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I hear Alaska has neither income tax nor sales tax.
Kidding aside, your choice will depend on how much you expect your annual income to be from all retirement sources. There are countless resources on the internet one can turn to to find the pluses and minuses of every state for retirement purposes. Do a search and good luck.
which states are the best tax wise for retirement. What i mean is which states take little or nothing from pensions or 401 withdrawals, etc.?
It really depends on your own specific situation and the total tax picture of each individual state.
For example, I'm a federal retiree. My pension would not be taxed in states like PA, NY, and MA. These are states that might not come immediately to mind as being good for retirees, but for specific retirees, they can be quite good. However, I would not move to any state based solely or primarily on how much the state was going to tax my pension/annuity - there are just too many other factors to consider.
I've actually spent a fair amount of time looking at taxes around the country with an eye to relocation. Taxes are one piece of the puzzle. But things are changing, even though I'll be moving in less than 2 years. Michigan, for example, used to have a generous exemption for retirement income and as of Jan 2012, that all changed with the new governor who came into office in Nov 2010 and rammed through legislation to favor corporate tax cuts on the backs of retirees and near-retirees. I have a feeling that whatever research done now could change, even for those of us in our 60's. It did in Michigan, and it can happen elsewhere.
States without income tax usually find their income in other places (sales taxes, property taxes, auto fees, and other kinds of taxes and fees). So, while income taxes are one part of my retirement picture, it's only one part. Also, some states that are seemingly high tax states might have exemptions for retirees, those over 65, so that's worth looking at if the state has other desirable features. But again, I think the whole state income tax issue is in flux and states are looking everywhere for more money.
Taxes in VA on 3 acres only a thousand dollars but what you need to look at also is livability and what it will cost to stay warm or cool .I had a custom home built in VA because of lower taxes lower homeowners insurance and lower car insurance and electric rates are cheaper also .I don't like to drive in snow and don't like to cold but still wanted a change in seasons .I sure as heck did not want shovel snow and being a vegetarian I wanted a veggie garden and here I have boxes i built in the ground with used windows to cover them for winter so it means I have fresh veggies all winter .I did not want to live in tornado alley and did not want to live near the shore because of increasing homeowners insurance and now they have to pay even more than ever .I wanted to feel safe and I wanted some distance from my neighbors .I retired younger and that happened just before my 50th birthday and I saved long and hard for that day .I bought 3 lots and my house is only on one lot so the future means I can sell them and taxes on the 2 empty lots is only 39 dollars a year .I sit on a hillside with views all around .I have a large farm in front down the hill and a large farm behind down the back of the hill and woods in between .I think I made a great choice and have never looked back .I bought the lots over a year before I built on them .5 thousand an acre.Thats great info curmudgeon
I remember living in SW VA in the early 1980's, and loved the rolling hills and mild climate. I haven't looked at VA as a retirement location since the northern part is certainly expensive. What part of the state are you in? VA is very beautiful. Are you near Charlottesville?
PA assesses no taxes on pensions (public or private), 401(k) distributions, IRA distributions or Social Security income. Since moving here, we've also found our local property taxes are a fraction of what we paid in Texas. Sales tax is 6% and exempts food, clothing and drugs. PA has a diversified economy with the 6th highest GDP in the country, so the economic outlook for the foreseeable future is fairly healthy.
PA does have favorable tax treatment for retirees, but the issue of fracking in some areas of the state might be a consideration, depending on what a retiree is looking for (rural or suburban or urban living). I've read that there are areas of the state that have been polluted by gas extraction companies and if allowed to expand in the state, it might create even more environmental issues. Something to be aware of if PA is on a retiree's list.
The southern states as a whole are best, both in terms of taxation levels and general cost of living. Places such as Alabama, Tennessee, Georgia, South Carolina, and North Carolina are pretty much known as "half-back" states, meaning that people originally retire to Florida, hate it, and then come half-way back home.
I don't agree about the taxation levels (as a generalization). For example - NC has a very regressive income tax - starting at 6% of income over $12.5k.
I agree with other people who've said you have to evaluate things in terms of your own personal situation - because the mileage varies a lot among states.
And I'll also note that people saying they are paying X in property taxes on a particular property is kind of worthless IMO without knowing what the property is worth. IOW - the real issue is the tax rate on property that is worth Y (and also how Y is computed - is it the market value of the house - or something else). Also - are there any exemptions? For example - if I owned a house worth $100k where I live (which I don't) - it would have a homestead exemption of $50k - so I'd be taxed on $50k - and I'd probably pay about $700/year in property taxes. Robyn
xz2y. That fracking issue is actually a non-issue. The oil and gas companies have been doing it for years and EPA has never found a problem. Why? Because they drill far below the water table. In Texas the wells are 2 miles down. Way below the water table. This whole issue is the environmentalists, that are mad that the oil companies have found a new way to tap into and extract the abundant supplies of oil and natural gas that our country has been blessed with. They were hoping to get us all back on trains, living in crackerboxes.
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Quote:
Originally Posted by sissy77
....I bought 3 lots and my house is only on one lot so the future means I can sell them...
This is a good plan^^^ as lots / acreage that are part of, or contiguous with principle residence can later be split / sold off under the 'tax-free-capital-gains' allowance. Usually this is from farm / larger parcels that are split off and sold every 24 months. I would be adding some 'improvements' (Shed, garden, orchard, barn, greenhouse) to the adjacent parcels just to substantiate to the IRS your onging use of contiguous parcels.
If you can build houses cheap enough, you can develop and sell them every 24 months once you get ready to move / need extra income. I build new for about $40 / sf finished, as I buy lots of interior stuff from Habitat or deconstruction non-profits. You may find your needs / desires changing down the road, so I build my first place on the least desireable location with the intent of building down and moving up (usually higher on hillside)
RE: AK There are significant reasons to give second thought to ALASKA retirement. There are some very nice and moderate regions, and certainly not the water shortage of the SW or Mtn States in USA.
Besides, Climate change may make Juneau the next Panama City
RE: Tax variation within locales... Check across the street, as The place I bought less than 1 mile away has 1/12th my current taxes and 1/2 those of my new neighbors (across the street): due to different school districts and Local Improvement Districts. A visit with assesor is imperative, and time well spent.
RE : State Tax (retirement) website... It has very poor ACTUAL data, and there is MUCH variation within states. It is good for the general feel of a state, AND if you live / spend as an Urbanite in the capital city of said state. It is of little use if you are looking into a tax efficient location. As mentioned there are states that HAMMER retirees and all low income earners. They should be marked in RED, as those states are often in the RED . Expect higher taxes EVERYWHERE, but especially in those areas that have become dependent on heavy taxation. Their infrastructure is BUILT and it is in the best interest of legislature / state / county employees to stay in the gravy.
Last edited by StealthRabbit; 03-01-2012 at 05:10 PM..
PA does have favorable tax treatment for retirees, but the issue of fracking in some areas of the state might be a consideration, depending on what a retiree is looking for (rural or suburban or urban living). I've read that there are areas of the state that have been polluted by gas extraction companies and if allowed to expand in the state, it might create even more environmental issues. Something to be aware of if PA is on a retiree's list.
Even if one is concerned with fracking, that occurs in an isolated area of the state. Every state with a healthy economy has its industrial areas with associated pollution. Parts of the Gulf Coast have very high air pollution levels. The upper midwest is a radon hotspot. Asthma rates are outrageous in California's Central Valley and around Louisville. Even isolated rural areas of the heartland report some the nation's highest levels of groundwater contamination due to decades of pesticides and fertilizer use:
Not dismissing you if you have a personal concern abut fracking. It's just that environmental concerns apply wherever one is considering living.
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