Most tax-friendly states for retirement 2022
Retirement is a time in your life that should be free from worry and stress.
If you’re close to retirement age, this is a great time to work on your retirement budget and make decisions about lifestyle choices that will affect your retirement years.
Taxes in Retirement
One factor often overlooked is your tax bill. Where you live can have a substantial impact on how much tax you must pay in retirement. Kiplinger has an up-to-date 2022 State-by-State Guide to Taxes on Retirees.
“When you reach retirement, you should be in control of your money and you should be on top of exactly how much goes out monthly and annually.” says Richard Eden, Senior Vice President of David Lerner Associates, “Find out how much your tax bill will be and how you might be able to reduce it.”
These are the top three tax-friendly states for retirees, according to the Kiplinger study:
Wyoming claims the third spot. With no state income tax, Wyoming is an attractive proposition. There's also no estate or inheritance tax there. Seniors benefit from the low state tax and a low local sales tax rate. Wyoming’s combined tax rate is the eighth lowest in the country.
Hawaii comes in at number two on the list. While the cost of living and property prices are high in Hawaii, the island paradise has a lot going for it. Hawaii has one of the lowest state and local tax burdens in the whole of the United States. So, you could be looking at lower taxes and piña coladas in the sunshine, rather than cold winters and higher bills elsewhere.
Delaware is the top tax haven for retirees. The First State has no sales tax, no death tax, and very low property taxes.
Some Delaware seniors qualify for a school property tax credit of up to $400. As a retiree, you may want to watch every penny. If that’s the case, Delaware is a perfect choice.
You'll have far more disposable income in Delaware because there are no state taxes and no local sales tax.
Some folks downsize their homes when they reach retirement, and others move out of state altogether. If you no longer need to live in your current state, perhaps it’s time to look elsewhere. Especially if moving could help cut down your taxes.
Talk to an Investment Counselor to find out what investments will give you the best income in retirement and what, if any, tax liability you may be facing.
Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.
To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.
Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances.
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