Choosing the most suitable place for you to live your golden years as comfortable and as pleasant as possible is not easy. You need to factor in a lot of things, from how close or far it is from your family to climate, amenities and most importantly taxes. Some states offer certain deductions on some of your retirement income while others do not levy income taxes at all, which means you get to keep your entire retirement income.
The following 26 states either have no income tax or exempt certain forms of retirement income, including Social Security benefits, according to a report issued by the Tax Foundation. First, we’ve listed the states that, starting with 2020, provide a full exemption of the Social Security benefits from taxation from all residents’ income taxes and continued with the states that levy no income tax whatsoever. Is your state on the list?
According to the Federation of Tax Administrators, social security is not taxed in California at state level. However, Californians with a taxable income of up to $1 million do have to pay individual income tax rates between 1% and 12.3%. Those with a taxable income exceeding the $1 million threshold, are taxed an additional 1 percent, in which case the state’s maximum tax rate becomes 13.3%.
If you’re thinking of spending your golden years in the Golden State, here are 10 Ways To Make the Most Out of Life as a Retiree.
When it comes to the personal income tax, Indiana levies a 3.23 percent. The good news is there’s no tax for Social Security benefits. Future Indiana retirees will also be glad to find out that the Hosier State has been named the fifth-most affordable state for homebuyers, according to a 2020 SmartAsset analysis.
“The Hoosier State has the second-lowest average closing costs in the study, at $2,627. Indiana also is tied for the fifth-lowest median listing price per square foot, at $108. It has the seventh-lowest median listing price overall, at $186,000,” as explained in SmartAsset’s “The 10 Most Affordable States to Buy a Home“.
Iowa is among the moderate tax-friendly states. Residents in Iowa have to pay personal income tax rates ranging from 0.33% to 8.53%. However, Social Security benefits are exempt from the Hawkeye State’s income tax, with those receiving such benefits having a full state income tax protection. You might also like: 14 States Where Your Pension Won’t Get Taxed.