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Given continuing financial problems states are experiencing, I don't think it's wise at this point to rely on current tax collection information. If you were a year or two out from retirement, that would be a different story, though. I'm not considering any of that, myself. I'll choose my state of retirement, if I decide to move from Illinois, based on other criteria. Taxes will be in the mix, but not the dominant factor for me.
I agree. One really needs to look more at the future liablities of states which takes alot of research. Also realise that just taxes does not tell the whole story on expense to live at a location. Often its even wise to realise that within states there are extreme differences.The coming years will be important ones for states as ;just for example; they take liaiblity of their share of medicaid increases in 2017.
The southern states as a whole are best, both in terms of taxation levels and general cost of living. Places such as Alabama, Tennessee, Georgia, South Carolina, and North Carolina are pretty much known as "half-back" states, meaning that people originally retire to Florida, hate it, and then come half-way back home.
AK is probably best (no income or sales tax)
SD
WY
WA (High property tax in some cases, not all)
then I would look to TN (tax on dividends, but no income tax, low property values)
FL (high home insurance rates)
TX (High property tax in some cases, not all)
NH, (High property tax in some cases, not all)
I plan to domicile in SD (one night / yr) and have PT residences (cash flowing income properties w/ xtra space for me) in WA, CO, TN, TX and other parts of the world where I can get healthcare. (Malaysia, Thailand, Philippines, MEX)
Chances are, tax rates are gonna change A LOT. I am working on a strategy to roll to federal tax exempt investments / earning stream.
Do be careful about the aggregate tax and CoL in your chosen region. (For example... Income Tax Free WA was very beneficial during my earning yrs... it has lost it's luster, post retirement, especially with my property tax rates climbing from $3/day to $33/day). I am a border dweller, so can shop in Sales Tax free Oregon, BUT I do very little accumulating, and always try to support local WA businesses, since I have commercial tenants in WA)
I would consider states with 'tax parity', I like ID and Colorado (my home state).
Last edited by StealthRabbit; 02-29-2012 at 12:05 PM..
Taxes in VA on 3 acres only a thousand dollars but what you need to look at also is livability and what it will cost to stay warm or cool .I had a custom home built in VA because of lower taxes lower homeowners insurance and lower car insurance and electric rates are cheaper also .I don't like to drive in snow and don't like to cold but still wanted a change in seasons .I sure as heck did not want shovel snow and being a vegetarian I wanted a veggie garden and here I have boxes i built in the ground with used windows to cover them for winter so it means I have fresh veggies all winter .I did not want to live in tornado alley and did not want to live near the shore because of increasing homeowners insurance and now they have to pay even more than ever .I wanted to feel safe and I wanted some distance from my neighbors .I retired younger and that happened just before my 50th birthday and I saved long and hard for that day .I bought 3 lots and my house is only on one lot so the future means I can sell them and taxes on the 2 empty lots is only 39 dollars a year .I sit on a hillside with views all around .I have a large farm in front down the hill and a large farm behind down the back of the hill and woods in between .I think I made a great choice and have never looked back .I bought the lots over a year before I built on them .5 thousand an acre.Thats great info curmudgeon
PA assesses no taxes on pensions (public or private), 401(k) distributions, IRA distributions or Social Security income. Since moving here, we've also found our local property taxes are a fraction of what we paid in Texas. Sales tax is 6% and exempts food, clothing and drugs. PA has a diversified economy with the 6th highest GDP in the country, so the economic outlook for the foreseeable future is fairly healthy.
'Tax Burden": We moved to a state with a noted high 'tax burden'. What we have found is that while the over-all taxes collected are actually focused more on corporations than on individuals. So we have experienced that 'tax burden' by itself can not be relied on as a good indicator of whether or not you will be taxed.
Also while there are states that simply do not tax income. All states that do tax individual income tend to have it done by way of 'brackets'. My peak working income was much higher than my pension is today. Had I lived here with my former higher income I would have paid taxes. However I am on pension. My pension is actually far below the trip-wire for paying taxes in this state. After personal deductions and exemptions; it turns out that none of my pension income is taxed here. So even though we settled in a state that taxes pension income, we simply do not pay income taxes on my pension.
My Dw is still working. For the first few years on my retirement, she was working p/t. Her p/t income effectively doubled our combined income. That combined income level is not taxed, as it was below the income tax trip-wire. A year ago she was promoted to f/t management, that increase in her income caused us to begin paying income taxes here. She will soon retire, and we will once again stop paying any income taxes.
We settled to an area with pretty low Mil-rates. For our 2400 sq ft house, on 150 acres of forest, and 1/4 mile of river frontage out our back door. We pay less than $1,000/year in property taxes.
If we were living on a shoestring, I suppose I would search for the lowest 'tax' state, though Curmudgeon's good link offers one the info for serious study and scenario work, and comparisons,
to determine the 'best states'.
But, there are obviously a number of factors to consider, and it seems to me that many/everyone's situ will have a number of variables in the consideration. Add in kids, grand kids, friends, lifestyle, housing, 'what one or the couple want to do', etc. and I doubt that many would make a state choice based on that state's taxes, esp when one considers the usual substantially lowered 'income' in retirement.
There are states that have better 'tax situs' than the two we live in, but I don't want to live 'there', nor do I feel compelled to spend much time on 'working' the different states tax laws, simply to save a few grand. Life is speeding by; my inclination to squeeze the last few bucks out of a effort have subsided.
We spend X a year, we get taxed Y a year in NC, but that is our budget and saving a few Gs is not going to affect my life or, what the lucky kidz get. Interesting some of the lengths some will go, and of course, everyone has a different 'need' as to what one requires to rationalize wherever one settles in, imo.
GL, mD
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