Retiring to the right US state could save you thousands

Retiring to the right US state could save you thousands
Retiring to the right US state could save you thousands

If you plan to work in retirement consider moving to a state that doesn't tax individual income – retirement or otherwise. At present, there are seven states that fit the bill: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming.

Of course, before you load up the truck and move to one of these seven states, calculate your overall tax burden as well as your sales tax or property tax rates, as well. For some, the amount paid in property taxes might offset the savings from not having to pay taxes on individual income.

Of note, many states and some local jurisdictions offer senior citizen homeowners some form of property tax exemption, credit, abatement, tax deferral, refund or other benefits. These tax breaks also are available to renters in some jurisdictions. The benefits typically have qualifying restrictions that include age and income of the beneficiary.

Also of note, this exercise of calculating which states provide the greatest after-tax income works especially well for high-income taxpayers, but less so for low- to moderate-income taxpayers, says Mengle. Also, older Americans should factor in to their calculations the likelihood that they will stop the to their stop working around age 70.

The Tax Foundation and the American Institute of Certified Public Accountants' Total Tax Insights have online tools to help you calculate your overall tax burden, sales tax and property tax rates.

Mengle also suggests working with a tax professional who can perform what-if scenarios for different states. "Have them work up an individualized assessment on the states that are possible retirement locations," he said.

CNBC

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