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As I've written before, my 2014 total California state income tax liability was about $3,500. My property taxes are low and I don't pay sales taxes on groceries. So if it only costs me $3,500 per year more to live in California, that is the bargain of the century and is well worth every penny.
Yes, I am aware that taxation is only part of the cost of living and I concede that the cost of living here as opposed to, say, Tennessee or Georgia, has more factors than just state income taxes. However, my point remains that living here is well worth every penny it costs.
All this agonizing about taxes seems strange to me. What about living where we will be happy? Of course there is nothing wrong with being informed about taxes for retirees - it would be silly to move somewhere only to get an unpleasant surprise about taxes. So links like the one in this thread are valuable and legitimate and I do not wish to denigrate them. It is the degree of agonizing which I don't understand.
I don't understand how Indiana is least tax friendly and Illinois is better. Everyone knows about the horrendous real estate taxes in IL. This doesn't seem right.
Illinois has a huge advantage since it does not tax retirement income!
For Indiana:
"IRAS & 401(K)S & PRIVATE PENSIONS
Taxable at ordinary income tax rates."
For Illinois:
"IRAS & 401(K)S & PRIVATE PENSIONS
Payouts are not taxed."
Food and groceries are taxed in Utah. The local sales taxes are growing in size as the population increases. My property taxes here are also growing as the population and desire to move here grows. In 17 years they've doubled.
They're about equivalent to that where we will move in California.
We also expect to have a greater income when we retire as we have lived well below our income here.
Good resource, but at a glance I noticed it wasn't complete for NY.
I live in NY state and there is an exemption for military service. Since I was in for 20+ years and during that time served while conflicts occurred, I am given additional property tax reductions.
In addition if you have a VA disability, depending upon the percentage, that also reduces your property tax.
Also agree quality of life is very important. We spend four months a year in FL and I don't care whether it is one of the best states for retirement, I could never live there full-time. There is a lot of crime for one thing, it is flat and HOT in April through October.
I can pay 2.8% on a lot of retirement income in AZ before I overcome the $5k per year in property taxes I left in IL. And I was living in the low rent district of the Chicago Suburbs. I had colleagues paying 2-3x that.
And if you structure your charitable contributions in AZ properly, you can offset most of your state tax liability.
As everyone is chiming in. There are lots of factors besides taxes to consider. Also even if taxes are high there are strategies to mitigate those taxes. CA is certainly a very nice state to live in. I can say that every state has good points and bad. You can make it anywhere if you are determined enough.
As everyone is chiming in. There are lots of factors besides taxes to consider. Also even if taxes are high there are strategies to mitigate those taxes. CA is certainly a very nice state to live in. I can say that every state has good points and bad. You can make it anywhere if you are determined enough.
California is a nice state to live in if you're either wealthy or illegal. That's why millions of middle class people here have moved to other states. I hope to soon be one of those.
California is a nice state to live in if you're either wealthy or illegal. That's why millions of middle class people here have moved to other states. I hope to soon be one of those.
I am middle class and legal, not even close to upper middle class; California is a nice state to live in for me. If you don't like California I have no quarrel with that, but what you wrote above is just pure nonsense.
Still it is a good list but, one other notable exception I think Submariner will chime in on that Maine is a "Not Tax Friendly" state. I would have put that in mixed as well. I could be wrong but may he can enlighten us.
I don't live far from Submariner. Having lived in Rhode Island, I find Maine to be much less burdensome for taxes than RI. He finds it better than CT. I pay less than $800 in property taxes on 33 acres; I believe he pays even less on 100 acres. Maine does have a state sales tax, but with NH next door, that is easy to skirt for large purchases. Maine's income tax is the only real issue I have.
Our vacation property in TN will be our official residence, for that very reason.
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