Some Good News for RI Retirees (sale, car insurance, townhouses)
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Some state taxes will be lowered for retirees in the coming next few years.
Rhode Island Taxation of Social Security Benefits:
For 2021, Social Security benefits are not taxed for joint filers with a federal adjusted gross income of $111,200 or less, single and head-of-household filers with federal AGI of $88,950 or less, and married taxpayers filing a separate return with a federal AGI of $88,975 or less (thresholds for the 2022 tax year are not available yet). For taxpayers exceeding these thresholds, Social Security benefits are taxed by Rhode Island to the same extent they are taxed at the federal level.
Rhode Island Tax Breaks for Other Retirement Income:
Taxpayers who have reached full retirement age can exclude up to $15,000 of income ($20,000 starting in 2023) from private, government, or military retirement plans (not including IRAs). For the 2021 tax year, federal adjusted gross income cannot exceed $109,050 for joint filers and qualifying widow(er)s, $87,200 for single and head-of-household filers, or $87,225 for married people filing separate returns (thresholds for the 2022 tax year are not available yet).
Beginning in 2023, military retirement income is exempt from tax. However, this exemption and the general retirement plan exemption can't exceed the amount of military retirement income received in the tax year.
Some state taxes will be lowered for retirees in the coming next few years.
Rhode Island Taxation of Social Security Benefits:
For 2021, Social Security benefits are not taxed for joint filers with a federal adjusted gross income of $111,200 or less, single and head-of-household filers with federal AGI of $88,950 or less, and married taxpayers filing a separate return with a federal AGI of $88,975 or less (thresholds for the 2022 tax year are not available yet). For taxpayers exceeding these thresholds, Social Security benefits are taxed by Rhode Island to the same extent they are taxed at the federal level.
Rhode Island Tax Breaks for Other Retirement Income:
Taxpayers who have reached full retirement age can exclude up to $15,000 of income ($20,000 starting in 2023) from private, government, or military retirement plans (not including IRAs). For the 2021 tax year, federal adjusted gross income cannot exceed $109,050 for joint filers and qualifying widow(er)s, $87,200 for single and head-of-household filers, or $87,225 for married people filing separate returns (thresholds for the 2022 tax year are not available yet).
Beginning in 2023, military retirement income is exempt from tax. However, this exemption and the general retirement plan exemption can't exceed the amount of military retirement income received in the tax year.
Railroad Retirement benefits are fully exempt.
Very good news for lower income retired Rhode Islanders. Along with the obvious climate change, it gives these seniors more options of staying here - rather than running to Florida.
Some state taxes will be lowered for retirees in the coming next few years.
Rhode Island Taxation of Social Security Benefits:
For 2021, Social Security benefits are not taxed for joint filers with a federal adjusted gross income of $111,200 or less, single and head-of-household filers with federal AGI of $88,950 or less, and married taxpayers filing a separate return with a federal AGI of $88,975 or less (thresholds for the 2022 tax year are not available yet). For taxpayers exceeding these thresholds, Social Security benefits are taxed by Rhode Island to the same extent they are taxed at the federal level.
So, basically, for almost everyone. Can't imagine there are very many people drawing 89,000 off their 401k or pension.
Actually, you'd be surprised sansonik. One of things that triggers the higher taxes for retirees are RMDs.
The feds make you take your money out at a certain rate based on age so they can tax it, and of course, that also impacts state taxation in RI. So a retiree can be forced to take out more than they need to live on. However, the age for that necessity has been raised slightly under the current regime.
That is good news and its about time. Now perhaps those retirees that prefer to stay in RI, wont feel like they have to leave the state. Believe me retirees when I say the no income tax in Florida, doesn't cut it in today's world. Florida is no longer the state to run off to in retirement. It's gotten very expensive and rather nerve wracking down here. The yearly hurricanes that seem to be a part of life here now. Then the outrageous insurance costs and fear of not finding insurance, plus the high overall cost of everything and the crowds and driving and driving. People are probably better off in RI later in life, other than the snow and cold. I know my relatives that live across the border from RI in Attleboro, have decided to no longer retire down here. I think its probably going to become more and more common, as states relax their overall tax burden on retirees. I'm glad Rhode Island is finally doing something about it.
I've compared cost of living in Florida vs RI and I don't find a major difference that skews in favor of FL. Property taxes are calculated at point of sale in many communities down there rather than the way they do it here. So these can be higher. Plus, as you say Jimrob- other major issues factor in like insurance, hurricanes.
I think food can be cheaper here since we have more supermarket choice. I see FL communities where it's just Publix.
Then one has to compare utilities.
6 mos of heat vs 6-8+ mos of AC? We don't do AC much at my house, so that skews in favor of RI. A lot of small calculations go into the equation and will be different for every one--- of course.
The one major area in which FL excels is single level housing. In RI- in general- you'd better be able to do stairs & multiple levels or get a stairlift.
I think RI has better medical care overall. My opinion and from what I've heard.
However, some will just prefer high heat to cold and snow regardless. Time spent indoors vs FL & RI????
That is good news and its about time. Now perhaps those retirees that prefer to stay in RI, wont feel like they have to leave the state. Believe me retirees when I say the no income tax in Florida, doesn't cut it in today's world. Florida is no longer the state to run off to in retirement. It's gotten very expensive and rather nerve wracking down here. The yearly hurricanes that seem to be a part of life here now. Then the outrageous insurance costs and fear of not finding insurance, plus the high overall cost of everything and the crowds and driving and driving. People are probably better off in RI later in life, other than the snow and cold. I know my relatives that live across the border from RI in Attleboro, have decided to no longer retire down here. I think its probably going to become more and more common, as states relax their overall tax burden on retirees. I'm glad Rhode Island is finally doing something about it.
This is our situation also ^^^^^. What started out as a very affordable coastal community has turned into a very affluent retirement haven now. Between taxes, flood insurance, hurricane insurance and car insurance the benefits of living in an income tax free state are quickly dwindling as retirees.
I do see many friends leaving Florida for Tennessee and North Carolina.
I do need to research what is deemed full retirement age in regards to my pension as it pertains in Rhode Island.
I've compared cost of living in Florida vs RI and I don't find a major difference that skews in favor of FL. Property taxes are calculated at point of sale in many communities down there rather than the way they do it here. So these can be higher. Plus, as you say Jimrob- other major issues factor in like insurance, hurricanes.
I think food can be cheaper here since we have more supermarket choice. I see FL communities where it's just Publix.
Then one has to compare utilities.
6 mos of heat vs 6-8+ mos of AC? We don't do AC much at my house, so that skews in favor of RI. A lot of small calculations go into the equation and will be different for every one--- of course.
The one major area in which FL excels is single level housing. In RI- in general- you'd better be able to do stairs & multiple levels or get a stairlift.
I think RI has better medical care overall. My opinion and from what I've heard.
However, some will just prefer high heat to cold and snow regardless. Time spent indoors vs FL & RI????
For those of us that have been in Florida for over twenty years we are locked in with our Homestead exemption's which once locked in our value can only go up 3% a year.
We are in the farthest northeast corner of Florida so we only see three brutal months of heat. You go out in the morning or early evening. So our heating and cooling is not that bad, but the costs keep going up like we see in RI. I definitely could not handle the heat farther south.
With groceries and the current inflation my wife and other friends wives no longer have any loyalty to any stores. She shops, Publix, Harris Teeter, Winn Dixie and Dollar Store. She finds food comparable to Stop and Shop.
When we first moved the savings here were pretty dramatic without paying property taxes on vehicles and definitely enjoyed not having the fiasco of car inspections although car insurance is higher.
On single story homes, I love that but miss my basements. Surprisingly we see retirees buying townhouses or two story homes which to me is crazy.
Medical care in our area is fantastic with Mayo being one of many top notch facilities although there are other areas in Florida that don’t boast this.
Between my pension, 401k, SS and other investments I might come out ahead in RI losing the flood and hurricane insurance but property taxes on home and autos might take that away.
Florida is not for everyone, it was for us due to job relocation but now that is over being retired.
This is our situation also ^^^^^. What started out as a very affordable coastal community has turned into a very affluent retirement haven now. Between taxes, flood insurance, hurricane insurance and car insurance the benefits of living in an income tax free state are quickly dwindling as retirees.
I do see many friends leaving Florida for Tennessee and North Carolina.
I do need to research what is deemed full retirement age in regards to my pension as it pertains in Rhode Island.
Thanks for posting this Holly
Interesting conversation. I would have thought warm winters would overcome most of the negatives of retiring to Florida. While most of Florida's not my cup of tea, warm winters are.
Interesting conversation. I would have thought warm winters would overcome most of the negatives of retiring to Florida. While most of Florida's not my cup of tea, warm winters are.
Florida is a great place for a lot of people but it is definitely not for everyone. We are picking up population growth like crazy but I think there will always be a small percentage of us that have being New Englanders is in our blood.
There is a tremendous lack of cultural, ethnic and geographic diversity. It can be very cookie cutter here with strip malls and every food franchise known but places like the Villages are booming.
There are those that are half backs, after moving to Florida they find they don’t like it and move to NC or TN which are both seeing tremendous growth as well as the areas surrounding Charleston, SC.
The Boomers are retiring quickly and like locusts we are taking flight looking for that perfect place.
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