Planning your retirement is an important life decision. After all, you have worked hard for it, so you want to make the most of the opportunity. Deciding on all the personal preferences you want in your retired life comes first—golf courses, fitness centers, the beach—but once that is figured out it is time to move on to the less thrilling, but equally important side of things. Money. You want to make sure you are getting the most for your dollars, so moving to a state with lower taxes or states with no retirement income tax at all is something to look into.
Benefits of Tax Friendly States
Alaska is the only state without state income tax or sales tax. As appealing as that sounds, most retirees are not looking to move to a place with true winters. Instead, they are looking to move to a place that is warmer, with less intimidating winters. Despite the attractive tax offer in Alaska, other states are becoming more tax friendly and are changing tax rates and exemptions to attract “amenity migrants.” Texas and Florida take the lead tax-wise as states with no retirement income tax at all, and Tennessee follows closely, only taxing dividend and interest income. Both Georgia and North Carolina have made significant changes to their taxes recently, angling their tax benefits to attract more retirees who want to live in tax friendly states. Most states specifically exempt Social Security and pensions from taxes, which is an attractive feature for retirees who receive a bulk of their income through those means. Below is a table offering a quick look at several most friendly tax states and how they compare to each other tax-wise.
|State||Income Tax||Sales Tax||Social Security|
|Tennessee||None (only dividends and interest)||7%||Exempt|
|Virginia||2-5.75% (Statewide local rate of 1%)||4%||Exempt|
Communities from Tax Friendly States Will Be at Upcoming Expo
The majority of the states listed above are warm weather states, which is a big factor in deciding where to retire. People want warm weather. But based on their income tax, these states are also favorable when it comes down to your money, and how much of it you will have in order to enjoy your new living environment. However, this is just a small sample of information on tax friendly states. At the ideal-LIVING Resort and Retirement Expo, there will be 8, tax friendly states present (NC, VA, DE, GA, SC, TN, MD, FL), ready to answer your tax questions more in depth. But it is not just tax information at the Expo. It is an in depth look the places you are considering retiring to, and the communities within. It is an experience you do not want to miss out on when seeking out where to retire!