Tuesday, August 27, 2013
Consider these various types of state taxes before choosing a retirement destination.
Pensions and retirement income can vary drastically from state to state. Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming do not tax income at all, while New Hampshire and Tennessee tax dividends and interest only. Most other states offer exclusions that protect some, or all, retirement income. Only California, Minnesota, Nebraska, North Dakota, Rhode Island, and Vermont offer no safe haven for retirement income.
States are generous for the most part when it comes to taxing Social Security benefits. Only 14 states tax benefits to some extent and some only tax benefits when they exceed a certain threshold while others allow benefits to qualify for tax breaks.
And as I have previously discussed, all but 19 states and the District of Columbia do not have an estate or inheritance tax.
Click here for a Retiree Tax Map which further examines these tax categories.
See Rachel L. Sheedy, States Differ on Retiree Tax Burden, Kiplinger, Sept. 2013.