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Thanks for the link, plainesman48. I looked with interest at the ten best and ten worst states as to tax status for retirees. I just want to add that it's a rather complex calculation, in the sense of needing to balance out the different taxes that some states have and others do not. For example, there are states which do not have income taxes, but they tend to have higher sales taxes, auto registration fees, etc. to make up for what they don't collect in income taxes. However, some retirees get so little income that they probably won't pay any state income taxes anywhere. Whereas for high income retirees, it would be more significant if a state didn't have any.
The other big fly in the ointment is property taxes, and since these are generally levied by county (not by state), they represent a real wild card. Example: A friend of mine in Pennsyvania (a "ten best" state) pays over twice the property taxes I pay on a place whose dollar value is about the same or a little less. Where do I live? California (a "ten worst" state)! Of course my income taxes and sales taxes are a lot more, but he pays over $3000 per year more in property taxes alone. So retirees need to look carefully before they leap, and as helpful as the Kiplinger site is, it's still complicated.
I would love to live in New Hampshire but it will never happen. Why? Their property taxes are so high probably because they have no income or sales tax.
The best strategy is to live in a low-property-tax state and do everything possible to minimize income tax, and live near the border of a state that has no sales tax.
I would love to live in New Hampshire but it will never happen. Why? Their property taxes are so high probably because they have no income or sales tax.
The best strategy is to live in a low-property-tax state and do everything possible to minimize income tax, and live near the border of a state that has no sales tax.
Don't just look at PROPERTY TAXES to make your decision, it realy depends upon what you want. There are fees and taxes hidden everywhere. If you think you have low taxes in your state, town, county, etc.... beware of the fees, HOA Fees can kill you! In Colorado there are HOA's from $200 per month on the dumpiest places all the way up to $2000 per month + on the most Expensive places....On top of property taxes. The nice malls also have 'surcharge %'s on top of Sales Tax'. So if you do the math, you will be very surprised. You also have to look at the flip side of being able to itemize sales and property taxes on your Federal Income Tax. That is where you may be able to see a benefit. You can't itemize HOA fees, but you can itemize property taxes.
Kind of surprising at first blush. Pennsylvania in the to best, North Dakota in the bottom 10. Just goes to show that its not the total taxes, but how they are applied and which the retiree is not subject to for one reason or another.
Don't just look at PROPERTY TAXES to make your decision, it realy depends upon what you want. There are fees and taxes hidden everywhere. If you think you have low taxes in your state, town, county, etc.... beware of the fees, HOA Fees can kill you! In Colorado there are HOA's from $200 per month on the dumpiest places all the way up to $2000 per month + on the most Expensive places....On top of property taxes. The nice malls also have 'surcharge %'s on top of Sales Tax'. So if you do the math, you will be very surprised. You also have to look at the flip side of being able to itemize sales and property taxes on your Federal Income Tax. That is where you may be able to see a benefit. You can't itemize HOA fees, but you can itemize property taxes.
I'm not sure what HOA fees have to do with taxes. HOA fees are paying for things which, for the most part, you would be paying for yourself if you owned a single family home. My fees ($300 per month) pay for the following: insurance on the exterior of the building, all maintenance on the exterior (painting, roofing, wood repairs, etc.), the gardening service, the pool service, the weekly trash pick-up, all water use, the upkeep of the meeting room which has a small kitchen and a restroom and which can be used by homeowners for larger gatherings, the management service, and the electric bill for the exterior lighting. There may be other things I am forgetting. Our place is well maintained and looks nice. I can't quite imagine what they would be spending $2000 per month per homeowner for. That seems totally ridiculous, but it still has nothing to do with taxation. Before you buy a place with an HOA, it is up to you to do your homework to find out what the fees are being spent for.
HOA's are for property owners, not renters - which is what I advise recent retirees to do after selling their homes. My mistake was selling the family home and moving all over the country, before finding the grass was greener at home.
I've paid as little as $950 in taxes for $100k home and acreage (WY) to as much as $2900 in other states for the same valued property (MT). Wyoming doesn't have an income tax, but the fees will kill you if you are on ssa only. Montana has no sales tax, but property tax and tax on ssa are very high.
Don't just look at PROPERTY TAXES to make your decision, it realy depends upon what you want. There are fees and taxes hidden everywhere. If you think you have low taxes in your state, town, county, etc.... beware of the fees, HOA Fees can kill you! In Colorado there are HOA's from $200 per month on the dumpiest places all the way up to $2000 per month + on the most Expensive places....On top of property taxes. The nice malls also have 'surcharge %'s on top of Sales Tax'. So if you do the math, you will be very surprised. You also have to look at the flip side of being able to itemize sales and property taxes on your Federal Income Tax. That is where you may be able to see a benefit. You can't itemize HOA fees, but you can itemize property taxes.
Good point on the fed tax itemization. HOA fees are usually shown in the real estate listing, but it's always a good idea not to assume anything--but choosing an HOA neighborhood is only an option. Property taxes are not an option. Condo fees vary quite widely, and some even include things like heating. Never heard of the surcharge tax in malls!
... I just want to add that it's a rather complex calculation, in the sense of needing to balance out the different taxes that some states have and others do not. For example, there are states which do not have income taxes, but they tend to have higher sales taxes, auto registration fees, etc. to make up for what they don't collect in income taxes. However, some retirees get so little income that they probably won't pay any state income taxes anywhere. Whereas for high income retirees, it would be more significant if a state didn't have any.
The other big fly in the ointment is property taxes, and since these are generally levied by county (not by state), they represent a real wild card. Example: A friend of mine in Pennsyvania (a "ten best" state) pays over twice the property taxes I pay on a place whose dollar value is about the same or a little less. Where do I live? California (a "ten worst" state)! Of course my income taxes and sales taxes are a lot more, but he pays over $3000 per year more in property taxes alone. So retirees need to look carefully before they leap, and as helpful as the Kiplinger site is, it's still complicated.
I agree.
It is a complex comparison to make.
I live in a state where people routinely complain about the income taxes; but as a retiree my pension is not high enough for us to pay income taxes. So to us it 'feels' like a state with no income taxes.
'Tax Burden' is a common way for folks to look at it. A state's total combined revenue, divided by the population and indexed by the state's average household income. Seems like a good way to do it also. But only if everyone in the state earns about the same exact level of income. We have a tiny corner that is urban, where over half of our state's population lives. Packed into that one tiny corner. They do have higher wages and higher taxes. We also have a thin narrow strip also the ocean coast that has high property taxes. Over all say 5% of the entire state has either dense populations, or high property taxes or a combination. When you try to sum it all together and present an average; that average simply does not represent anyone here.
There are places where you can live on a fixed-income; where you pay no income taxes; where your property taxes are low; where the other taxes are not so high as to over ride the savings from not paying high income and/or property taxes.
I looked up NY State. The writeup looked pretty good. Unfortunately, the report failed to mention that in addition to the State sales tax local governments add more taxes taking the rate to nearly 9%. The report failed to mention that property taxes are extremely high, often over $10000/year on a very modest house. They did not mention that the cost of healthcare is staggering in the NYC area, nor did they mention the overall cost of living which for the major metro areas is as high as 1.7x the national average. They failed to mention that electric rates are about triple the national average. Yup, a pretty worthless report.
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Do the MATH.....it depends what you want...
