Survey of Total State Taxes and Planning Implications for Retirees

Raghavan, Kamala
January 2009
Journal of Financial Planning;Jan2009, Vol. 22 Issue 1, p56
Academic Journal
• Common wisdom states that retirees often move to sunny locations like Florida and Nevada, both of which are among seven states that have no income taxes, making them attractive to retirees. But income taxes are only part of a retiree's total tax burden. A variety of other taxes imposed by these states can add up to a hefty tax load, possibly making a state with income tax more favorable to a retiree than a state with no income tax. • Changing economic conditions make state and local government tax rates fluid and subject to changes. A financial planner can provide invaluable service by matching the client's post-retirement assets, life expectancy, interests, and lifestyle to a state's total tax burden along with its amenities, and providing the client with rational decision alternatives. • This paper reviews the significant components of the retiree's tax burden, and suggests broad guidelines for the client's discussion with a financial planner to maximize income during retirement years while considering family and health-related issues. • State tax issues covered in this paper are personal income taxes, taxing of Social Security benefits, taxation of private-sector income, state and municipal sales taxes, property taxes and property tax breaks often provided for older taxpayers, inheritance and estate taxes, and tax breaks for 529 college savings plans.


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