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Should You Move To A Different State?

Are you happy where you’re living now? You may be comfortable in your location because it’s close to where you work, it’s a great place to raise your kids, and it’s close to your friends and family. But it doesn’t have to be forever. In fact, you might contemplate a move in the near future, especially if you’re nearing retirement or are already retired.

Why would you move? For starters, there could be personal issues. You might enjoy living in a warmer climate, getting away from congestion, and living closer to a golf course or by water. But economic considerations, especially with regard to taxes, also may be part of the equation. Depending on your situation, it may be far less costly for you to live somewhere else when you take state and local taxes into account. Consider the following:

  • You may be living in a state with high income tax rates. When you add state and local taxes to your federal tax load (including a top income tax rate of 39.6% and a new 3.8% Medicare surtax), your top tax rate could exceed 50%. You could save money by moving to a state with lower rates. A few—Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming—don’t have an income tax.
  • You may be living in a state with high taxes on retirement income. The tax treatment of retirement income varies widely around the country. For example, some states don’t tax any income from retirement plans and Social Security benefits, some provide a partial exemption, and some tax all retirement income.
  • You may be living in a state with high sales taxes. Almost all states impose sales and use taxes, but there’s wide variation in the rates. Only five states—Alaska, Delaware, Montana, New Hampshire, and Oregon—don’t have a sales tax. This could be a prime consideration if you expect to make substantial taxable expenditures during retirement.
  • You may be living in a state with high property taxes. Although the real estate market generally has been soft recently, there has been little relief from property taxes for homeowners. And that town whose high property taxes may have seemed worthwhile when you were sending your kids to its great schools could be less appealing when your nest is empty.
  • You may be living in a state with high inheritance taxes. This is a final factor that could influence where you choose to retire. The rules differ from state to state, and in several states the laws deviate from federal estate tax law. For example, only three states—Delaware, Hawaii, and North Carolina—also provide the current federal exclusion of $5 million (indexed to $5.25 million in 2013).

All of these tax considerations could affect what you’ll spend during retirement. With a little homework, you may be able to find a place with low taxes and one that appeals to you for other reasons.



INDEX
  • Getting A High Tax Grade For Higher Education Credits
  • How Social Earnings Taxation Has Changed
  • Why Aren't More Millennials Moving On Up And Out?
  • Taking Socially Responsible Investing To The Next Level
  • Don't Be Caught Red-Handed By The Wash Sale Rule
  • Leading Economic Indicators Hit 10-Year High
  • Avoid These 6 Mistakes In Stretch IRA Planning
  • More Flexibility Allowed In Flex Spending Accounts
  • Individual Bonds-Ugh!
  • Set Aside The Funds One Might Need For A Rainy Day
  • Protect Against Possible Terrorist Attack
  • U.S. Leading Economic Indicators Rose Again
  • Fed Chair Strikes A More Cautious Tone, But Still Expects Moderate Growth
  • Count Off 3 Tax Breaks For Higher Education
  • Don't Be Victimized By These 10 Common Scams
  • Retirement Plan Choices For The Self-Employed
  • New Law Says Tax Debtors May Lose Their Passports
  • Compare Minor's Account To 529 Plan
  • Are You Being Socially Responsible?
  • 8 Smart Moves For College Grads
  • Seeking Financial Aid: Don't Fear The FAFSA
  • New Baby? Consider An Education Savings Plan
  • HOW THE IRS RESOLVES AN IDENTITY THEFT CASE:
  • 3 Ways To Deduct Mortgage Interest
  • HOW THE IRS RESOLVES AN IDENTITY THEFT CASE
  • Understanding Deflation
  • Don't Play Up Super Bowl Outcome In Stock Decisions
  • When Should Millennials Start Retirement Saving?
  • Have Your Child Kick Into A Roth With A Reward To Boot
  • Sizing Up The Energy Boost To The Economy
  • A Stock Plunge Amid Strong Economic Data
  • 14 Top Year-End Tax Moves For Individuals In 2014
  • Drill Down For Three Key Oil And Gas Tax Breaks
  • When It Pays To ID Security Sales
  • GDP Growth Data Masks Strength Of The Recovery
  • Be On The Lookout For Crimes Involving An Elder Fraud
  • UNDERPERFORMANCE/OVERPERFORMANCE
  • S&P 500's New All Time High Wednesday Will Probably Continue Over Upcoming Months, But Other Indexes Are Struggling
  • U.S. Stock valuations are within the top 10 valuations of all time but probably won't crash. Why?
  • Seven Steps To Digging Your Way Out Of Deep Debt
  • 5 Steps To Protect The Digital Assets You Own
  • The Long-Term Fiscal Status Of The United States
  • Margin Debt At Record Levels
  • What To Do When You're Suddenly Widowed
  • A Common Error In Powers Of Attorney
  • Should You Move To A Different State?
  • Tax Cost Of Being Your Own Landlord
  • Why Do GRATs Remain In Such High Demand?
  • Don't Wait To Harvest Your Losses
  • The Best States To Move To For Tax Purposes
  • 10 Reasons For The IRS To Flag Your Return
  • Many Women Face Special Challenges As Retirement Nears
  • Nine Reasons To Consolidate Debt
  • Straight Talk About Living Trusts
  • SEPPs From An IRA: Don't Change Horses Midstream
  • New Regulations Fill In Gaps On 3.8% Surtax
  • Do You Know Life Insurance Basics?
  • Top Income-Earners Drive U.S. Economic Growth
  • Give IRA Cash To Charity: Heads You Win, Tails You Win
  • Four Wash Sale Strategies To Help Clean Up Taxes
  • College Savings: How Much Do You Need Each Month?
  • Surprising New Research: Large Caps Top Small Caps
  • Newly Widowed Face 401(k), IRA Options
  • Retirement Saving Takes Time And Must Be A Priority
  • Divide-Conquer To Convert To Roth IRA
  • What Is Probate And What Does It Protect?
  • A Research Surprise On Bond Funds
  • After New Tax Law, Do You Still Need A Bypass Trust?
  • Start Estate Planning For Your Child Now
  • Seven Tax Ideas To Use Throughout The Year
  • A Comprehensive Way To Plan For College Savings
  • Bulletproofing Your Will Before Death
  • IRS Mercy on 60-Day IRA Rollover Error
  • Feds Warn Of Life Settlement Dangers
  • Know The Tax Rules On Charitable Gift Deductions
  • IRS Ruling Boosts IDTs as Estate Planning Technique
  • A Defined Benefit Plan Lets You Sock Away Large Amounts If You Can Overcome Some Obstacles
  • Economic Shifts Bring New Pitfalls And Prizes
  • Evaluating Great Companies
  • Inflation Versus Deflation
  • Jeremy Grantham And Lou Stanasolovich Discuss Market Valuations
  • Ramifications Of A Weakening Dollar
  • Secular Versus Cyclical Bear Markets
  • Small Business And Work Opportunity Tax Act
  • Time To Plan For Estates, Wills, & Trusts



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