Retiring To A State With No Income Tax?<\/h2>\r\n
It seems complicated at first but it actually become a pretty easy topic to discuss when you think about a few things.\u00a0 \u00a0First of all, state income tax isn’t some astronomical number like our national income tax.\u00a0 \u00a0Meaning that even though the government is taking money from your hard earned paycheck it’s much less overall than the big hit.\u00a0 In our mind, it’s big enough to help you decide which state is better in a list of best states to retire to but not so much that it should impact your main decision UNLESS, you stand to make substantial income.\u00a0 \u00a0<\/p>\r\n
To make the matter less of a headache to choose, there are many states that have special tax rules for seniors.<\/p>\r\n
If retiring to a state with no income tax is a thought you are considering, then consider these questions.\u00a0<\/p>\r\n
- \r\n
- Will I have any taxable income from a job?\u00a0 – Will you be employed in your retirement years?<\/li>\r\n
- Do I own rental property?\u00a0 – Rental income is considering taxable income<\/li>\r\n
- Do I own passive income vehicles? – Do you own a stock that pays dividends in a non-retirement account, for example.\u00a0 Do you own part of a business that pays distributions?<\/li>\r\n<\/ol>\r\n
What States Have No Income Tax<\/h2>\r\n
In 2020 we have 9 states that officially have no income tax and another 20+ states that have differing views on income.\u00a0 To complicate matters a little bit more, some states have special rates for retirees at “retirement age” and others have no tax up to a certain income.\u00a0 \u00a0 Finally, there are 2 states that specifically do not tax wages but tax retirement income.\u00a0 \u00a0For this blog we’re just going to focus on the states without an income tax.\u00a0<\/p>\r\n
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<\/p>\r\nAlaska<\/h3>\r\n
Alaska not only has no income tax but Alaskans don’t pay a sales tax.\u00a0 Not only that but you can receive extra money from the Alaska Permanent Fund Corporation. The actual amount varies but it’s between an extra $1,000 to $2,000.\u00a0<\/p>\r\n
What makes Alaska a great place to vacation might not make it a great place to retire<\/a>.\u00a0 The climate is obviously the main concern but recently politicians are concerned about low oil prices and are pushing for more taxes.\u00a0<\/p>\r\n
Florida<\/h3>\r\n
Florida is every one’s top choice to retire, with good reason<\/a>.\u00a0 \u00a0The weather, the attractions and the large population of retirees make it ideal.\u00a0 \u00a0Florida also draws a lot of retirees because it has no income tax.\u00a0 \u00a0If you can afford the real estate taxes and higher than normal insurance, Florida could be a viable choice.\u00a0 (It’s always in the top state lists!)<\/p>\r\n
Nevada<\/h3>\r\n
Florida and Nevada have a lot in common.\u00a0 Warm climates and a lot of tourist.\u00a0 That’s exactly how both states are able to operate without income tax.\u00a0 \u00a0Nevada does however, have a very high sales tax of 8% and high taxes on “sin” trades.\u00a0<\/p>\r\n
South Dakota<\/h3>\r\n
Unless you live out this way, South Dakota probably wasn’t on your radar.\u00a0 However, after reading this it should be!\u00a0 South Dakota has no income tax, low sales tax.\u00a0 Real estate is relatively cheap as well.\u00a0 \u00a0<\/p>\r\n
Texas<\/h3>\r\n
Retiring to Texas is an option for many.\u00a0<\/a> With as big as a country you’re sure to find something you like.\u00a0 Texas has no income tax but does have higher than average sales tax.\u00a0 \u00a0While real estate is affordable in Texas, the property taxes are higher than average.\u00a0<\/p>\r\n
Washington<\/h3>\r\n
Washington state features no personal income tax but make up for it paying a sales tax that is one of the highest in the nation.\u00a0 However, for the sake of considering whether or not to retire to Washington<\/a>, you have to consider that you do less overall consuming in your retirement years.<\/p>\r\n
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<\/p>\r\nWyoming<\/h3>\r\n
Another state that rarely makes our popular list but should!\u00a0 Wyoming has no income or corporate state income tax, low sales taxes and low overall real estate property taxes and prices.\u00a0 Wyoming is blessed with natural resources and generates much of its tax income from that.<\/p>\r\n
Tennessee<\/h3>\r\n
Tennessee makes our “no income tax” list barely.\u00a0 Remember when we said that “income” can sometimes be defined differently.\u00a0 Tennessee doesn’t have a wage tax but does tax investment income.\u00a0 Tennessee is a great southern state retirement option, unless you want to grab a beer with some friends during retirement.\u00a0 Tennessee has slightly above average sales and property taxes but features one of the highest taxes on beer.\u00a0 \u00a0<\/p>\r\n
New Hampshire<\/h3>\r\n
If New England area is where you need to be in retirement, consider New Hampshire.\u00a0 Like Tennessee, New Hampshire has no “wage” taxes but does tax dividend and interest.\u00a0 \u00a0The taxes are only for those earning more than $2,400 on their investments at a rate of 5%.\u00a0 \u00a0Like much of the northeast, New Hampshire has some of the most expensive real estate and property taxes.\u00a0<\/p>\r\n\r\n\r\n\r\n\r\n\r\n
Other Factors To Consider<\/h2>\r\n
State income taxes are worth considering but not the only factor in your decision.\u00a0 \u00a0You’re thinking about retirement, not actually working, at least not a j-o-b.\u00a0 \u00a0This means that you may have no income to even worry about.\u00a0 \u00a0Not to mention that state income taxes rarely amount to other tax pitfalls.\u00a0 \u00a0Here are a few more things to think about in your state specific retirement hunt.\u00a0<\/p>\r\n\r\n\r\n\r\n
Real Estate Tax<\/h3>\r\n
Real estate taxes are worth looking at but they can be confusing.\u00a0 \u00a0Each county and city may have their own rate.\u00a0 In addition, in some states real estate taxes are often posted as a rate but controlled by something called a “millage rate.” Most people don’t realize that politicians will manipulate the millage rate to charge higher taxes but the tax rate displayed doesn’t actually change.\u00a0 \u00a0This confusing discussion is better covered here<\/a>.\u00a0<\/p>\r\n
Sales Tax<\/h3>\r\n
One thing that you might not consider is the sales tax.\u00a0 However, if you’re retired then the cost of living is a big deal, especially if you’re on a fixed income.\u00a0 It’s so important we’re going to cover states with low sales tax because we feel it can be a bigger impact than no income.\u00a0<\/p>\r\n
Intangibles & Other Considerations<\/h3>\r\n
Outside of climate, there are some other intangibles to consider, such as proximity to family.\u00a0 \u00a0If you’re retired and have no income, then having no income tax isn’t all that beneficial.\u00a0 There are many states that specifically tax retirement types of income (such as New Hampshire and Tennessee) and others that pay you to live there (Alaska).\u00a0 \u00a0Each retirement story is unique and it’s impossible to write a one size fits all guide.<\/p>\r\n\r\n\r\n","protected":false},"excerpt":{"rendered":"
When you’re thinking about retirement the idea of living in a state without an income tax becomes attractive. However, is it worth it to relocate to a state simply because it has no income tax? We took a look at the best states to retire to and states that had no income tax did fare […]<\/p>\n","protected":false},"author":1,"featured_media":433,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[113],"tags":[45,86,75,87,85,101,37,114],"acf":[],"_links":{"self":[{"href":"https:\/\/bestretirementcities.org\/wp-json\/wp\/v2\/posts\/429"}],"collection":[{"href":"https:\/\/bestretirementcities.org\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bestretirementcities.org\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bestretirementcities.org\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bestretirementcities.org\/wp-json\/wp\/v2\/comments?post=429"}],"version-history":[{"count":4,"href":"https:\/\/bestretirementcities.org\/wp-json\/wp\/v2\/posts\/429\/revisions"}],"predecessor-version":[{"id":9111,"href":"https:\/\/bestretirementcities.org\/wp-json\/wp\/v2\/posts\/429\/revisions\/9111"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bestretirementcities.org\/wp-json\/wp\/v2\/media\/433"}],"wp:attachment":[{"href":"https:\/\/bestretirementcities.org\/wp-json\/wp\/v2\/media?parent=429"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bestretirementcities.org\/wp-json\/wp\/v2\/categories?post=429"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bestretirementcities.org\/wp-json\/wp\/v2\/tags?post=429"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}