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"...having a total annual income derived from any and all sources of $37,000 or less, or any persons who file a joint return and either spouse is 65 years of age or older having a total annual joint income derived from any and all sources of not more than $68,000 may qualify for a total exemption from income tax."
So, yes, Social Security, pension, etc. are included in the $37,000/$68,000 threshold. Thus, if your total income from all sources is less than $37,000/$68,000 you stop and sign the affidavit. Done!
If your total income is greater than the above, then you complete the Tax Computation in which you will use the Gross Taxable Income and the $1250/2500 exemptions for single and married taxpayers.
Clearly the Gross Taxable Income is limited to dividends, money market funds, etc. It does NOT include pensions, annuities, IRAs, etc.
"...having a total annual income derived from any and all sources of $37,000 or less, or any persons who file a joint return and either spouse is 65 years of age or older having a total annual joint income derived from any and all sources of not more than $68,000 may qualify for a total exemption from income tax."
So, yes, Social Security, pension, etc. are included in the $37,000/$68,000 threshold. Thus, if your total income from all sources is less than $37,000/$68,000 you stop and sign the affidavit. Done!
If your total income is greater than the above, then you complete the Tax Computation in which you will use the Gross Taxable Income and the $1250/2500 exemptions for single and married taxpayers.
Clearly the Gross Taxable Income is limited to dividends, money market funds, etc. It does NOT include pensions, annuities, IRAs, etc.
Are my federal government pension income and my IRA distributions subject to Tennessee’s Hall income tax?
Tennessee has no individual income tax on wages, employer sponsored retirement income or most other forms of income. Because the Tennessee income tax does not apply to salaries and wages, items of income such as Social Security and pension income are also not subject to state tax. This also includes distributions from accounts like IRAs and 401(k) plans. In addition, distributions from annuities are never subject to Tennessee tax.
Not everyone retiring to TN is doing so just because of the cost of living. If that was the case, there are areas of the Midwest quite a bit cheaper than most of Tennessee, but those places aren't attracting retirees to the same extent because they aren't as mild, and don't have the natural beauty that TN does. Eastern TN has excellent lakes and rivers for hiking/boating/fishing/hunting, and excellent outdoor activities for most of the year. There are frequently posts on the TN forum from retirees looking for mountain/river views, a lake house, etc. A lot of folks from up north think TN is all like Gatlinburg, which is far from the truth, and want a piece of some of "pioneer lifestyle," for lack of a better term. Taxes usually aren't at the top of the list.
It's a tough place to make a living, but if you're bringing in money from some rich and prestigious area, your quality of life in TN can be high.
I only have one friend who lives in Tennessee - in Chattanooga - and he is not wealthy/retired. So he doesn't have to worry about the Hall Tax. I obviously can't speak for all people in general in Tennessee.
I agree that there are some pretty nice looking areas in what I call the "mid-south". But they do get cold - and they do have ice storms (which I find worse than snow storms in terms of causing power outages). Sometimes snow storms as well. To call these climates "mild" is wrong IMO. "Mild" IMO is never having ice or snow storms (or perhaps only having a once a decade storm during a freakish weather event). Much less ice storms where you lose power on a regular basis - once or more times every winter. Note that many of these places are really hot in the summer too.
A lot of these mid-south areas are also off the beaten path when it comes to the availability of goods/services. May be more important to some people than others. My husband spent months living with his late father when his late mother was dying driving his father back and forth to medical facilities in Raleigh/Durham NC - medical care that wasn't available where my inlaws lived. In the Pinehurst area. Big friggin' PITA IMO.
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I would say that Orlando is going to be considerably more expensive overall than most anywhere in TN, aside from the Nashville city limits and Williamson County. Orlando is going to have much, much more expensive insurance costs than anywhere in TN, property prices are generally higher and rising faster, etc.
I honestly know zero about Orlando real estate prices. And it is a big very differentiated market when it comes to low end versus high end and stuff in the middle.
And think about what your "it's a tough place to make a living" means. It means - no matter what your destination is - you'll be moving from something like a nice NE suburb to a town in the middle south where most locals are poor - or dirt poor. And you - the retiree with a nice middle class income - will be at the top of the heap compared to the locals. That would be a very uncomfortable situation for me (I honestly have hated what I saw in places like the Pinehurst area - poor locals versus retired people from NJ trying to live on the cheap). I prefer to live in a more normal community. Where younger people can earn decent incomes. Robyn
But they do get cold - and they do have ice storms (which I find worse than snow storms in terms of causing power outages). Sometimes snow storms as well. To call these climates "mild" is wrong IMO.
Totally spot on. We have at least a couple of "events" per winter where EVERYTHING shuts down due to ice or snow. And schools can be closed for days on end. Not to mention the many many days of grey, dreary bleck. I hate winter here (Nashville).
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but if you're bringing in money from some rich and prestigious area, your quality of life in TN can be high
This is true, especially if you bought in Nashville prior to the huge run up of home prices.
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I prefer to live in a more normal community.
Bingo. It would be a fate worse than death TO ME to live in some little town (TN or elsewhere). YVMV
One of the things I am looking forward to the most in retiring to Tennessee is being able to lord it over all the local poor and dirt poor people. If they are real nice to me, I may even introduce them to 'lectricity so they don't have to sit in the dark on the front porch whittling and spitting.
That is another point that MUST be emphasized. Property tax rates vary substantially between counties. The counties in Eastern Tennessee have very low property tax rates. The counties around Nashville tend to be very high. Not quite Chicago high but about 25% less than what I was paying in Illinois.
When I was doing a financial model while planning retirement, I found that in OUR circumstances, moving to Kentucky would yield a lower overall tax situation.
Funny, in my situation Kentucky and Alabama both came up lower for overall taxes, but we liked TN best for other reasons
Totally spot on. We have at least a couple of "events" per winter where EVERYTHING shuts down due to ice or snow. And schools can be closed for days on end. Not to mention the many many days of grey, dreary bleck. I hate winter here (Nashville)...
One consideration is whether the HVAC system in a house is up to the weather. My inlaws' house in NC had the same kind of "heat pump" system you'll find in most of Florida - and no way it could keep the house warm on colder winter days. During one Christmas trip - the temp in the house wouldn't get above 60. Admittedly - that was a very bad storm - the storm of '89 - but we nearly froze to death. Robyn
One consideration is whether the HVAC system in a house is up to the weather. My inlaws' house in NC had the same kind of "heat pump" system you'll find in most of Florida - and no way it could keep the house warm on colder winter days. During one Christmas trip - the temp in the house wouldn't get above 60. Admittedly - that was a very bad storm - the storm of '89 - but we nearly froze to death. Robyn
That is so true. I can tell you that should we build a house in TN we are going to have two heating systems in the house. The primary will be the heat pump that is prevalent there and the other is going to be a forced hot water system running through the floor. It is called a radiant heating system where the entire floor of the house warms up the house. That is what we have in our house minus the heat pump which I wish we had for those quick spurts of cold weather.
Sure, TN isn't FL warm in the winter, but it's still warmer than a lot of the major population centers around the country. While TN's winters may be closer in temperature to say Illinois than Florida, that 10-15 degrees that it's warmer in TN is often the difference between a consistent snowpack throughout the winter and snow free ground. Also, it's not that uncommon for temperatures to be in the 50s-60s Dec-Feb. Those temperatures are rarer the farther north you go.
There are only a few places in the country one can reliably avoid winter altogether - most FL, coastal CA, south Texas, and some parts of the southwest. I would personally prefer living around Tampa or Jacksonville to TN - summers are not much different (but last longer), and you mostly avoid the couple of months of winter, but a lot of folks don't mind the relatively subdued winters and more temperate summers, especially in eastern TN.
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Originally Posted by N.Cal
Totally spot on. We have at least a couple of "events" per winter where EVERYTHING shuts down due to ice or snow. And schools can be closed for days on end. Not to mention the many many days of grey, dreary bleck. I hate winter here (Nashville).
This is true, especially if you bought in Nashville prior to the huge run up of home prices.
Bingo. It would be a fate worse than death TO ME to live in some little town (TN or elsewhere). YVMV
Most everywhere in TN is not even close to as expensive as the trendy parts of Nashville. Yeah, things do shut down for little to nothing, but the roads are almost always passable (rare to get a blizzard or truly dangerous conditions to last awhile) for a retiree, what difference does it make if schools are shut down?
Generally the retirees I've known who came to TN, and posters on this board as well, are not looking to move into the heart of Nashville and Memphis. They're often wanting something smaller and slower paced than that. I don't want to live in a tiny town either (can't really these days if you have to work) but for a lot of people from major cities, it's what they seem to be looking for. Right or wrong, that idyllic, quaint, Mayberry version of Tennessee a lot of northerners seem to have doesn't exist. It has problems and benefits like everywhere else.
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Originally Posted by Robyn55
A lot of these mid-south areas are also off the beaten path when it comes to the availability of goods/services. May be more important to some people than others. My husband spent months living with his late father when his late mother was dying driving his father back and forth to medical facilities in Raleigh/Durham NC - medical care that wasn't available where my inlaws lived. In the Pinehurst area. Big friggin' PITA IMO.
And think about what your "it's a tough place to make a living" means. It means - no matter what your destination is - you'll be moving from something like a nice NE suburb to a town in the middle south where most locals are poor - or dirt poor. And you - the retiree with a nice middle class income - will be at the top of the heap compared to the locals. That would be a very uncomfortable situation for me (I honestly have hated what I saw in places like the Pinehurst area - poor locals versus retired people from NJ trying to live on the cheap). I prefer to live in a more normal community. Where younger people can earn decent incomes. Robyn
Agreed the lack of retail selection can be problematic, but that goes for small towns and rural areas everywhere. It's not just a Tennessee or Southern issue. Even ten years ago, I was able to order most everything I wanted/needed that I couldn't find locally online. Sophisticated medical needs in upper east TN often end up at Vanderbilt or Duke if they can't be treated in Knoxville. It is a problem, but if you're looking at lightly populated areas, it comes with the territory. If you need that elite level of medical care, move close to a major urban center.
Frankly, once you get outside the major metros, a lot of native Tennesseans and Southerners aren't fond of northern retirees. I was in Asheville, NC last spring and met a retired couple who from NYC. They were fawning over how cheap the place was and how a lot of things "just aren't like they were back home." Yeah, I guess it is cheap for them, but it's not cheap at all for the locals who are mostly working $10-$15/hr service jobs (all you'll find in most of the small town South), while rents and property prices have been bid up by a crush of northern retirees and remote workers not dependent upon the local labor market. Also, if you're going into a culture substantially different than your own (I can barely think of two more unlike cultures than rural Appalachian and urban northerners), then tell everyone all your complaints, of course the locals are going to be ticked off by it. They prattled on for awhile and I told them to just back "up nawth" since it's so much better.
Last edited by Serious Conversation; 03-24-2016 at 09:46 AM..
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