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My DH and I have saved religiously all our lives for our upcoming retirement.
We want to retire to a State which will not drain us of our hard-earned money due to it's tax structure. In particular, that State's tax laws on investments and income from investments.
Does anyone know which are the best States to reside in when it comes to avoiding the tax penalty levied upon investments or tax penalties levied upon the income from ones investments?
Perhaps you should consider shifting a portion of your investment portfolio into tax shelters.
We did this, back when 'capital gains' taxes were much higher, and we observed that we were paying 1/3 of our profit on federal taxes.
Getting out from the 'capital gains' category and into investments that can provide sheltering of my other income sources, allowed us to reduce our federal taxes to zero.
I do understand that each state structures it's income tax system differently, however generally most states do appear to base their systems first on what the Federal tax system is doing. If you get your Federal tax liability down to zero, then few states will tax you anything.
We moved to Maine in our retirement. Maine's is not the best state for income taxes. However by following the general guidelines of the Federal IRS tax system, and conforming our portfolio so that we do not have any Federal tax liability, we do not have any state tax liability either.
It remains my understanding that as such, I could move to any state, and file there, and pretty much maintain the same tax liability with each state.
Your results may vary.
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