Redding, Conn. (PRWEB) March 12, 2009
As the economy continues to sag, many retirees planning to move should be alert to new taxes that may impact their decision on where to retire. Most states are searching for new sources of revenue either through an increase in state and local sales taxes, taxes on wine and spirits, cigarettes, gasoline, licenses, lodging and more.
Helping to sort all this out is a Web site - http://www.RetirementLiving.com - run by the Retirement Living Information Center. The company has just published online its 2009 "Taxes by State" guide that reports on taxes encountered in every state, including income taxes, exemptions for seniors, and how retirement income and property are taxed.
With tax season rapidly approaching many people who are planning their retirement are wondering how their retirement income will be taxed if they move and what additional taxes they may confront in their new location.
"In assessing prospective locations, retirees may discover that some states are not the tax havens they are reported to be," said Tom Wetzel, president of the Retirement Living Information Center. "It is important to look beyond the state taxes and drill down to check local property, sales and income taxes. The presence or absence of a state income tax may not be the best criteria for selecting a retirement destination."
Depending on where you choose to live your tax bill may affect your ability to enjoy the lifestyle you are seeking. Some states are more tax-friendly to retirees than others. Seven states do not tax individual income -- Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. Two other states - New Hampshire and Tennessee - impose income taxes only on dividends and interest (5 percent for New Hampshire and 6 percent for Tennessee for 2008).
Currently, 27 of the 41 states (and the District of Columbia) that have broad-based personal income taxes do not tax Social Security benefits. The remaining 14 states do tax Social Security to some extent -- Minnesota, Nebraska, North Dakota, Rhode Island and Vermont tax Social Security income to the extent it is taxed by the federal government. Connecticut, Iowa, Kansas, Missouri, and Montana tax Social Security above an income floor. Iowa will gradually phase out its Social Security tax levy from 2008 through 2014.
With regard to pension income, some states exempt it all, others tax some or none. Those exempting pension income entirely are Pennsylvania and Mississippi.
Beginning with the 2008 tax year Kansas residents can exclude Social Security income from their taxes if their adjusted gross income (AGI) is less than $75,000. Missouri will phase out its Social Security tax levy by 2010. Colorado, New Mexico and Utah require that federally untaxed Social Security benefits be added back to federal AGI to calculate the base against which their broad age-determined income exclusions apply.
Some states, such as Ohio and Pennsylvania, have jurisdictions that impose local as well as state income taxes. Six states (California, Montana, Nebraska, New Mexico, North Dakota and Vermont) are particularly tough on retirees because they have a relatively high top tax bracket and fully tax most retirement income.
"It is important to note that states without income taxes have one less revenue-raising option. Therefore, they may be more inclined to turn to increases in sales or property tax to shore up their budgets," Wetzel added.
Property taxes are important for everyone. Based on data from the 2005-2007 American Community Survey by the U.S. Census Bureau, property taxes paid by homeowners in certain New York and New Jersey counties were the highest in the country, while several Louisiana parishes paid the lowest. Of course, property taxes in any state are based on assessed value.
"Overall our Web site contains a wealth of information to help retirees make the difficult decision on where to live in retirement," says Wetzel. "Site visitors should not overlook the section on Great Places to Retire , which contains in-depth reports on more than 200 retirement destinations," he added.
About Retirement Living Information Center, Inc.
The Retirement Living Information Center, through its Web site, http://www.RetirementLiving.com, provides essential information to assist seniors in planning for their retirement years. The site guides them to information that will support their decision-making. It contains information on retirement communities, great college towns for retirement, a retirement destination decision guide, and news about lifestyle issues.
Tom Wetzel - 203-938-0417
Taxes by State section: http://www.RetirementLiving.com/RLtaxes.html.
# # #