Taxes form a very important component of your retirement budget and they can be a major contributor to stress in retirement.
If you have been used to a steady source of income at the end of the month for many years life becomes a challenge when the source is terminated more so if you never planned for it.
The send off you are given, if it is in lump sum can be another source of stress if you are not good at personal financial management, and the taxes on your retirement benefits do not help matters.
It would therefore be wise to choose a state that offers tax breaks for retirees. These states do not tax many types of retirement benefits including the Social Security. This can reduce stress for you and hence extent your life – most retirees die simply because of stress-related problems.
Here are some states that can offer you a peace of mind on your retirement:
Alaska is the best place for retirees especially if you have no problem with cold weather. In Alaska there is no sales tax or income tax. The Social Security income and pension are also not taxed by the Alaska state.
Florida offers tax break for retirees and its weather is generally pleasant; not too hot not too cold. Florida has access to the beach where you can go and pass time to enjoy your retirement.
Retirees in Florida don’t pay taxes on their pension and on the Social Security. Furthermore, there is no state income tax. But the state charges a sales tax at the rate of 6 percent.
Even though this state charges a 6.25 percent sales tax and its property taxes are higher than in other states, individual retirement accounts, Social Security, income from federally qualified retirement plans and capital gains on employer securities are exempted from taxation.
In Mississippi retirement accounts, annuities, pensions and income from Social Securities are tax exempt. The major problem with Mississippi is the 7 percent sales tax and the income tax.
Nevada state charges 6.85 percent sales tax but it has no tax on Social security and pension income.
In Pennsylvania the sate charges a 6 percent sales tax but there is not tax on pension and Social Security benefits.
It is also better than the neighboring states like New Jersey and New York because of its low housing and living costs.
South Dakota is one of the states that offer the lowest sales tax at only 4 percent. The state charges no tax on Social Security, pension benefits and income for individuals
In Texas the sales tax is 6.25 percent but there is no income tax including Social Security, retirement income and pensions.
The Washington state charges a 6 percent sales tax but there is no tax on Social Security, pension and other forms of income.
Washington is great for outdoor activities and you can also access mountains and the ocean.
Wyoming just like South Dakota charges a sales tax of only 4 percent. The state doesn’t tax any form of income including Social Security and retirement benefits.