Once you retire, you may expect that a number of things will change. Yes, this probably includes your finances and budget to some degree. But one thing probably won’t change: Depending upon how you structured your retirement income, you might still owe income taxes each year when you file your returns. Some retirees are surprised to discover that even their Social Security benefits can be taxed!
This is true for both your federal and state income tax returns, depending upon where you live. The good news is that some states do not impose income taxes on Social Security benefits, and a few states don’t have an income tax at all! It’s no wonder many people carefully consider their state of residence as they prepare for retirement.
Since taxes may impact your overall budget, it makes sense to consider how your choice of residence impacts your retirement budget. There are many reasons retirees often move, and taxes aren’t the most important consideration on everyone’s list.
Having said that, you might be interested in knowing which states do not tax Social Security benefits. Some of them have no state income tax at all, according to MSN Money.
- Alabama
- Alaska
- Arkansas
- California
- Florida
- Hawaii
- Illinois
- Indiana
- Iowa
- Kentucky
- Louisiana
- Maine
- Maryland
- Michigan
- Mississippi
- Nevada
- New Jersey
- North Carolina
- New Hampshire
- Oregon
- Pennsylvania
- South Dakota
- Tennessee
- Texas
- Washington
- Wisconsin
- Wyoming
Additionally, some of these states might not tax any type of retiree pension. But do your research carefully if you’re considering a move in retirement. While some of these states might appear friendlier from an income tax standpoint, remember that property taxes, sales taxes, and other requirements will also impact your budget.
We can help you do the math. As you continue to plan for retirement, let’s meet regularly to discuss income taxes, potential relocation, and any other factors that might impact your financial life both now and in the future.