PDF for state-by-state Social Security and pension taxation (55, pensions, move)
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For those of you who are looking at various states for potential relocation for retirement, here is a good PDF for state-by-state taxation in retirement (social security income, pension income). The first section is a summary and the second part offers more details about social security taxes (if any) and how pension income is defined and taxed in each state. I found it useful as a comparison, and thought that others who are looking at various retirement locations might find it useful, also. Obviously there are other taxes to consider in retirement (property, sales, etc), but this is a good summary and comparison of SS and pension taxes.
The Michigan information has recently changed as of 2012, with cuts to pension exemptions depending on date of birth, so there may be other states listed with recent changes not reflected. (Info on michigan.gov.) If anyone from other states has recent updates to SS or pension taxation, those would be helpful.
It is a good idea to compare income taxes and property taxes before you move for retirement. It would really hurt if I had to pay income taxes from my pension; or high R.E. taxes.
It is a good idea to compare income taxes and property taxes before you move for retirement. It would really hurt if I had to pay income taxes from my pension; or high R.E. taxes.
There are a lot of factors, apparently Homeowners Insurance in Florida is more than my Real Estate Taxes in Arizona. The Income Tax here doesn't effect me becaause almost all of the income I have is not taxable i.e. Social Security, Veterans Compensation and an offset for Federal Pensions. Things like Auto Insurance can vary widely within a state
There are a lot of factors, apparently Homeowners Insurance in Florida is more than my Real Estate Taxes in Arizona. The Income Tax here doesn't effect me becaause almost all of the income I have is not taxable i.e. Social Security, Veterans Compensation and an offset for Federal Pensions. Things like Auto Insurance can vary widely within a state
Good point.
Our insurances are low. They [real estate and vehicle combined] run than $700/year.
What a great link, xz2y. Clear, well-written, easy to understand and easy to navigate (just scroll down). A third category of data would be a useful addition, however, namely the actual state income tax rates and cut-off points. For example one state may offer a partial exemption of pension income (say, the first $6,000 like Arkansas), but if that state's basic rate is higher than another state with no exemption, then what a person pays on his pension income could actually be higher in the state with the partial exemption. Not likely perhaps, but possible. Of course adding that third category of data would make the chart more complicated and the print finer. It's an excellent reference as is.
What a great link, xz2y. Clear, well-written, easy to understand and easy to navigate (just scroll down). A third category of data would be a useful addition, however, namely the actual state income tax rates and cut-off points. For example one state may offer a partial exemption of pension income (say, the first $6,000 like Arkansas), but if that state's basic rate is higher than another state with no exemption, then what a person pays on his pension income could actually be higher in the state with the partial exemption. Not likely perhaps, but possible. Of course adding that third category of data would make the chart more complicated and the print finer. It's an excellent reference as is.
Thanks, Escort. I ran across the PDF in a marketwatch.com article earlier this week. I'm glad you like it. I think your idea of adding another section for actual state income tax rates is a good one. Some states have very high rates and low cut-offs, like Oregon, for example. I haven't done the math on the kind of comparison you mentioned, but after I narrow down my list of possible retirement areas, that might be something to look at. Thanks for posting.
I will be 70 yo this coming January (2013) and planning to retire to Florida. I will receive, besides my S.S., a pension from my present job, for which I have been fully vested for over 24 years. I was wondering if I would have to pay an income tax for my pension benefits and for Social Security.
I will be 70 yo this coming January (2013) and planning to retire to Florida. I will receive, besides my S.S., a pension from my present job, for which I have been fully vested for over 24 years. I was wondering if I would have to pay an income tax for my pension benefits and for Social Security.
Thanks for any info.
From the chart, you won't have to pay any state income tax on either in Florida. You will likely have to pay federal income tax on your pension and depending on your total income, you might have to pay federal income tax on your SS. If your combined income is greater than $25,000 if filing single or $32,000 filing a joint return, at least 50% of your SS will be taxed. It maxes out at 85% taxable.
State tax is good info to know but it shouldn't be the only deciding factor as others have pointed out.
And sometimes the location is really where you want to be in spite of taxes and costs.
The property tax in amny states such as texas will need alot of reseqarch since they vary so much because its a country and local entity property tax ;not state tax. It can be very low to hgih depending o even the city witi a conty. The one has to factor i what is provided in servcie that may have to be poruchase privately such as barbage ;trash etc.That is why COL is often very hard to accesss unless one doesw alot of reseaqrch to to speific area. Mnay times state taxes are just part of the4 equestion has feees can alos differer so much likie registering a vehile yearly cost.just what the city ;county;or state aqctually taxes >Example is I have seen some where they actauly tax vehicle in property taxes.Then of course there are the exemptions for retired;over 65 etc.
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