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Taxes Seen As Key Factor in Choosing a Retirement Destination
Jan 29, 2008 (12:01 PM EST)
REDDING, Conn., Jan. 29 /PRNewswire-USNewswire/ -- With tax season rapidly approaching many people planning their retirement are wondering how their retirement income will be taxed if they move. Also, what other taxes will they have to confront in their new location.
Depending on where you choose to live your tax bill may affect your ability to enjoy the lifestyle you are seeking. Some states are more tax-friendly to retirees than others.
Helping to sort all this out is a Web site -- http://www.RetirementLiving.com -- run by the Retirement Living Information Center. The company has just published online its 2008 "Taxes by State" guide that reports on taxes encountered in every state, including income taxes, exemptions for seniors, and how retirement income and property are taxed.
"In assessing prospective locations, retirees may discover that some states are not the tax havens they are reported to be," said Tom Wetzel, president of the Retirement Living Information Center. "It is important to look beyond the state taxes and drill down to check local property, sales and income taxes. The presence or absence of a state income tax may not be the best criteria for selecting a retirement destination. Higher sales and property taxes can more than offset the lack of a state income tax," Wetzel added.
Based on data from the 2005 American Community Survey by the U.S. Census Bureau, the following five states have the lowest median real estate taxes per $1,000 of value. They are Louisiana ($1.72), Hawaii ($2.04), Alabama ($3.10), District of Columbia ($3.76), and Delaware ($3.95). The states with the highest median real estate taxes are Wisconsin ($18.20), Texas ($18.17), Nebraska ($16.69), Vermont ($16.35), and New Hampshire ($16.33). Of course, property taxes in any state are based on assessed value.
Seven states do not have a personal income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. New Hampshire and Tennessee only tax dividends and interest income that exceed certain limits. Some states, such as Ohio and Pennsylvania, have jurisdictions that impose local as well as state income taxes. Six states (California, Montana, Nebraska, New Mexico, North Dakota and Vermont) are particularly tough on retirees because they have a relatively high top tax bracket and fully tax most retirement income.
Currently, 26 of the 41 states (and the District of Columbia) that have broad-based personal income taxes do not tax Social Security benefits. The remaining 15 states with broad-based income taxes tax Social Security to some extent: Minnesota, Nebraska, North Dakota, Rhode Island, Vermont tax Social Security income to the extent it is taxed by the federal government. Connecticut, Iowa, Kansas, Missouri, Montana and Wisconsin tax Social Security income above an income floor. Iowa will gradually phase out its Social Security tax levy from 2008 through 2014.
In 2008 Kansas residents can exclude Social Security income from their taxes if their adjusted gross income (AGI) is less than $75,000. Missouri will phase out its Social Security tax levy by 2010. Colorado, New Mexico and Utah require that federally untaxed Social Security benefits be added back to federal AGI to calculate the base against which their broad age-determined income exclusions apply.
"Overall our Web site contains a wealth of information to help retirees make the difficult decision on where to live in retirement," says Wetzel. "Site visitors should not overlook the section on Great Places to Retire which contains in-depth reports on more than 200 retirement destinations," he added.
About Retirement Living Information Center, Inc.
The Retirement Living Information Center, through its Web site, http://www.RetirementLiving.com , provides essential information to assist seniors in planning for their retirement years. The site guides them to information that will support their decision-making. It contains information on retirement communities, great college towns for retirement, a retirement destination decision guide, and news about lifestyle issues.
Tax section: http://www.RetirementLiving.com/RLtaxes.html .
CONTACT: Tom Wetzel of the Retirement Living Information Center, Inc., firstname.lastname@example.org+1-203-938-0417,
Web site: http://www.retirementliving.com/