A lack of taxes on retirement benefits and estates can make it a smart destination, too.
The amount of taxes retirees pay varies widely depending on where they choose to settle.
Following are 4 types of taxes you should consider when selecting a place to retire.
All tax statistics come from the findings of the Federation of Tax Administrators (FTA).
1. State income taxes
- 4 states have a relatively low income tax rate across all brackets.
--- For example, the rate is less than 5% for even the highest income bracket:
--- in North Dakota (3.22%), Arizona (4.54%), Kansas (4.6%) and New Mexico (4.9%)
- Other 6 states have a low flat income tax rate of 5% or less. They include:
--- Pennsylvania (3.07%), Indiana (3.3%), Illinois (3.75%), Michigan (4.25%), Colorado (4.63%) and Utah (5%)
- 7 states don’t tax individual income at all:
Alaska, Florida, Nevada, South Dakota, Texas, Washington, Wyoming
- 2 states — New Hampshire and Tennessee:
--- tax only income from dividends and interest
- For more details on your state or the one you’d like to retire in, check out
- the state-by-state income tax breakdowns from the Federation of Tax Administrators.
2. State sales taxes
- 5 states have no sales tax, according to the FTA:
--- Alaska, Delaware, Montana, New Hampshire and Oregon.
- In the other 45 states:
---- rates vary from 2.9% (Colorado) to 7.5% (California).
- The types of goods and services that are taxed also vary from state to state
- Items taxed in some states — but not others — include:
--- barber services, landscaping, prescriptions, clothing and food.
- For details, check out the FTA‘s state-by-state breakdown of sales tax rates,
- which also lists: which states exempt food, prescriptions and over-the-counter medications.
3. State and local property taxes
- Because property taxes can be significant, you should learn not only an area’s current property tax rate, but
- also the history of how it has changed over time.
- To learn more about rates in a specific state & county,
- try this search engine formula: [state/county] + property tax.
- That should lead you to the appropriate revenue department’s website.
- While reading up on a state’s property tax rate,
- don’t forget to check for tax breaks, too.
- Some states and local jurisdictions offer some form of property tax benefits:
--- exemption, credit, abatement, deferral, refund or other benefit
- to homeowners or renters who are senior citizens.
4. State estate taxes
- Wealthier retirees also must consider a state’s estate tax:
- 15 states and the District of Columbia have an estate tax, according to the nonprofit Tax Foundation.
- If the state in which you are interested does tax estates, find out:
--- both the rate and
--- whether the likely dollar value of your estate qualifies it for taxation.
5. To learn more about a state taxes
try this search engine formula: [state] + state estate tax.
Sales tax tables by zip code every state: taxrates.com