Some State Taxation Schemes Are Better For Retirees

Reducing your tax burden is one way to reduce your living expense to make your retirement income go farther.

If you're considering moving, be aware of those states that give a break to retirees on their state income tax - and those that don't.
Though your federal income tax is the same everywhere, state income taxes vary considerably. Some states don't even have an income tax while others offer some income tax breaks to retirees. Be sure to check the current tax status for everything mentioned below. Here are some examples...

*States with no state-income taxes:
Seven states don't tax income. They are Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. Two additional states tax only dividend and interest income, but only if they exceed certain limits. They are New Hampshire and Tennessee.
Be aware that some of these states may make up what they don't get through income taxation by some other form of tax. As an example, New Hampshire has high real estate taxes to take up the slack for no state income tax.

*States that give a break to some forms of retirement income:
Two states exempt all retirement income - and that includes IRAs and 401(k) plans - from state income taxes. They are Pennsylvania and Mississippi.
Most states with an income tax allow some exemption for pensions. But these same states may tax public and private pensions differently. As examples, Alabama, Hawaii, Illinois, Kansas, Louisiana, Massachusetts, Michigan, Mississippi, New York and Pennsylvania exclude all federal, military and in-state government pensions from taxation. Yet Kansas taxes public pensions from all other states.


Some other states give you a tax break based on your age and income. New Jersey allows residents 62 and over who have incomes less than $100k to exclude up to $20,000 of private pension income from its state taxes. New York residents who have reached 591/2 can exclude up to $20,000 of private or out-of-state public pensions from taxes regardless of their total income.
Michigan residents can exclude up to $43,440 (for 2009) of private pension income from state taxes.
*Watch our for states with high retirement taxes :

These states tax most pension and other retirement income; and can have high marginal tax rates too. Three examples are California (9.55% tax rate on income less than $1 million), Rhode Island (9.9% tax rate) and Vermont (9.5% tax rate). Connecticut and Nebraska also tax all retirement income, with top tax brackets of 5% and 6.84%.

So before you consider moving to another state, check into how it will tax the income you'll bring with you for your retirement. It may be a pleasant bonus - or may dissuade you from choosing that location.

In the event you beloved this short article and also you would like to get details about Http://Tinraobatdongsan.Com (Http://Tinraobatdongsan.Com) kindly visit the web page.