Reduce your retirement tax bills.
Retirees can help their savings last longer by moving to a place with lower taxes. These 13 states don’t tax Social Security or pension income. However, they have very different property and sales tax rates, which should also be taken into consideration, according to data from Wolters Kluwer Tax & Accounting, the Tax Foundation and the U.S. Census Bureau. Check out these low tax places to retire.
Alabama
The state of Alabama doesn’t tax Social Security benefits or traditional pension payments. Property owners in Alabama paid a median of just $556 in real estate taxes in 2015. The state sales tax rate is also a relatively low 4 percent, but there may be additional local sales taxes in some areas of the state.
Alaska
Alaska is the only state with no state income tax and no state sales tax. However, property taxes can be high. Homeowners paid a median of $2,979 for real estate taxes in 2015.
Florida
Year-round warm weather isn’t the only perk of retirement in Florida. The state doesn’t levy an income tax. Real estate taxes were a median of $1,733 across the state in 2015. The state sales tax rate is 6 percent.
Illinois
The state of Illinois allows retiree residents to subtract their Social Security income from their adjusted gross income. Income from federally qualified pension plans and IRAs is also generally exempt from state tax. But real estate taxes are high, costing homeowners a median of $4,101 in 2015. Shoppers also pay a 6.25 percent sales tax on many purchases.
Mississippi
Pension and annuity payments and income from Keogh plans and IRAs are generally exempt from state tax in Mississippi, and income from Social Security is also not subject to taxation. Median real estate taxes were just $877 in 2015. However, Mississippi has a relatively high state sales tax rate of 7 percent.
Nevada
The casinos and nightlife could be what draws you to Nevada, but you might stay for the low tax rates. Nevada doesn’t have a state income tax. The median real estate tax bill was $1,529 in 2015. The state sales tax rate is 6.85 percent.
New Hampshire
The only forms of income New Hampshire taxes is dividends and interest. There is also no state sales tax. Property taxes, however, are among the highest in the country. Homeowners paid a median of $5,349 for real estate taxes in 2015.
Pennsylvania
Social Security benefits are not included in taxable income in the state of Pennsylvania. Distributions from 401(k)s and similar types of workplace retirement accounts and IRA withdrawals taken after age 59 1/2 are also generally exempt from state income tax. But retirees will have to pay a 6 percent sales tax on their purchases. The median property tax bill was $2,671 in 2015.
South Dakota
South Dakota is another state that doesn’t have an income tax. Property owners paid a median of $2,025 for real estate taxes. There’s also a state sales tax of 4.5 percent.
Tennessee
Dividends and interest are the only forms of income that are taxable in Tennessee, and taxpayers age 65 or older with low incomes are exempt. But watch out for the 7 percent sales tax. Homeowners also paid a median of $1,099 in real estate taxes.
Texas
There is no state income tax in Texas, but the state raises revenue in other ways. Property owners faced a median of $2,755 in real estate taxes in 2015. There’s also a 6.25 percent sales tax applied to many purchases.
Washington
Washington state won’t tax your income, but it will tax your property. Homeowners paid a median of $2,895 for property taxes in 2015. There’s also a 6.5 percent sales tax.
Wyoming
Wyoming doesn’t levy an income tax. The sales tax is a relatively low 4 percent. Property taxes were a median of $1,256 in 2015.
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13 States Without Pension or Social Security Taxes originally appeared on usnews.com
