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The stereotypical retiree moves south for better weather and a more relaxed lifestyle. (Picture couples playing shuffleboard in Fort Lauderdale.) But there might be some better reasons to change states after you retire.
Some states are known for having more friendly tax laws for retirees. So where should you take your shuffleboard skills and your IRA? Here are a few suggestions:
We know, it's cold. And really dark half the year. But it's really sunshiny the other half, plus the Last Frontier (really) has no state income tax, sales tax, estate tax, or inheritance tax. That means the man won't be taking a bite out of your Social Security benefits, retirement plan withdrawal, or gains from your investments, plus your dollar goes a little farther, in this life and the next. And it doesn't hurt that Alaska has the lowest gas tax in the country, either.
Now here we go -- warm, dry, and with enough activities to keep you busy post-retirement. The Silver State also spurns income, estate, and inheritance taxes, and has a paltry 6.85 percent state sales tax. The issue with moving to Nevada in retirement won't be losing your nest egg to the state -- it'll be losing it to the casinos.
Perhaps not the first destination on most retirees lists, until you consider the Magnolia State exempts Social Security benefits from its state income taxes. Not only that, it also excludes withdrawals from IRAs and 401(k) plans, income from public and private pensions, and other types of qualified retirement income. So as a retiree, you'd be living essentially tax-free. No wonder Mississippi is also called the Hospitality State.
OK, Florida isn't the best tax state for retirees, and it might not crack the top ten. But since most of y'all are wondering what the Sunshine State's tax situation is, here you go. Like most of the states on this list, Florida has no state income tax, nor does it charge estate or inheritance taxes. Where the state does tax you is on purchases -- sales tax can be as high as 7.5 percent in some places. However, Florida does have some nice homestead exemptions to its property taxes for homeowners over the age of 65.
Don't forget that no matter where you live you'll be subject to federal taxes. And if you're trying to find the best tax scenario for your retirement, you might want to talk to an experienced tax attorney near you.
Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.