tax friendly states for retirees

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Re: tax friendly states for retirees

Postby VictoriaF » Sun May 12, 2013 7:11 pm

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Re: tax friendly states for retirees

Postby mickeyd » Sun May 12, 2013 7:20 pm

(Previously I mentioned no sales tax. Yeah - that was a mistake. I meant state income tax.)


Yea, I assumed that was what you meant. Texas will beat you up with 8-9% sales tax. Just don't buy anything and you can avoid that one.

I can not defend TxDot repairing IH-35 as needed. Doesn't that happen on all interstate highways?

BTW you might want to try taking US 281 from FW to SA as an alternate route. It's always been a beautiful drive.
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Re: tax friendly states for retirees

Postby BobStrauss » Sun May 12, 2013 8:35 pm

Maybe I'll try 281 next time, as I live a stone's throw from it now in SA. I do take the toll road to bypass Austin, which is nice, but that is a private road, and only a short part of the trip.
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Re: tax friendly states for retirees

Postby neurosphere » Sun May 12, 2013 8:42 pm

MarkNYC wrote:The NY pension exclusion does apply to Roth conversion income as long as the account owner is over age 59.5 on the date of conversion; and the exclusion can be used in combination with the NY standard deduction.


That's a good deal for one who plans to retire early and/or make Roth conversions in lower income years.

Hmm, so for retirees of moderate income, New York might be considered a "low tax" state. :D

A married couple could have a $40,000 distribution from their deductible IRA, and another $15,000 in income from other sources, and not pay any state tax. Also, the first few dollars ($40,000 or so) in NYS are taxed at only 4-6% due to progressive tax brackets. If one optimized IRA withdrawals and other income sources, a married couple can have $95,000 in income and only pay about $2000 in state taxes. Or pay no tax on $55,000 worth of income.

Of course, if one lived in new york city, there is additional tax. I hope to retire in new york city, and this information about the IRA exemption is welcome news.
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Re: tax friendly states for retirees

Postby ddunca1944 » Sun May 12, 2013 8:53 pm

gkaplan wrote:You couldn't pay me to live in most of the tax friendly states for retirees.


+1

My priority is to live near my children & grandchildren. I also enjoy the services that my taxes pay for. Besides, our largest tax bill is to the IRS and that would be the same whichever state we lived in.
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Re: tax friendly states for retirees

Postby rec7 » Sun May 12, 2013 8:55 pm

Or a person could invest in all treasury notes they are tax free in all states as far as I know.
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Re: tax friendly states for retirees

Postby investor » Sun May 12, 2013 9:01 pm

free even of State Taxes ?
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Re: tax friendly states for retirees

Postby Sidney » Sun May 12, 2013 9:01 pm

Or a person could invest in all treasury notes they are tax free in all states.


Yes, but if you have a lot of your assets in deferred accounts, they will get taxed by many states when you take distributions.
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Re: tax friendly states for retirees

Postby The Wizard » Sun May 12, 2013 9:05 pm

flipflopliving wrote:FWIW most RV fulltimers pick SD or TX as their state of domicile for tax reasons.

I think it used to be NV; why the change?
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Re: tax friendly states for retirees

Postby Toons » Sun May 12, 2013 9:13 pm

Blues wrote:
gkaplan wrote:You couldn't pay me to live in most of the tax friendly states for retirees.


I think I just heard a sigh of relief coming over the mountain from Tennessee...



Which reminds me ,since leaving New York State and retiring to Tennessee a couple of years ago,what a pleasant drive we take occasionally On I-26 from Jonesborough Tn,to Asheville NC and back.Beautiful mountain scenery and very little traffic.Both Tennessee and North Carolina keep roads in good shape also. :happy
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Re: tax friendly states for retirees

Postby Blues » Sun May 12, 2013 10:32 pm

Toons wrote:
Blues wrote:
gkaplan wrote:You couldn't pay me to live in most of the tax friendly states for retirees.


I think I just heard a sigh of relief coming over the mountain from Tennessee...



Which reminds me ,since leaving New York State and retiring in Tennessee a couple of years ago,what a pleasant drive we take occasionally On I-26 from Jonesborough Tn,to Asheville NC and back.Beautiful mountain scenery and very little traffic.Both Tennessee and North Carolina keep roads in good shape also. :happy


Asheville's about a half hour, 40 minutes away. We know the road quite well as we frequently go back up the I-81 corridor through the Shenandoah Valley to visit family in NY and NJ. :sharebeer
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Re: tax friendly states for retirees

Postby flipflopliving » Sun May 12, 2013 10:37 pm

The Wizard wrote:
flipflopliving wrote:FWIW most RV fulltimers pick SD or TX as their state of domicile for tax reasons.

I think it used to be NV; why the change?

The best for lowest overall taxes are NV, SD, TX, and WY and SD and TX are the two with the biggest mail forwarding services.
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Re: tax friendly states for retirees

Postby lazyday » Mon May 13, 2013 2:41 am

jeffyscott wrote:But in any case, if you can afford to live where you want to live, would you move just to save :moneybag ? I don't think I would.

Not sure I could afford to live where health insurance is expensive!

I suspect this topic has been covered thoroughly in Early Retirement forums. And other retirement forums, including ones already linked. Maybe even with wiki or best posts available. Not discouraging discussion here, some find the caliber of people here quite high. :happy
(don't ignore ER forums tho)
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Re: tax friendly states for retirees

Postby DualIncomeNoDebt » Mon May 13, 2013 6:47 am

flipflopliving wrote:The best for lowest overall taxes are NV, SD, TX, and WY and SD and TX are the two with the biggest mail forwarding services.


What about Washington state. No income tax, does it rank as favorable?
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Re: tax friendly states for retirees

Postby Magruder » Mon May 13, 2013 9:19 am

Not a single mention of Tax-Free New Hampshire! No sales tax; no income tax. Hurry though, former Massachusetts residents are filling up our remaining space fast!
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Re: tax friendly states for retirees

Postby FrugalInvestor » Mon May 13, 2013 9:25 am

livesoft wrote:Texas does not tax income.


But don't overlook the high property taxes is Texas.
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Re: tax friendly states for retirees

Postby beardsworth » Mon May 13, 2013 9:42 am

Magruder wrote:Not a single mention of Tax-Free New Hampshire! No sales tax; no income tax.


But it has a reputation for high property taxes, on average, compared to other states. For example:

http://www.kiplinger.com/tool/retiremen ... 0Hampshire

Since you live there, could you comment? Thanks.
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Re: tax friendly states for retirees

Postby beardsworth » Mon May 13, 2013 9:48 am

DualIncomeNoDebt wrote:
flipflopliving wrote:What about Washington state. No income tax, does it rank as favorable?


It's on our list of possible someday-retirement places--but because we like Washington, not because it has no income tax, although that's a "background" consideration.

It does have a high sales tax, and among the nation's highest per-gallon gasoline taxes.
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Re: tax friendly states for retirees

Postby BigFoot48 » Mon May 13, 2013 9:51 am

Taxes are important, but other factors may be way more important.

A house across the street from us sold in early 2012 at a bargain price to a couple moving here from Virginia to retire. They had been to the Tucson area many times and knew it well. Before they moved in they had significant improvements made to the house, as the elderly woman that had lived there had let it slide a bit.

Well, a month ago, about 8 months after they moved in, a for-sale sign went up. We talked to them and while they liked the area and neighborhood, the retirement experience here just wasn't clicking for them, so they're moving to South Carolina to be close to their grandchildren, and where real estate is even less expensive.

Fortunately, the market has improved here and they had an offer within two weeks that will cover all their improvements and selling costs, and maybe even give them a small profit from their Arizona retirement venture.

So keep in mind all the factors of retirement in choosing a location, and choose wisely! (Rent for six months?)
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Re: tax friendly states for retirees

Postby Blues » Mon May 13, 2013 9:54 am

Magruder wrote:Not a single mention of Tax-Free New Hampshire! No sales tax; no income tax. Hurry though, former Massachusetts residents are filling up our remaining space fast!


I have family in Keene and Troy, but you can't get there from here... :wink:

In honesty, I've spent a lot of time in NH both with family as well as backpacking, rock climbing, cross country skiing etc. A great state...but a little chilly in the winter.
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Re: tax friendly states for retirees

Postby rec7 » Mon May 13, 2013 3:34 pm

investor wrote:free even of State Taxes ?


The Fed's tax them but not the states as far as I know.
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Re: tax friendly states for retirees

Postby pryan » Mon May 13, 2013 5:21 pm

I moved to The Villages in Florida five years ago. The Florida tax rates are extremely favorable to retirees.I live there because of the lifestyle, not the tax rates. Florida does not impress me that much but The Villages is the best place I have ever lived. I am a California native so that says something. There is a reason it is the largest retirement community in the USA.
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Re: tax friendly states for retirees

Postby flipflopliving » Mon May 13, 2013 8:02 pm

MarcMyWord wrote:
DualIncomeNoDebt wrote:
flipflopliving wrote:What about Washington state. No income tax, does it rank as favorable?


It's on our list of possible someday-retirement places--but because we like Washington, not because it has no income tax, although that's a "background" consideration.

It does have a high sales tax, and among the nation's highest per-gallon gasoline taxes.


Washington is knocked out by a high sales tax of 6.5 % and personal property tax.

As someone else said NH was knocked out by the tax on dividends and interest.
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Re: tax friendly states for retirees

Postby mlipps » Mon May 13, 2013 8:19 pm

flipflopliving wrote:
MarcMyWord wrote:
DualIncomeNoDebt wrote:
flipflopliving wrote:What about Washington state. No income tax, does it rank as favorable?


It's on our list of possible someday-retirement places--but because we like Washington, not because it has no income tax, although that's a "background" consideration.

It does have a high sales tax, and among the nation's highest per-gallon gasoline taxes.


Washington is knocked out by a high sales tax of 6.5 % and personal property tax.

As someone else said NH was knocked out by the tax on dividends and interest.


If 6.5% sales tax is high, I need to get out of Cook County...
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Re: tax friendly states for retirees

Postby flipflopliving » Mon May 13, 2013 8:32 pm

mlipps wrote:
flipflopliving wrote:
MarcMyWord wrote:
DualIncomeNoDebt wrote:
flipflopliving wrote:What about Washington state. No income tax, does it rank as favorable?


It's on our list of possible someday-retirement places--but because we like Washington, not because it has no income tax, although that's a "background" consideration.

It does have a high sales tax, and among the nation's highest per-gallon gasoline taxes.


Washington is knocked out by a high sales tax of 6.5 % and personal property tax.

As someone else said NH was knocked out by the tax on dividends and interest.


If 6.5% sales tax is high, I need to get out of Cook County...


Well keep in mind that my comment was directed to those who are full time RVrs and that means they are looking for the overall lowest tax rate and not necessarily for the best place to live. ;-)

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Re: tax friendly states for retirees

Postby campy2010 » Mon May 13, 2013 11:13 pm

mlipps wrote:
flipflopliving wrote:
MarcMyWord wrote:
DualIncomeNoDebt wrote:
flipflopliving wrote:What about Washington state. No income tax, does it rank as favorable?


It's on our list of possible someday-retirement places--but because we like Washington, not because it has no income tax, although that's a "background" consideration.

It does have a high sales tax, and among the nation's highest per-gallon gasoline taxes.


Washington is knocked out by a high sales tax of 6.5 % and personal property tax.

As someone else said NH was knocked out by the tax on dividends and interest.


If 6.5% sales tax is high, I need to get out of Cook County...


The WA sales tax is 8.6-9.5%. The portion that goes to the state is 6.5% and local counties can add a percentage on top of the state's portion. The overall stales tax rate hasn't been 6.5% in a very, very long time.
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Re: tax friendly states for retirees

Postby johnep » Tue May 14, 2013 7:58 am

Blues wrote:
Toons wrote:
Blues wrote:
gkaplan wrote:You couldn't pay me to live in most of the tax friendly states for retirees.


I think I just heard a sigh of relief coming over the mountain from Tennessee...



Which reminds me ,since leaving New York State and retiring in Tennessee a couple of years ago,what a pleasant drive we take occasionally On I-26 from Jonesborough Tn,to Asheville NC and back.Beautiful mountain scenery and very little traffic.Both Tennessee and North Carolina keep roads in good shape also. :happy


Asheville's about a half hour, 40 minutes away. We know the road quite well as we frequently go back up the I-81 corridor through the Shenandoah Valley to visit family in NY and NJ. :sharebeer


I totally agree. I-26 from Tennessee to Asheville is an awesome drive. Western NC and Eastern Tennessee are both beautiful country. If I were not so entrenched in my NCcommunity I would move to either in a heartbeat.
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Re: tax friendly states for retirees

Postby jeffyscott » Tue May 14, 2013 7:02 pm

Every state is going to collect taxes one way or another and sometimes lower taxes can mean higher fees for things like car registration.

I used to think we should at least move across the line to IL in retirement, but now I look at about 3% extra in sales tax on every single purchase and maybe $1000-1500 more in property taxes. Then there is the strong likelihood the taxes there will be going up, up,up due to the horrible state finances, from decades of failing to fund the pension systems. So now, more than likely, we will just stay in WI.
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Re: tax friendly states for retirees

Postby Needtoknow » Wed May 15, 2013 1:06 am

I must tell you that I found my retirement state back when I was 24 years old and I moved from New York City to Southern California. I have visited many of the states over the years keeping in mind the possibility of retirement. I must tell you that I keep coming back to my home in the "California Riviera".

Believe me, I think about the taxes and California supposedly has very high ones. However, each of the states will get you one way or another. I looked at houses in Texas. I have got to say that I was shocked at 3.09% property taxes. In California, I pay only 1%.

I also consider other factors. You get a lot less wear and tear on your cars in California than you do back east. Food prices really don't vary that much from state to state. Gas prices are cheaper in many states compared to California. However, when I go to NY, NJ or CT the prices are the same or higher than California's for gasoline. Electric rates in Arizona has really high electric rates.

I live under an hour from both Los Angeles and San Diego. The I-5 takes me to both cities. We have wonderful parks and lots of great activities for kids to seniors. There are all kinds of discounts for seniors and if you are savvy enough to use your discounts you will find that prices for many things are a lot lower like some of the other cheaper states. You'd be surprised how cheap California is. In fact, the beaches are still free. The mountains and snow in them are still free. The beauty of the state is free. Yes, you may say these come at a cost. True, but I know that in summer Texans, Arizona and Nevada residents don't really care for the heat where they live. In the winter, all of the midwest and the east coast don't like the winters because they are all trying to come here or the south. Floridians and others in the south don't like their humidity in the summer. Also, many Floridians don't like their ANNUAL hurricane season. Hawaii, well that is a great place to visit for a month or two but I would get island fever and stuff is really expensive there, even more expensive than here in California.

So although it may seem that I am boasting about California living, that was not the point. Yeah traffic may be bad in some cities but what city doesn't have that problem at some point? We do have an occasional shake here and there from earthquakes and yes we have forest fires when we don't get a lot of rain some years. However, taxes would not be the reason for me to leave California. I find many, many pluses here. I say this as a person who will recieve a substantial pension that will exceed $100,000 each year and will have some 403B savings. I do believe that with early planning, one could shelter taxes. I have substantial savings in Roth IRA's and life insurance products that I will draw upon without tax penalty. I have these insurance products for my wife and I and I must tell you that they are very safe and do fine. I don't worry about my taxes too much. No, I am not an insurance salesman but I do read. I read a book a while back called the Retirement Time Bomb by a guy named Ed Slott and another book a while back about creative strategies. Insurance is a great avenue for those of us who will earn a lot of income and will be in a high tax bracket. My wife will still be working and makes a substantial income as well so I have been looking for ways to shield my money from Uncle Sam and still enjoy my California living. I must say that my plan has been going very, very well. So those of you looking for tax haven states, good luck to you, but you may enjoy where you are with some good pre-planning for YOUR situation.
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Re: tax friendly states for retirees

Postby letsgobobby » Wed May 15, 2013 2:33 am

nvboglehead wrote:As a native of SF, CA, moved to LV, NV 16 years ago and never looked back. Very low cost of living (no state income taxes) and plenty to do. Love the weather, including the infernal summers.

Dale

And no estate tax. Good place to persuade your wealthy parents to move.
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Re: tax friendly states for retirees

Postby stemikger » Wed May 15, 2013 3:00 am

Calm Man wrote:I understand. I guess what I am saying is that when we retire we have maybe between 10 and 30 good years left. I live in NJ. I like going into NYC to see and do well, everything. I could save say $10,000 a year for example in taxes by moving to Texas or Florida Alaska or another tax free state. Taxes would be lower but weather extremes greater, the reliance on the auto more and the available public transportation and cultural/sports activities less. (This is not to say that Texas and Florida don't have plenty to do.). So I decided rightly or wrongly that I'd maximize my "happiness" and activities as I saw fit and not worry about taxes. So far it is working great as with free time there is so much one can do around here and I may, gulp< eventually move to NYC especially when I am ready to get rid of the car.


+1
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Re: tax friendly states for retirees

Postby rec7 » Wed May 15, 2013 6:08 am

Ever notice the tax free states many times have wilder weather. It is like tax free is the carrot to get you to move there.
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Re: tax friendly states for retirees

Postby 2beachcombers » Wed May 15, 2013 9:28 am

Ga--no SS tax and 65K retirement income exclusion once you are 65. I believe it is 35K at 62. This for each individual.
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Re: tax friendly states for retirees

Postby BigFoot48 » Wed May 15, 2013 9:40 am

Needtoknow wrote:Electric rates in Arizona has really high electric rates.

We're at $0.11kWh in the Tucson area.
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Re: tax friendly states for retirees

Postby ddunca1944 » Wed May 15, 2013 9:52 am

rec7 wrote:Ever notice the tax free states many times have wilder weather. It is like tax free is the carrot to get you to move there.



The tax free carrot is not enough to make me consider moving to most of those places. I dislike extremes of hot and cold weather. And living near family is priceless.
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Re: tax friendly states for retirees

Postby Alan S. » Wed May 15, 2013 3:15 pm

Looking at each state's taxes and other costs can only be put into perspective if you test your own intended comsumption pattern to determine your total tax load for each state. For example, if you intend to buy expensive cars and furniture then sales taxes may be your main concern. If you want to invest in an expensive retirement home, consider property taxes, and of course income taxes with respect to the types of income you will have in retirement. For most states that have -0- tax of a certain type, they will make up for that with higher rates elsewhere. Eg TX has no income tax, but very high property taxes.

Also consider a state's fiscal situation. High deficits means that the current tax rates may be subject to considerable increases in the near future. States are limited with respect to austerity measures and tax increases since residents can re locate to another state very easily, especially after retirement and do not have to be concerned with school quality for their kids. The source tax was also eliminated back in 1996.
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Re: tax friendly states for retirees

Postby jeffyscott » Wed May 15, 2013 5:13 pm

Needtoknow wrote:Believe me, I think about the taxes and California supposedly has very high ones. However, each of the states will get you one way or another. I looked at houses in Texas. I have got to say that I was shocked at 3.09% property taxes. In California, I pay only 1%.


Well, if a similar house costs 3 times as much, then the property tax ends up being about the same.
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Re: tax friendly states for retirees

Postby Needtoknow » Wed May 15, 2013 10:14 pm

jeffyscott wrote:
Needtoknow wrote:Believe me, I think about the taxes and California supposedly has very high ones. However, each of the states will get you one way or another. I looked at houses in Texas. I have got to say that I was shocked at 3.09% property taxes. In California, I pay only 1%.


Well, if a similar house costs 3 times as much, then the property tax ends up being about the same.


Exactly my point!
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Re: tax friendly states for retirees

Postby Toons » Wed May 15, 2013 10:16 pm

johnep wrote:
Blues wrote:
Toons wrote:
Blues wrote:
gkaplan wrote:You couldn't pay me to live in most of the tax friendly states for retirees.


I think I just heard a sigh of relief coming over the mountain from Tennessee...



Which reminds me ,since leaving New York State and retiring in Tennessee a couple of years ago,what a pleasant drive we take occasionally On I-26 from Jonesborough Tn,to Asheville NC and back.Beautiful mountain scenery and very little traffic.Both Tennessee and North Carolina keep roads in good shape also. :happy


Asheville's about a half hour, 40 minutes away. We know the road quite well as we frequently go back up the I-81 corridor through the Shenandoah Valley to visit family in NY and NJ. :sharebeer


I totally agree. I-26 from Tennessee to Asheville is an awesome drive. Western NC and Eastern Tennessee are both beautiful country. If I were not so entrenched in my NCcommunity I would move to either in a heartbeat.


+1 :sharebeer
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Re: tax friendly states for retirees

Postby bsteiner » Sat May 18, 2013 9:48 pm

For retired Federal or New York employees, New York City is tax-friendly. New York State and City do not tax Federal or New York employee pensions or Social Security, and have an exemption for some amount of other pension and IRA benefits. NYC its own income tax, but has a very low property tax. That benefits homeowners with modest incomes, as well as retired Federal and New York employees.
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Re: tax friendly states for retirees

Postby donaldfair71 » Sat May 18, 2013 11:33 pm

Needtoknow wrote:I must tell you that I found my retirement state back when I was 24 years old and I moved from New York City to Southern California.


I can completely relate to this!

Originally from northwest PA, I attended college not far from home and always pictured myself living and dying there. Almost out of college, 23, and never having driven south of the Mason-Dixon Line, some friends and I decided on an impromptu trip to Virginia Beach.

We're driving south, from PA through Maryland for literally 1/10 mile, through WV and finally Virginia. I couldn't believe how beautiful the scenery was in the Shenandoah Valley, most notably the Winchester area. On the way back, we got lost (if anyone has ever been to Winchester, you'd understand. Every "route" has 2 names, and they are not continuous-- They stop, then pick up 3 roads over and signs are lacking) in Winchester, and the people who helped us at a McDonalds and a gas station were so much nicer and, well, happier than the people I was used to "up north" that I was floored. I actually said to one of my buddies, "I'm gonna live here someday. This seems like a great small town". I know you say things as a college kid, and as a young person, and it's "Yeah, right, okay" and you move on. But I honestly, even though I had been in the area 2 hours combined in my life, felt like it was "home". It was something I felt about the area and had never felt about any area, even my hometown.

Flash forward a full 3 years. My serious then-girlfriend (now wife) and I were looking to relocate to a place hiring teachers. She had just finished up her teaching certificate, and I was spinning my wheels substitute teaching in one of the roughest areas to get a teaching job. We pepper the south with teaching applications, just looking to get in together in the same area. Applied to about 25 districts in Va., 15 in NC, 15 in SC. Who calls both of us first? Frederick County Public Schools... Winchester, Virginia. I've been in that area for 7 years now, and no tax break could ever move me out. In my case, my retirement locale found me.
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Re: tax friendly states for retirees

Postby gerrym51 » Sat May 18, 2013 11:43 pm

massachusettes where i live has an income tax but incredibly it does not tax SOCIAL SECURITY at all. so as far as retirement that would make it a good state.
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Re: tax friendly states for retirees

Postby eucalyptus » Tue May 21, 2013 9:58 pm

Left MD for FL. Big improvement,everything seems much easier in FL. No state income tax. Hurricanes and alligators.
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Re: tax friendly states for retirees

Postby rustymutt » Tue May 21, 2013 10:04 pm

At the Very Least, Work Hard, Do Your Best, Know the Truth and the Facts and Always Be Honest!
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Re: tax friendly states for retirees

Postby beardsworth » Tue May 21, 2013 11:00 pm

rustymutt wrote:http://www.kiplinger.com/tool/retirement/T055-S001-state-by-state-guide-to-taxes-on-retirees/index.php


rustymutt, did you actually read the thread before posting? I provided that same link, above, on May 11th. Came back to read the latest post(s) today and thought "this seems familiar."

Oh, well, the more the merrier. :)
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Re: tax friendly states for retirees

Postby littlebird » Fri May 24, 2013 12:55 am

[quote="Watty"]Beware of general lists, the problem is that the relative tax load for people of different income levels may be a lot different than what the lists are looking at. . quote]


Another problem with lists is that the compiler will only research the taxes she/he is familiar with. When I was doing this type of research, 25 years ago, New Mexico had low sales taxes, low property taxes, low income tax, etc. After we moved there, we discovered that indeed it had all those low taxes; it also had a whopper of a tax called "gross receipts tax" which neither we nor the compilers of "best states to retire to" type lists had ever heard of.
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Re: tax friendly states for retirees

Postby Dandy » Sat May 25, 2013 9:21 am

I understand the lure of states that don't tax retirement income. Just be careful to look at the whole picture e.g. sales tax, realestate taxes etc. before you uproot yourself. Also, given the fiscal issues that face many states - they may decide to create taxes to cover their debt. So you also want to look at states that are in good fiscal shape.
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