Tax friendly states Fall Issue 2018As retirement draws near, tax-friendly states become more desirable. Cold weather and high-tax states motivate soon-to-be retirees to seek the opposite of both. Retirement tax-friendly states with lower property taxes have become the priority.  

When considering relocating, it’s important to weigh many factors including lifestyle options, cost-of-living, as well as the dreaded tax bills.

SALT Taxes

Earlier this year, Federal tax deductions for state and local taxes (SALT) were capped at $10,000. In many areas around the country, property taxes alone exceed $10,000.

According to ATTOM Data Solutions, the nation’s largest property database, there were nine counties in the country with a population of at least 100,000 that had average annual property taxes of more than $10,000: Westchester ($17,179), Rockland ($12,924), and Nassau ($11,415) counties in New York; Essex ($11,878), Bergen ($11,585), Union ($10,863), and Morris ($10,294) counties in New Jersey; Marin County California ($11,295); and Fairfield County, Connecticut ($10,612).

Give Yourself a Raise

Move to a tax-friendly state!

Here are a few of your best options. Click on the state to link to communities in that state on ideal-LIVING.com.

Arizona does not tax Social Security retirement benefits. The state does tax other types of retirement income, like distributions from an IRA or a 401(k). Arizona’s property taxes are relatively low. Median home values are $239,200.

Arkansas does not tax Social Security retirement benefits. Withdraws from retirement accounts and public and private pensions are partially taxed. Property taxes in the state are among the lowest in the U.S. Median home values in Arkansas are $121,700.

Delaware does not tax Social Security retirement benefits. There is a deduction of up to $12,500 on income from pensions or retirement savings accounts. There is no sales tax at the state or local level. Delaware has the 4th lowest property tax rates of any state. Wages are taxed 4.8%. Also, it does not have an estate or inheritance tax. Median home values are $232,100.

Florida has no state income tax, which means Social Security retirement benefits, pension income, and income from an IRA or a 401(k) are all untaxed. Florida has no estate or inheritance tax. Property and sales tax rates are close to the national averages. Median home values are $223,300.

Georgia does not tax Social Security retirement benefits and provides a deduction of $65,000 per person on all types of retirement income for anyone 64 or older. Georgia has no state inheritance or estate tax. Property taxes are moderate. Median home values are $174,000.

Nevada has no state income tax, which means that all retirement income is tax-free at the state level. Property taxes are among the lowest in the nation. Median home values are $273,800.

North Carolina 
exempts all Social Security retirement benefits from income taxes. Other forms of retirement income are taxed at the North Carolina flat income tax rate of 5.5%. The state’s property and sales taxes are both moderate. Median home values are $172,800.

South Carolina does not tax Social Security retirement benefits and has a $15,000 deduction for seniors receiving any other type of retirement income. Withdrawals from retirement accounts are partially taxed. South Carolina has some of the lowest property taxes in the country. Median home values are $158,200.

Tennessee does not have a standard income tax. Social Security retirement benefits and income from retirement accounts are not taxed at the state level. Property taxes in Tennessee are quite low, but sales taxes are high. Median home values are $157,900.

Texas has no state income tax, which means Social Security retirement benefits and all other types of retirement income are tax-free. Texas has some of the highest sales taxes and property taxes. The median single family home price in Texas is $184,700.

Utah taxes Social Security retirement benefits. Other types of retirement income, such as pension income and income from retirement accounts, are also subject to the state’s 5% flat income tax, though seniors can claim a small credit against those taxes. Utah has very low property taxes. Median home values are $305,800.

*Information from smartasset.com and zillow.com

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