax on many purchases.
Pension and annuity payments and income from Keogh plans and IRAs are generally exempt from state tax in Mississippi, and income from Social Security is also not subject to taxation. Median real estate taxes were just $879 in 2017. However, Mississippi has a relatively high state sales tax rate of 7 percent.
The casinos and nightlife could be what draws you to Nevada, but you might stay for the low tax rates. Nevada doesn’t have a state income tax. The median real estate tax bill was $1,489 in 2017. The state sales tax rate is 6.85 percent.
The only forms of income New Hampshire taxes are dividends and interest. There is also no state sales tax. Property taxes, however, are among the highest in the country. Homeowners paid a median of $5,388 for real estate taxes in 2017.
Social Security benefits are not included in taxable income in the state of Pennsylvania. Distributions from 401(k)s and similar types of workplace retirement accounts and IRA withdrawals taken after age 59 1/2 are also generally exempt from state income tax. But retirees will have to pay a 6 percent sales tax on their purchases. The median property tax bill was $2,691 in 2017.
South Dakota is another state that doesn’t have an income tax. Property owners paid a median of $2,012 for real estate taxes. There’s also a state sales tax of 4.5 percent.
Dividends and interest are the only forms of income that are taxable in Tennessee, and taxpayers age 65 or older with low incomes are exempt. But watch out for the 7 percent sales tax. Homeowners also paid a median of $1,120 in real estate taxes.
There is no state income tax in Texas, but the state raises revenue in other ways. Property owners faced a median of $2,775 in real estate taxes in 2017. There’s also a 6.25 percent sales tax applied to many purchases……..Read more>>