Oddlots
Random samplings of new affecting
the estate planning industry
Compiled by Christopher Weems, Associate Editor
Send an e-mail with your news item
State Taxes are Major Factor in Retiree Relocation Decisions
REDDING, Conn. -- As tax season heats up, Americans making their retirement plans receive a pointed reminder about how much of their income they lose each year in state taxes. Those planning to move to another state will want to examine the tax burden they will face upon arrival.
Taxes are increasingly important to everyone, but retirees have extra cause for concern since their income may be fixed.
The Retirement Living Information Center has just published updated information on its Web site, http://www.RetirementLiving.com, about the tax structure in every state, including income tax rates, exemptions, sales and fuel taxes. Using the data provided on the site, seniors should be able to stretch their retirement income significantly by identifying and relocating to states with lower taxes. Five states have no sales tax: Alaska, Delaware, Montana, New Hampshire,
and Oregon. Seven states have no personal income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. New Hampshire and Tennessee only tax dividends and interest.
It is important to keep in mind that moving to a state with no personal income tax or sales tax may not reduce your overall tax liability if the city you select has high property taxes.
Also to be considered are taxes on "intangible assets." For instance, Florida does not have a personal income tax but hits its wealthy residents with a $1 tax on every $1,000 of taxable stocks and bonds. Arizona does not tax Social Security benefits, but does tax income from private employer pensions and public pensions earned outside the state.