Quote:
Originally Posted by Retriever
In November, 2018, Kiplinger's Personal Finance magazine published the results of their study of the relative "tax-friendliness" of all 50 states for retirees.
At that point, North Carolina was already classified as "NOT tax-friendly", so if their tax structure changes to further disadvantage retirees, then it could easily turn into a tax hell for older people.
And, just for the record, NJ is classified as "mixed". NJ is one of the states that is essentially "in the middle", and is not at either extreme of "not tax friendly" or "most tax friendly".
I know a couple of people who assumed that they would be in a better position tax-wise by moving from NJ to NC, and they were shocked to find that their state taxes increased fairly substantially in the process.
https://www.kiplinger.com/tool/retir...rees/index.php
 |
Retriever is right about researching your move, whether it be to another part of NJ or to another state. You have to check the "fine print" for details about taxes that could have profound economic consequences.
During the mid 80's I bought a lot in the Poconos and planned to build a house there and commute to my job in Morris County. Then, in the early 90's, my parent's health deteriorated and I put off moving. During that period, everybody and their grandmother thought the Poconos was NJ's and Brooklyn's answer to affordable housing. Remember those TV ads touting how you could get a "cheap" big house (by NJ standards) costing less than your rent. Well, everybody did move there and the taxes started to resemble what you'd pay in NJ for pretty much the same size house. The houses weren't that much cheaper either.
In 2004, with my parents gone and me retiring, I decided to move. The Poconos were out because of the housing prices and taxes. I sold my lot. My boss had retired about a year earlier to outside Charlotte NC. She had sold her Colts Neck house and bought something even bigger in Union County NC. I visited her for a week in July 2005 and by the time I left, had put a down payment on a new house.
I had researched the tax situations in both North Carolina and South Carolina and decided to go with North Carolina, simply because it didn't tax my federal pension. South Carolina only gave a $5000 exclusion on their state income tax, kinda like what NJ was doing ...and that's only if you're over 65. I was 51 when I retired. I'll never get Social Security because I never paid in very much during my working years. Most states (not all) don't tax your SS until you are in a high income bracket. But very few states give the equivalent break to people who don't get SS, like me in NJ. In essence, I got Nada from NJ! Pay the full amount on your pension. Goodbye NJ!
It worked out very well for me in NC, but that's not the case for everyone. One of the dirty little secrets of the so-called "cheap Southern states" (minus Florida & Texas) is that their state income tax rates are much higher than NJ's state income tax. North Carolina seems to think you are a member of the Downton Abby crowd if your income is over $60,000. That amount puts you in the highest bracket for state income tax. Some high income earners and retirees learn the hard way that NJ was actually cheaper than their new state and their now lofty state income tax increases are higher than their property tax savings from moving.
Another thing that worked in my favor in NC was that my property taxes were cut in half when I turned 65. My property taxes went from $2300 a year to $1150 a year on a 2850 sq ft house (assessed at $200K) on 1/4 acre. Just a property tax "freeze" ...bite me! NJ might hold on to more of their seniors if they did the same.
Not everything is a bed of roses in NC. There's a 2% sales tax on food and you pay the full 6.75-8.00% (depending on the county) on clothes. Please tell me that PSE&G or JCPL doesn't have sales tax on the gas and electric portions of your utility bill yet.
That's something NC did 2 years ago.
So if you're planning your escape from the Garden State research carefully or you'll end up worse off. Ditch the snow blower and shovel though if you're going south of Charlotte. You'll never need it.
* If Short Hills or Long Valley has a similar housing deal to mine, I
could be persuaded to move back. You will, of course, let me know!
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
