If you’re a retiree and consider moving to a different state, then you’re most likely looking for a state with fewer or lower taxes. The U.S. has many tax-friendly states, you just need to discover them and learn how the tax system works. Not only is that going to cause less stress, but it will also make a big difference in your life, making you happier and more positive overall.
So, let’s see which states are the most tax-friendly so you know what to expect.
Alabama is great because there isn’t any Social Security benefit tax, so you don’t have to worry about that one.
Also, if you want to own property, the taxes will be very low. In 2019, the median property owners paid in the state was just $609 in real estate taxes. On top of that, taxable state income doesn’t include traditional pension payments either. There is also a very low sales tax rate, of only 4%.
Even though Arizona has above-average sales taxes, it’s still tax-friendly compared to other states. For instance, there is no inheritance or estate tax, which could make this place even better for people who are retired or about to retire soon.
There are some income tax rates, but they are pretty low. The tax ranges from 2.59% to 4.5%. The median property tax rate is $617 per $100,000 of the assessed value of the home. As for the average combined state and local sales tax rate, it’s only 8.4%.
If you don’t know how to deal with the tax laws in Arizona, you can always contact Scottsdale tax lawyers to help you out.
You can also pick Mississippi to be your new home. Over there, most people who have retirement income will not have to deal with any state income tax.
Basically, Social Security and Pension payments can be excluded or subtracted from the Mississippi taxable income. On top of that, there are low property taxes, with the median real estate taxes being only about $1,009 back in 2019.
Despite having an income tax, this state is great for retirees because it exempts many retirement income types from it. If you’re a retiree, you will be allowed to subtract your pension or Social Security income from your federal adjusted gross income. This also includes things like IRAs, employee-defined benefit plans, SEPs, and others.
The one thing that’s high though is the real estate tax. The median was pretty high at $4,527. For income tax, though, you don’t have to worry.
What makes Pennsylvania great for retirees is the fact that taxable income doesn’t include Social Security benefits. If you’re older than 59 ½ and want to make an IRA withdrawal or 401(k) distribution, there will be no income tax. The median property tax bill back in 2019 was also $2,887. It’s a little high but not as high as in other states.
It’s important to know which states are tax-friendly for retirees if you want to make a move. One of these states could be your next home, so choose wisely if you want to have some peace of mind in your retirement years.