States that don't tax your retirement income

[vraiblonde]

13 States That Won’t Tax Your Retirement Distributions

Every penny from your 401(k), IRA, pension and Social Security counts when you’re retired

www.aarp.org

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.

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

 

[Tech]

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]

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]

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.

 

[PeoplesElbow]

Yep, the feds would love the income.

Like I said you can take advantage, it takes some planning and smarts though.

Had my mom do a conversion and she ended up paying no federal taxes at all on it. It was the right year to do it, any other year she would have paid taxes.

 

[SamSpade]

13 States That Won’t Tax Your Retirement Distributions

Every penny from your 401(k), IRA, pension and Social Security counts when you’re retired

www.aarp.org

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]

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]

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]

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]

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]

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]

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.

 

[stgislander]

Just heard this on WTOP this morning, for those wanting to stay local.

Study: Va. is best state to retire - WTOP News

Looking for the best place to live when you retire? Look no further than the Old Dominion. Virginia is the top state to retire, according to a new study from WalletHub.

wtop.com

 

[itsbob]

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.

Mass state troopers used to sit on the interstate on the border with NH.. BOOZE, Fireworks, and anything you didn't pay Mass taxes on carried amazing fines.

 

[SamSpade]

Just heard this on WTOP this morning, for those wanting to stay local.

Study: Va. is best state to retire - WTOP News

Looking for the best place to live when you retire? Look no further than the Old Dominion. Virginia is the top state to retire, according to a new study from WalletHub.

wtop.com

Every time I read one of those - I learn that many of the factors they included to make the list are things I don't care a whit about.
Taxes on a lesser fixed income - including property tax - is the single largest motivator.
Things like weather are important - but not as important as COST.

 

[Sneakers]

Mass state troopers used to sit on the interstate on the border with NH.. BOOZE, Fireworks, and anything you didn't pay Mass taxes on carried amazing fines.

Didn't MD do that with people going over the Nice bridge a while back, when VA sold real fireworks? Not so much for the taxes, but the illegal possession stuff.

 

[Clem72]

Every time I read one of those - I learn that many of the factors they included to make the list are things I don't care a whit about.
Taxes on a lesser fixed income - including property tax - is the single largest motivator.
Things like weather are important - but not as important as COST.

I would add access to decent medical facilities. I have had thoughts about WV, there are several cities only an hour or two from the DC metro.

 

[Kyle]

 

[SamSpade]

I would add access to decent medical facilities. I have had thoughts about WV, there are several cities only an hour or two from the DC metro.

That's actually on my list too just not as high. My mom lived in the Raliegh Durham area, so I knew she'd always have first-rate care.

THAT is actually the biggest reason I DON'T want to live in East Bumblef*ck, because I'd die at home and they'd find my body a month later.

 

[Sneakers]

THAT is actually the biggest reason I DON'T want to live in East Bumblef*ck, because I'd die at home and they'd find my body a month later.

Living by myself, that thought has crossed my mind frequently. Pretty sad to think that my death might be uncovered because someone realized I hadn't posted in this forum for a few weeks...