{"id":511,"date":"2012-03-30T08:46:13","date_gmt":"2012-03-30T15:46:13","guid":{"rendered":"http:\/\/www.aikapa.com\/Financial_Bites\/?p=511"},"modified":"2017-09-27T14:29:55","modified_gmt":"2017-09-27T21:29:55","slug":"tax-season-and-the-retiree","status":"publish","type":"post","link":"https:\/\/www.aikapa.com\/Financial_Bites\/?p=511","title":{"rendered":"Tax Season and the Retiree"},"content":{"rendered":"

Tax Season and the Retiree<\/strong><\/p>\n

There are a lot\u00a0to contemplate\u00a0when considering the state in which to retire.\u00a0Most want to be close to family and friends, the weather to be suitable for them, and what they hope to do in terms of activities.\u00a0 A consideration this time of year are taxes \u2014 one of life\u2019s two certainties and,\u00a0one often a large expense in retirement.\u00a0 It is never a good idea to seek out a retirement state based solely on tax burden but it is good to be aware which states fit your plans best for retiement.<\/p>\n

So, find out how\u00a0each state taxes your income and plan accordingly.\u00a0Also consider how the state taxes\u00a0your property and your consumption and you might want to consider how it taxes your estate.\u00a0 That should give you a state tax burden that you’ll need to cover during retirement.<\/p>\n

Older Americans who planned for retirement often\u00a0generate income from several sources\u00a0during retirement, including income from wages or self-employment; Social Security; pensions; and personal assets, including taxable and tax-deferred accounts. Taxes on those sources of income, mean less money for your care and enjoyment.\u00a0 But don’t forget state and local property taxes, state and local sales and use taxes. You might pay plenty in property taxes and sales taxes.<\/p>\n

Remember, what you save on income taxes in one state you might pay in property taxes or sales taxes. And vice versa. What you save on property and sales taxes in one state you might pay in income taxes – so calculate for your specific retirement situation.<\/p>\n

One more note, for those who itemize deductions, there are five types of deductible non-business taxes, including state, local and foreign income taxes; state, local and foreign real estate taxes; state, and local personal property taxes; state and local sales taxes, and qualified motor vehicle taxes.<\/p>\n

Your specific tax burden,\u00a0will depend on whether you can take advantage of these deductions.<\/p>\n

The states are listed in order of tax friendliness from an overall tax burden point of view:<\/p>\n

1. Alaska<\/strong>:\u00a0 Alaska doesn\u2019t tax personal income, including Social Security benefits and pension income. And, there\u2019s no state-imposed sales tax. This is not to say that you won\u2019t pay any taxes in Alaska –\u00a0You\u2019ll pay other types of taxes, such as property taxes.<\/p>\n

2. Nevada<\/strong>:\u00a0This state doesn\u2019t tax income, Social Security benefits or pension income. And its property taxes are reasonable, too. Its sales tax, however, is higher than the national average.<\/p>\n

3. South Dakota<\/strong>: The state doesn\u2019t tax individual income, Social Security benefits or pension income. And the overall tax burden is among the lowest in the nation.<\/p>\n

4. Wyoming<\/strong>: There\u2019s no individual income tax on Social Security benefits or pension income in Wyoming but property taxes and sales taxes tend to be higher than the national average.<\/p>\n

5. Texas:<\/strong> In Texas, there\u2019s no individual income tax. But property and sales taxes tend to be higher than the rest of the nation.<\/p>\n

6. Florida<\/strong>: There are plenty of reasons why people choose to retire to the Sunshine state, the low tax burden being among those reasons. There\u2019s no individual income tax on Social Security benefits or pension income with high property and sales taxes.<\/p>\n

7. Washington:<\/strong>\u00a0There\u2019s no individual income tax on Social Security benefits or pension income. But if you plan on spending lots money while in retirement watch out for the high sales tax.<\/p>\n

Edi Alvarez, CFP\u00ae
\n<\/sup>BS, BEd, MS<\/p>\n

www.aikapa.com<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Tax Season and the Retiree There are a lot\u00a0to contemplate\u00a0when considering the state in which to retire.\u00a0Most want to be close to family and friends, the weather to be suitable for them, and what they hope to do in terms … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[37,9,8,7],"tags":[186,185,187,84],"class_list":["post-511","post","type-post","status-publish","format-standard","hentry","category-estate-planning","category-family-planning","category-retirement-planning","category-tax-planning","tag-sales-taxes","tag-state-taxes","tag-tax-burden","tag-tax-planning-2"],"_links":{"self":[{"href":"https:\/\/www.aikapa.com\/Financial_Bites\/index.php?rest_route=\/wp\/v2\/posts\/511","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.aikapa.com\/Financial_Bites\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.aikapa.com\/Financial_Bites\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.aikapa.com\/Financial_Bites\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.aikapa.com\/Financial_Bites\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=511"}],"version-history":[{"count":4,"href":"https:\/\/www.aikapa.com\/Financial_Bites\/index.php?rest_route=\/wp\/v2\/posts\/511\/revisions"}],"predecessor-version":[{"id":834,"href":"https:\/\/www.aikapa.com\/Financial_Bites\/index.php?rest_route=\/wp\/v2\/posts\/511\/revisions\/834"}],"wp:attachment":[{"href":"https:\/\/www.aikapa.com\/Financial_Bites\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=511"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.aikapa.com\/Financial_Bites\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=511"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.aikapa.com\/Financial_Bites\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=511"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}