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Many people think that Tennessee doesn't have a state income tax.* It does - a tax that falls disproportionately on seniors who have investment income. It's called the Hall Tax:
The Hall Tax is a relic from the 1920s. Named for the state senator who championed it, this levy collects 6% of all investment income Tennesseans earn from mutual funds, dividends, and bonds.
Since I don't live in Tennessee - and have zero interest in moving there - I really don't know the particulars of this tax. Best to investigate in terms of your own personal situation if you're planning a retirement move to Tennessee. Robyn
*There are only 7 states without an income tax: Alaska - Florida - Nevada - South Dakota - Texas - Washington and Wyoming. If you spend part of the year in a state with an income tax - and part in a state without one - I suspect the taxing states all have different rules about taxing the income of part-time residents.
Tennessee’s Senior Citizen Tax Is Ripe for Retirement
Many people think that Tennessee doesn't have a state income tax.* It does - a tax that falls disproportionately on seniors who have investment income. It's called the Hall Tax:
ince I don't live in Tennessee - and have zero interest in moving there - I really don't know the particulars of this tax. Best to investigate in terms of your own personal situation if you're planning a retirement move to Tennessee. Robyn
*There are only 7 states without an income tax: Alaska - Florida - Nevada - South Dakota - Texas - Washington and Wyoming. If you spend part of the year in a state with an income tax - and part in a state without one - I suspect the taxing states all have different rules about taxing the income of part-time residents.
This is pretty common knowledge. People are surprised because they have been told that Tennessee has no income tax.
What is more troublesome in Tennessee is the sales tax. The state rate is 7.0% and municipalities can add another 2.75% to this. The average rate is 9.45% statewide. And unlike most states, Tennessee does NOT exempt food and other necessities.
How is this different than any other state that taxes dividends and interest income?
The difference is that Tennessee does not tax regular (earned) income such as pensions, wages, self-employment income, etc. For a person whose income consists almost entirely of dividends and/or interest, then Tennessee would offer no particular tax advantage. If memory serves New Hampshire is the same.
Just be careful when doing your planning. A no income tax state can look pretty good, as Texas does on paper. But, if you own an expensive home, your tax bill can still be pretty hefty, as Texas property taxes are pretty high. Remember, the state doesn't run on prayers and good wishes, it takes money and they get it from somewhere. Each person has to look at their particular situation, as there is no one size fits all formula.
EVERY state has to have taxes of some kind to run...you need to get the full picture of all of them - income tax, sales tax, property tax and any exemptions that could impact your situation.
Many people think that Tennessee doesn't have a state income tax.* It does - a tax that falls disproportionately on seniors who have investment income. It's called the Hall Tax:
The Hall Tax is a relic from the 1920s. Named for the state senator who championed it, this levy collects 6% of all investment income Tennesseans earn from mutual funds, dividends, and bonds.
Since I don't live in Tennessee - and have zero interest in moving there - I really don't know the particulars of this tax. Best to investigate in terms of your own personal situation if you're planning a retirement move to Tennessee. Robyn
*There are only 7 states without an income tax: Alaska - Florida - Nevada - South Dakota - Texas - Washington and Wyoming. If you spend part of the year in a state with an income tax - and part in a state without one - I suspect the taxing states all have different rules about taxing the income of part-time residents.
As Escort Rider said the same goes for NH. The thing you are not pointing out is if those mutual funds are designated as retirement accounts (IRA, 401k) they are not taxed. If you have just investments that have not been given the tax treatment of designated retirement accounts then you will pay income as regular income.
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Originally Posted by reneeh63
EVERY state has to have taxes of some kind to run...you need to get the full picture of all of them - income tax, sales tax, property tax and any exemptions that could impact your situation.
That is absolutely true. What I do not like are those fees that you cannot avoid. I would much prefer a fair tax such as a sales tax because everyone pays the same. If I choose not to pay tax then I just don't buy anything. It is pretty simple. Also I would certainly prefer a state that does not gouge its property owners for exorbitant taxes on property and never re-evaluate it to reflect the current market condition. I can tell you that maybe back a number of years ago my house might have fetched close to 500k in a sale but now I should not have to pay the tax of property whose value was nearly halved. That is especially true for a retiree. My only thankfulness is that in less than a year or so I will have my mortgage paid off as my wife enters her retirement. I am on my last week of work.
So in response to Robyn yes it is true and we all need to look and understand the situations we find ourselves in. In moving it isn't just taxes that you use to determine a place's suitability. It is a number of factors. Take all of them and run them up against your current situation and then see if a move is warranted or if just downsizing in place is a better option.
As Escort Rider said the same goes for NH. The thing you are not pointing out is if those mutual funds are designated as retirement accounts (IRA, 401k) they are not taxed. If you have just investments that have not been given the tax treatment of designated retirement accounts then you will pay income as regular income.
So when you take distributions from IRAs - like RMDs - they're not taxed?
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...I can tell you that maybe back a number of years ago my house might have fetched close to 500k in a sale but now I should not have to pay the tax of property whose value was nearly halved...
Don't you have a right to contest/appeal your property appraisal? Robyn
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