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Basing something on the 'tax burden' is misleading. The total state revenue from all sources, divided by the population does give you a number. But that number does not mean that any specific person is paying that amount. Corporations also pay taxes, does that stop a person from retiring? No.
I live in the oldest state, the state with the highest percentage of retirees.
I pay no state income taxes because many pensions are exempted from taxes in this state.
This is the fifth home that I have owned, it is the largest home I have owned and it's property taxes are by far the lowest of all the previous homes I have owned. So to say that this state has 'high' property taxes is a pill that I can not swallow.
???
Yep. The information is pretty much meaningless. You have to take your own financial circumstances and plug them in state-by-state and town-by-town to see where you really stand. Most states don't tax Social Security. I expect to have a pretty large Roth balance that isn't taxed. If that's a big chunk of your retirement income, why would you care about state income tax rates? Housing costs and property tax rates vary wildly within a state. You can retire in a high COL state but not live in the metro area with the high housing prices that makes the state high COL. You can pick a town with a low property tax rate.
There's also what you 'get' for your tax dollars. My town has a ton of senior-oriented services. When I'm old and feeble, I'll likely have a bunch of years where I consume more in services than I pay in property taxes. Same for the state and state income & sales taxes.
Tennessee is cheap to live in, bottom line end of story. And, at least in the decent sized cities, QOL is great. Half of my in-laws from upstate NY are dying to move down here to save money among several other reasons.
Also, if people think lakes, valleys, hills, and the Smokey Mountains are ugly, well, they're crazy. But everyone is entitled to their opinion.
It's all relative. We live in Massachusetts and collect a federal pension thus we pay no state taxes. We also live in an area that shares high schools so our property taxes are manageable.
If Ohio is a low tax state, why does Vanguard offer a tax-exempt fund? They offer tax-exempt funds for MA, NJ, NY, CA, PA, and Ohio. What do they all have in common? States with a sizable population and a HIGH tax rate. You don't see anything for Texas or Florida, do you?
One of the major factors in moving my business from the Cleveland to the Chicago area in 2000 was that my marginal tax rate went down 7.5%. There were several other factors but that was a pretty significant one.
Most of the benefits you mention are not uncommon to most states. Most states don't have a personal property tax and a good many states do not tax food consumed off premises or medications.
And that does not include the higher property tax rates in Wayne Co. which are in the top 25% as a % of value in the nation.
Illinois personal income tax as of July 2017 goes from 3.75% to 4.95%. Corporate income tax, excluding S corporations, goes from 5.25% to 7%. Meanwhile, Ohio income tax rates have been gradually falling since 2005. I paid about 3.25% for 2017, plus another $100 in internet sales taxes.
While this does not exactly describe me, this is the profile I use when I compare tax rates across states:
$100,000 retirement income, with both income and expenditures greater than during working years.
House with 10 acres of property, total worth of $200,000, with annual property taxes of $3000.
$50,000 5000 pound SUV
$1 Million estate that goes to nephew.
Using this set of criteria, there are a lot of gotchas in other states. As an example, Kentucky has a substantial inheritance tax when the estate goes to a nephew. And while I can shield investment income in Ohio with tax-exempt municipal bonds, I cannot reduce the effects of high property and sales taxes if I move to a state without an income tax.
Last edited by mshultz; 02-26-2018 at 09:01 AM..
Reason: Redundant word, additional detail
this should be a retirement forum sticky - thanks for the information - always nice to compare state by state -
NO NO NO NO and NO!
This list does NOT refer to retirement income AT ALL.
VERY misleading.
Example: Georgia. This list says this:
Quote:
9. Georgia
Taxes paid as pct. of income: 9.1%
Income per capita: $42,159 (11th lowest)
Income tax collections per capita: $947 (25th highest)
Property tax collections per capita: $1,087 (20th lowest)
General sales tax collections per capita: $515 (8th lowest)
HOWEVER, for RETIREES, Georgia is very generous on exempting pensions from ALL sources for most retirees, excluding up to $65.000 in pension income to each retiree (both spouses individually).
Tennessee is cheap to live in, bottom line end of story. And, at least in the decent sized cities, QOL is great. Half of my in-laws from upstate NY are dying to move down here to save money among several other reasons.
Also, if people think lakes, valleys, hills, and the Smokey Mountains are ugly, well, they're crazy. But everyone is entitled to their opinion.
It's by no means expensive, but taxes are the cheapest thing about living here.
I pay no state income tax. I'm above average income for the area. We have a 9%+ sales tax, but I work close enough to Virginia that I do most of my shopping there. Tagging my car is about $30. Fees of any type are low.
With that said, I pay a lot more for some things than I did in Indianapolis. Car insurance was more than double for the same coverage through State Farm. That more than ate up the registration savings. Groceries are notably more expensive. Virtually any retail item here is more expensive due to a lack of competition unless you're going to Walmart. Housing is about the same price, but the quality of the local housing stock is poor.
If you're living in Farragut or Brentwood, you're going to have a much different perspective on QoL in TN vs. someone in a small town or rural area in the state.
Illinois personal income tax as of July 2017 goes from 3.75% to 4.95%. Corporate income tax, excluding S corporations, goes from 5.25% to 7%. Meanwhile, Ohio income tax rates have been gradually falling since 2005. I paid about 3.25% for 2017, plus another $100 in internet sales taxes..
I moved to Illinois in 2000 when the Ohio top marginal rate was 7.5% and the Illinois was 3%. I saved about 4% on the state tax rate and 3.5% on the avoidance of the punitive local income rates. That is over 7% savings that I was able to keep. Property tax rates were very similar.
If you're living in Farragut or Brentwood, you're going to have a much different perspective on QoL in TN vs. someone in a small town or rural area in the state.
Brentwood is tough. What do you do when your neighbor's Ferrari bashes into your Lamborghini?
Median household income there is pushing $150K. That part of the Nashville 'burbs in Williamson County totally spoiled my illusion of a state full of hillbillies. It's one of the most affluent places on the planet.
Brentwood is tough. What do you do when your neighbor's Ferrari bashes into your Lamborghini?
Median household income there is pushing $150K. That part of the Nashville 'burbs in Williamson County totally spoiled my illusion of a state full of hillbillies. It's one of the most affluent places on the planet.
Brentwood and Franklin are really the jewels of the entire state, aside from Belle Meade in Davidson County. It is a totally different world there. When I lived in Indiana, I lived in Hamilton County, which is nearly as affluent as Williamson. Coming from a county like these back to "mainstream USA" is tough enough. Coming back to Kingsport, where household income is in the low $30,000 range, from basically Williamson County level affluence, was economic shellshock
Even if you step down from a Williamson County level of affluence, there are still nice areas like Farragut, Hendersonville, etc., that are reasonable for two middle income professional couples. Aside from a handful of suburban areas around Nashville, Knoxville, and some affluent retiree enclaves, much of the rest of the state has problems. Little towns like Newport and Crossville make Springfield look like Mayberry.
Like you've said I don't know many times, you can't take these listicles seriously in big state by state swathes. My property taxes in Johnson City are about 1% of the value of my condo annually. I get city trash pickup in that. My grandmother's Waste Management monthly bill is about as expensive as my property taxes. That's not counting leaf removal, curbside recycling, a membership at a city gym at a discounted rate (I go to a gym subsidized by my employer) if I chose to use it, bus access (if I needed it), etc., that my whopping $700 annual property tax bill gets me. Schools are 9-10 on GS.
I could probably cut my property tax bill in half if I moved to Kingsport or Sullivan County. You also get what you pay for. The town is polluted by Eastman Chemical and Domtar. It smells. Crime is high compared to surrounding communities. Housing stock is dated. Options, from retail to dining to medical care, are slim. A $30-$40/month property tax savings isn't worth it to me.
Brentwood and Franklin, despite the price increases, still have a very low tax burden for what you get compared to many areas of the country.
Why do people mention a $30 charge (like Serious Conversation did) for car registration or tags, as if that is a large or important expenditure? Others have mentioned it too for whatever amount they happen to be charged for it, whatever the amount for their car turns out to be for registration/tags.
It's such a tiny expenditure in the scheme of things.
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