States that don't tax your retirement income

vraiblonde

Board Mommy
PREMO Member
Patron

Nine of those states that don't tax retirement plan income simply have no state income taxes at all: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. The remaining three — Illinois, Mississippi and Pennsylvania — don't tax distributions from 401(k) plans, IRAs or pensions. Alabama and Hawaii don't tax pensions, but do tax distributions from 401(k) plans and IRAs.
:yahoo:

If the Fed wanted to do something for seniors, which they don't, they'd stop taxing retirement income on a federal level.
 

Tech

Well-Known Member
Pa. just makes it up on property taxes. Know people paying over $4G in school taxes alone on a 15' row home, no garage.

Want to do something for seniors? Outlaw property taxes. You don't own that house, you're just renting from the government.
 

PeoplesElbow

Well-Known Member
States without income taxes make up for it in other ways, there is no free lunch, but you can game the system to your advantage.

For example you want to end up living in a state that taxes ira distributions, first move to one that doesn't and do a Roth conversion, then move to the state you want to end up in that does.
 

Tech

Well-Known Member
States without income taxes make up for it in other ways, there is no free lunch, but you can game the system to your advantage.

For example you want to end up living in a state that taxes ira distributions, first move to one that doesn't and do a Roth conversion, then move to the state you want to end up in that does.
Yep, the feds would love the income.
 

SamSpade

Well-Known Member



:yahoo:

If the Fed wanted to do something for seniors, which they don't, they'd stop taxing retirement income on a federal level.
What I don't get - is that they tax Social Security benefits.

Actually, they DON'T if you have ONLY SS, and you only get taxes on it if you have a substantial retirement income IN ADDITION to SS. THEN it still gets taxed.

What makes this seem awfully unfair is - SS is already limited. It has a cap on how much of your income gets taxed BEFORE retirement, but it only pays so much also. Sure seems to me that it is punishing you for having been successful in your career. That is, you live your life - you have almost no retirement income - they don't tax you. Do about average, and they don't tax much. Do very well - and that tax they've piled on you your whole life is more or less fully taxable.
 

Hessian

Well-Known Member
States without income taxes make up for it in other ways, there is no free lunch, but you can game the system to your advantage.

For example you want to end up living in a state that taxes ira distributions, first move to one that doesn't and do a Roth conversion, then move to the state you want to end up in that does.
Hmm, I think we need a seminar on this....choose an agreeable restaurant, and name a time to congregate in their "Special Events" room...you are the first speaker. I can chip in a few ideas regarding stock investments vs ETFs & bonds....(I'll go last when everybody is sleepy).
 

PeoplesElbow

Well-Known Member
What I don't get - is that they tax Social Security benefits.

Actually, they DON'T if you have ONLY SS, and you only get taxes on it if you have a substantial retirement income IN ADDITION to SS. THEN it still gets taxed.

What makes this seem awfully unfair is - SS is already limited. It has a cap on how much of your income gets taxed BEFORE retirement, but it only pays so much also. Sure seems to me that it is punishing you for having been successful in your career. That is, you live your life - you have almost no retirement income - they don't tax you. Do about average, and they don't tax much. Do very well - and that tax they've piled on you your whole life is more or less fully taxable.
It really is a fairly small amount. I think the max social security you can get is around 22k, you have to almost double that in other income before they tax 85% of it.

If you can derive income from dividends and capital gains that doesn't count as income.
 

SamSpade

Well-Known Member
It really is a fairly small amount. I think the max social security you can get is around 22k, you have to almost double that in other income before they tax 85% of it.

If you can derive income from dividends and capital gains that doesn't count as income.
I sure intend on retiring making more than 22k + 44k = 66k. No question. In fact, my plan is have double that.
 

PeoplesElbow

Well-Known Member
Hmm, I think we need a seminar on this....choose an agreeable restaurant, and name a time to congregate in their "Special Events" room...you are the first speaker. I can chip in a few ideas regarding stock investments vs ETFs & bonds....(I'll go last when everybody is sleepy).
It was actually an easy decision, she hadn't started receiving SS yet, had a capital loss on the books and didn't have much to be taxed as income that year.
 

Monello

Yeah, whatever
PREMO Member
Right now we are in Alabama, 2 miles from the border with Florida. Alabamans in this area buy their groceries, prescriptions and clothes in Florida. Because FL doesn't tax those purchases. Each county in Alabama has it's own sales tax. This is in addition to state tax on purchases. For good measure, some cities also add a city sales tax up to 3%.

I guess if you are in a place where you can take advantage of state differences, that's what you do. Same with people from Maryland driving over the bridge to purchase discounted cigarettes.
 

PrchJrkr

Long Haired Country Boy
PREMO Member
Ad Free Experience
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Right now we are in Alabama, 2 miles from the border with Florida. Alabamans in this area buy their groceries, prescriptions and clothes in Florida. Because FL doesn't tax those purchases. Each county in Alabama has it's own sales tax. This is in addition to state tax on purchases. For good measure, some cities also add a city sales tax up to 3%.

I guess if you are in a place where you can take advantage of state differences, that's what you do. Same with people from Maryland driving over the bridge to purchase discounted cigarettes.
I can make it to Murphy's Express and back, and still have plenty of time to get to Solomons by 9:00.
 
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