Are you looking to relocate during retirement? If so, keep in mind that certain destinations have tax benefits that will help your retirement savings go further.
Looking at the best places to retire in 2012, Yahoo Finance noted the importance of considering local taxes. Nine states have no state income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Texas, Tennessee, Washington State and Wyoming. These destinations may be worth considering if you’re among the 75 percent of Americans who Bankrate says will work during retirement.
While the absence of state income tax may sound appealing, some of those states have other high taxes. In Washington State, Yahoo points out, Seattle has a hefty 9.5 percent sales tax. Alaska is the only state with no state income or sales taxes, according to U.S. News.
Yahoo notes that some states offer tax breaks on Social Security and pension benefits. This may ease the financial burden for those in their later years. The states with the best tax breaks for retirees, according to Yahoo, are Alabama, Alaska, Arizona, Georgia, Idaho, Kentucky, Louisiana, Mississippi, Montana, New Hampshire, New Mexico, Nevada, Oklahoma, South Carolina, South Dakota, Utah and West Virginia.
For a list of tax benefits for seniors in each state, check out the interactive map on Kiplinger.com that gives information on states’ income, sales, Social Security and inheritance taxes.
Are you planning to relocate to a new state for your retirement? How important is it for you to find a destination with low taxes?