First of all, you should all check out this Wall Street Journal Article called The Pros and Cons of ‘Target Maturity’ Bond Funds in which my owner, Debbie, was quoted! I am such a proud pet. But back to my musings.
I often wonder where my favorite humans, Debbie and Rob, will retire to. Will they remain in New Jersey (even though the taxes in Bergen county are incredibly high)? Or will they move south to Florida (I shudder at the thought… my fur coat in that weather? I don’t think so.)? Or, maybe, just maybe, they will retire to Maine (obviously I am not at all biased, being a Maine Coon cat)!
However, there are factors other than weather that people should consider when choosing where to retire. Specifically, Debbie reminded me that as a financial advisor, she often encourages people to take state taxes into consideration. This is because moving from a state that is not tax friendly to a state that is tax friendly can help lower your expenses and make retirement savings last longer! Statistically, the most popular states to retire to are Maine, Arizona, South Carolina, Nevada, and Florida. But how tax friendly are those states? Keep reading to find out!
As the 5th most popular state to retire to, Maine boasts many nature areas and super cheap lobster (they’re practically giving it away). However, Maine has a mixed tax picture. Maine’s state income tax is 5.8% (on taxable income less than $21,450 for single filers; less than $42,900 for joint filers) — 7.15% (on taxable income of $50,750 or more for single filers, $101,550 for joint filers). State sales tax is 5.5%.
Arizona is well known for the majestic Grand Canyon, and less well known for its mixed tax picture. Arizona’s state income tax is 2.59% (on up to $20,690 of taxable income for married joint filers and up to $10,346 for all others) — 4.54% (on more than $310,317 of taxable income for married joint filers and more than $155,159 for all others). Meanwhile, the average state and local sales taxes are 8.33%.
South Carolina is home to the historic and beautiful city of Charleston, as well as many beaches! This state is also tax friendly, with state income tax of 3% (on taxable income over $2,970) — 7% (on taxable income over $14,860). Additionally, the average state and local sales taxes are 7.43%, and there is no estate tax/inheritance tax.
Nevada is the second most popular state to retire to and is home to the bright lights of Las Vegas (as well as plenty of desert). If you can get past the lack of greenery, prepare to enjoy Nevada’s very tax friendly status! Nevada has no state income tax, and average state and local sales taxes of 8.14%. Additionally, this state has no estate tax/inheritance tax.
It should come as no surprise that the most popular state to retire to is incredibly tax friendly! Besides being home to numerous golf courses and sunny beaches, Florida has no state income tax, and average state and local sales taxes of only 6.80%. Additionally, Florida has no estate tax/inheritance tax.
In conclusion, there are many factors that you should consider when choosing where to retire, including the tax friendliness of states. For more assistance in planning your retirement, please contact the Taylor Financial Group team. We are located in Franklin Lakes, NJ!
Till next time,
P.S. Look how big Maine Coons can get! We truly are majestic.