Finding a Retirement-Friendly State

yahoo ^ | Friday, December 12, 2008 | Mark P. Cussen

[BenLurkin]

From a tax perspective, determining which state is the "right" state to retire in will depend on the type and amount of income that you reasonably expect to receive. The nine states that, as of 2008, do not assess income tax of any kind (Alaska, Florida, Nevada, South Dakota, Texas, Washington, Wyoming, Tennessee and New Hampshire) do not automatically qualify as the best for all retirees. If you own several rental properties, then the best state for you may differ from someone whose primary income outside of Social Security will come from pensions or IRAs.

There are four major categories of income for which states differ in their methods of taxation:

Pensions Social Security Sales Tax Property Tax

Pension Income

If you're looking to escape taxation of your pension at the state level, your options are pretty limited. Currently, as of 2008, there are only three states that do not tax pension income:

Illinois Mississippi Pennsylvania

New York has stipulations for some government employees to receive tax-free pension income, but not all retirees. These three states exempt virtually any kind of income received from tax-deferred accounts, including pensions, IRAs and qualified plans.

If your pension is from the government or the military, then seven more states open up for consideration: Alabama, Hawaii, Kansas, Louisiana, Massachusetts, Michigan and New York.

If the aforementioned states do not appeal to you as retirement havens, seven others exempt at least a portion of pension income from taxation: Delaware, Georgia, Minnesota, New Mexico, Utah, Virginia and West Virginia.

States that tax all retirement income at relatively high rates include California, Connecticut, Nebraska, Rhode Island and Vermont. More complete information on how each state taxes their residents' pension income can be found at RetirementLiving.com.

[weegee]

How about a retirement friendly country?

[Ken522]

Florida doesn’t have a state income tax - that would apply to pensions too, wouldn’t it?

[SkyDancer]

Ireland???
They’re pretty good regarding business taxes ... plus if you’re from the PNW it’ll be just like home .... and they have great beer ....

[2banana]

If you're looking to escape taxation of your pension at the state level, your options are pretty limited. Currently, as of 2008, there are only three states that do not tax pension income:

Illinois Mississippi Pennsylvania

But Pennsylvania offers no tax breaks for money you put IN to your 401k or pension. They get it going in, not coming out.

[mylife]

Guatemala

[oh8eleven]

It is my understanding that the first $20K of retirement pay is tax free in NY ...
"Under N.Y. Tax Law section 612(c)(3-a), an individual who is over the age of 59 may exclude up to $20,000 of eligible pension and annuity included in federal adjusted gross income from the computation of total New York income."

[RichardAubrey]

My wife & I are counting the years till we can escape luney-tune state of California. My first choose would be Washington--still a little liberal but no income tax and close enough to drive to Portland to escape the sales tax. Also we like to grow things and the weather is conducive and few forest fire in the Western portion. Next would be Texas—even fewer liberal and no income tax. Our daughter (junior in HS) is running around the house with a U of T sweatshirt lately. Either state would be better than California and the crack heads running Sacramento.

[Global2010]

Rogue Nation across the bay seems popular.

Not a into Ale but seems others like it.

I once had a cold cave creek Jalepeno beer but I dont think that is on the market anymore.

I stopped in at the Lincoln City Pig n Pancakes for breakfest on my way home and that is not the same good food I had once ten years ago in Astoria. Way too much money too.

Should have gone to Npt Steak and Seafood for a more home cooked meal.

[mylife]

From what I gather Guatemala will allow dual citizenship, allows for the right to keep and bear arms. You can build a home for 30 bucks a square. its a democracy. cost of living is cheap. You own your land and can leave it to the kids.

I dont know about tax rates though

[P8riot]

Movin to Montana soon....

[oncebitten]

Peru - Cheap food, housing and labor. Nice people. Good climate. See yaaaaaaa!

[refermech]

To become a dental floss tycoon???

[mylife]

Bah bah Buhp Bah Buhp Dah dah...

[SkyDancer]

I like Astoria - neat town. The movie “Short Circuit” was filmed there ...

Beer is a personal thing - I like micro brews, do not like the stuff that’s advertised during football games ...

[Global2010]

All my neighbors (20yrs now) and I are from Cali.

Funny all from the same too.

No sales tax in Oregon but if you have half a view the property taxes can kill ya.

Those of us that built here did so without a mortgage (by the Grace of God).

Foreclosures left and right and not just to those who signed a bad deal. No jobs. And they still chose to go with Obama.

[gov_bean_ counter]

How about a State of Confusion???

[Global2010]

I would move to Peru just to feast on the Lichon(sic).

[mylife]

Waz dat? Guinea pig?

[Global2010]

The crunchy skin of roated Pig.