The 5 Best and Worst States For Taxpayers Over 50
There’s a lot of talk about how Americans are struggling to get to a good place with their retirement and savings, but compared to a lot of other countries we’re looking great. An online survey conducted early this year polled retirees in 15 countries. The study found that Americans are more likely to be saving for retirement than their international counterparts, and that Americans are fairly confident about retirement. Still, where you live in America probably has an effect on your answer – and an impact on how much you’re able to keep saved. Here are the five best and worst states for tax-paying Americans over 50:
Florida is actually one of the few states that does not charge income tax. Although its tax breaks mean it may have high-priced homes and insurance costs, there is also a low sales tax. The state also provides a homestead tax exemption for resident owners over 65 who have a limited income. The tax exemption can be up to $50,000 in the Sunshine State. Ah, so that’s why everyone retires in Florida.
Nevada: it’s not just about Vegas. Nevada is actually a great place to save money on taxes, because like Florida it doesn’t charge income tax. That’s quite a break, especially if you’re moving there from a state with a high income-tax, like California, Hawaii, or Oregon. You will save tens of thousands of dollars, in addition to the inheritance, estate, and gift taxes that Nevada has also eliminated. On top of that, the state has a low state and local tax burden at just 8.1%.
New Jersey was recently found to be the worst place to be a veteran, but Texas is a great alternative. Disabled veterans and seniors over 65 who are homeowners qualify for a property tax exemption up to $15,000. On top of that, there’s no income tax, or inheritance tax for your kids to worry. Texas is a great place to hold onto your money – the state income tax can’t touch your pension or social security.
Alaska doesn’t seem to hold the same appeal as Florida, so far as retirement destinations go. Sure it’s dark for a significant part of the year, but the landscape is beautiful and income tax and sales tax will be a distant memory when you move there. The state actually pays its inhabitants to live there each year, cutting residents out a check for their share of the oil wealth. In 2013 that was about $900 a person. You can add that to your savings, along with the $150,000 property tax exemption for disabled veterans, widows and widowers over 60, and seniors over 65. Alaska is clearly underrated.
Wyoming isn’t notorious for a lot of things. But if you love wide-open space, nature, and outrageous tax breaks, you might want to retire to Wyoming. In a state like Wyoming, not having to pay state taxes on your pension or Social Security benefits goes a long way. But in addition, the state doesn’t have income tax, only taxes homeowners 9.5% of the house’s market value, and has the outrageously low sales and local tax rate of 5.49%.
Worst: New York
New York City may not be the worst place to retire, but it comes pretty close. Taxes will eat your money up, because there are taxes for every occasion. There’s the city income tax, sales tax, and a tax for when you sell property. New York is probably the state with the single highest tax burden, according to The Tax Foundation, with nearly 13% in taxes being paid by its residents annually. If the 8.82% income tax and 8.5% local sales tax don’t hit your wallet hard, the high cost of living will.
While New York may have the highest state-wide tax burden, The Tax Foundation found that Bridgeport, Connecticut has the highest tax burden of any US city. That seems to sum up living in Connecticut pretty well. The average Connecticut citizen forks over $7,150 to state and local taxes annually. Both renters and homeowners hurt from the state’s heavy property dues. In Connecticut, there doesn’t seem to be a way to avoid the high taxes.
Living in the land of Hollywood glamour comes at a hefty price. The state’s richest residents have to pay 13.3% on state income tax, and although those with moderate incomes pay less, it isn’t substantially less. Sales tax will hit you every week at 7.5%, and The Tax Foundation declared that as an average taxpayer you’ll be giving the state and local taxes $5,136 a year.
Worst: New Jersey
New Jersey is now known as one of the worst places to live as a veteran. Unfortunately it’s not the perfect place for anyone to live out their remaining years either, having been recently named one of Forbes’ worst places to die. The state will get you will an inheritance tax of up to 16% of the estate if its value is over $500, and an additional tax on property worth more than $675,000. If you want to leave anything behind to your loved ones someday, New Jersey is not the place to protect your assets.
Worst: Rhode Island
You might not think the smallest state would need quite as much from you in taxes, but you’d be wrong. The sales tax is 7%, property and local taxes are daunting, but the real kick is that pensions are also taxed, which results in a 10.5% state and local tax burden for the state. But, everyone has to decide where to retire for themselves. Sure the taxes can be brutal (income tax and estate tax are up to 6%), but if living in Rhode Island brings you closer to your loved ones, it could be worth it.