If you’re looking to retire and you need to find ways to trim expenses, you may want to head north to Alaska.
It turns out Alaska offers more than majestic vistas, abundant wildlife and unspoiled beauty. Kiplinger says Alaska is the most tax-friendly state in the nation for retirees.
The Last Frontier is a tax paradise for retirees who don’t mind long, dark winters and bears in their backyards. The clincher: The state sends all permanent residents an annual dividend check from the state’s oil wealth savings account. The 2014 payout will be $1,884 per person, state officials just announced.
Alaska also has no state sales tax, no state income tax and no estate or inheritance tax. Plus, senior homeowners (age 65 and older) don’t have to pay municipal taxes on the first $150,000 of the assessed value of their property.
These four states are also tax-friendly for retiring folks, Kiplinger says:
- Wyoming. The average state and local combined tax rate for Wyoming residents is a mere 6.89 percent, the lowest in the U.S. The Equality State also has low property taxes, no state income tax and a low sales tax. “Even better for seniors, those who meet income requirements are eligible for a refund of up to $900 ($800 for single filers) of property taxes, utilities and sales/use taxes,” Kiplinger wrote.
- Nevada. With no state income tax, no estate or inheritance tax and food and prescription drug exemptions from sales tax, “the Silver State offers retirees a jackpot of tax savings,” Kiplinger said.
- Georgia. “Social Security income is exempt from state taxes, and so is up to $35,000 of most types of retirement income for residents age 62 to 64,” Kiplinger said. “For those 65 and older, the exemption is $65,000 (or $130,000 per couple).” Georgia has no estate or inheritance tax, and its state income tax is 1 to 6 percent.
- Arizona. With a state income tax of just 2.59 to 4.54 percent, the Grand Canyon State has a low income tax, and Social Security benefits are exempt.
Other tax-friendly states for retirees include Mississippi, Delaware, Louisiana, South Dakota and Florida.
Some states’ taxes are not so nice to older Americans. Rhode Island, Vermont, Connecticut, Minnesota and Oregon are the top five least tax-friendly states for retirees, Kiplinger says. Click here to read more about them and five other not-so-friendly states.
How will you decide where to retire? Will a state’s tax structure come into play? Share your comments below or on our Facebook page.