Taxes
As a retiree, you also need to pay special attention to the tax rate of the state and community you plan to live. The total tax burden is important to you because your income may be fixed. The types of taxes you need to check into as a retiree are:
- State income tax
- State fees and assessments
- Sales tax
- Local tax
- Personal property tax
- Auto licensing fees
- Fees or assessments for garbage pickup, street and storm maintenance.
State income taxes vary state to state. Only a few states don’t tax personal income. In some states pension income is taxed, while others exempt all or part of federal, state, or private pensions. It’s wise to contact state tax offices to obtain general information and a tax form to estimate income taxes.
Retirees are often surprised to find the cities they move to have income taxes for residents. The cities may call local income taxes other names such as wage taxes, occupational license fees, assessments of fees applied to your income, etc.
Property taxes can vary from state to state, county to county, between cities, from street to street, and neighborhood to neighborhood. Many cities and townships offer tax exemptions and deductions for homeowners, seniors, veterans, individuals with disabilities, and widows. As a retiree, you should check the local government or county where you’re considering retiring for information on property tax exemptions and deductions.
As a retiree who is relocating, you need to check into the state’s and city’s fees such as vehicle registration and license plate fees. States figure these fees differently; calculations may be based on the value, age, and/or weight of the car. Some retirees are surprised by how steep these fees can be. Also, some cities charge special fees in a separate billing or on the property tax bill for garbage pickup, street maintenance, and storm sewer maintenance. You can investigate the costs for taxes and fees at your local library, and by contacting state and local governments. In addition, some reliable resource books on this subject include:
- America’s Best Low-Tax Retirement Towns by Eve Evans, Elizabeth Niven, and Mary Lu Abbott, published by Vacation Publications, Inc., 2008.
- Retire in Style: 60 Outstanding Places Across the USA and Canada by Warren R. Bland, PhD, published by Next Decade, 2005.
