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Researching states for the best tax advantages for retirees, Florida is rated the best. Carolina is a mixed bag. Wondering if the advantages are big enough to make a difference or is it really marginal. I know everyone`s finical situation is different, but has anyone put numbers to it?
It depends on your income tax exposure. FL has no income tax, but if your income is low and/or not taxable (only SS or SS plus small pension, Roth IRAs). We have high income taxes due to taxable pension and taxable withdrawals of substantial 401Ks, IRAs and 457 plans). We lived in AZ for first 10 years of retirement and averaged 6K a year in state income taxes. In FL, none. However, our insurance costs in FL are much higher due to hurricane threat (adds to both home and car insurance); we live 1 block from the water and have federal flood insurance, too. If you live more inland, out of flood zones, obviously you will not be hit with flood insurance.
Our property taxes are a bit higher in FL than they were in AZ. Our sales tax rate in FL is lower. We spend a lot, so sales tax is a big issue with us. Again YMMV, depending on your lifestyle.
Every state and especially localities need money to operate and balance their budgets. They get it though a variety of taxes; pick a state that suits your income and financial habits. We like warm weather, hate snow or even frosts, which limits us further when looking at non-income tax states or states that do not tax pensions or give big breaks on pensions. Georgia is a good example of an income tax state that gives tax breaks on pensions if you are 65 or older.
Which "Carolina" are you talking about ?? There is a difference between taxes in North and South Carolina.
I can speak to South Carolina. The Palmetto State offers many exemptions for Senior Citizens. Pensions and Social Security are not taxed. And the first $15K of earned Income is exempt for Filers over 65. I had a pretty good year last year with those three sources of Income......and I only owed the State $10 in Income Tax.
Property Taxes are also reduced for Seniors. The first $50K of the Primary Residence is exempt from the calculation. The full bill is due and payable on January 2nd, but I gladly write the check -- it's less than we paid PER QUARTER back in the People's Republic of New Jersey !! The Flood Insurance can get pricey if you're in FEMA's AE Zone.
The Gasoline Tax is one of the lowest in the nation. Cars (and boats, RV's etc) are taxed as Personal Property on an annual basis, the older the vehicle, the less you pay. Car Insurance is a bit on the pricey side, because there's some people that drive like lunatics around here. That's still only a few bucks to the bad side of the ledger.
Hotel Rooms and Restaurant Meals are taxed at the Local Level. Tourists are paying the big share of those Fees, so thank you very much.
Kiplinger's website usually has a survey of "Best States for Retirees" you could look it up as they say.
Well, property taxes need to be looked at, and that's on a county to county basis.
I lived in a high property tax county in Florida, also one block from the beach, and moved to western NC. I compared homeowners insurance, flood insurance, property taxes, and lawn care in Fl, to homeowners, income tax, property tax, and HOA in NC and I save over $2k a year in NC.
I believe NC takes $8k off your income if you're a senior, but I haven't looked closely at it because I'm not there yet. I haven't looked at sales tax because I'm not a big spender.
I will also add that I my car insurance in FL was cheap and covered practically nothing as the basic state minimum. In NC my car insurance is also cheap and is full coverage. I should say that I am a preferred driver and use the car only for "pleasure" as they say, so about 5K miles a year. But that was in both states.
Plus, my utilities are way lower too, since it's a more moderate climate.
If you buy in FL near the beach, expect your HVAC to last no more than 10 years due to the salt and water eating it. Plus hurricanes are expensive, and most people in my area had a deductible of $8k (which is a highly researched number - the ins companies know that is the figure most hurricanes cost people, and if you have a lower deductible, your rate will skyrocket.) Everyone I know who got hit by Matthew had just under $8k in damage, not to mention the cost of evacuation (hotels, meals, etc)
I have a vague recollection that counties (some? all?) in SC have gone to full assessment when a house is bought, so when buying a house there be sure to check what the current rate would be on a property. If the Smiths are paying $1000 a year for a house they bought ages ago for $150k, and today it's priced at $500k, the taxes will be much more.
Last edited by crusinsusan; 08-14-2017 at 07:59 AM..
This is such an interesting thread. We have been torn between Florida and Delaware. Both areas close to the beach. Weather is definitely different. LOL
We're from Maryland so taxes will definitely improve in either state. But, we have seen the cost differences between DE and FL with insurance rates and property taxes. We not overly impressed with healthcare in DE. There are so many things to consider!
North Carolina has a 5.75% flat tax on income. Social Security isn't taxed, but IRA distributions and pensions are taxed. When they changed to this a few years ago, I remember there were some in government who wanted to also tax Social Security as well, but the uproar took that off of the table. Just one of the reasons we wound up in Tennessee instead of North Carolina, where we had bought land years ago for retirement.
Between property taxes and homeowners insurance and flood insurance...yikes....im so happy I retired in Western NC. I really couldn't take 'the Florida lifestyle' after 25 good years...notice I said "good years" my 13 years in NC have been "GREAT YEARS".
My pension is low, so low that we slide under the tripwire to pay Federal Income taxes. Last year Maine passed a law making military pensions tax-exempt.
So without income taxes, our primary focus for taxes becomes property taxes, and we moved to a region with low property taxes.
I have looked at all three. I think you will find Fl the least expensive. But if you have a tight budget also look at utility rates and insurance. Of course the location in the state will influence the last two.
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