Helpful miscellaneous articles
regarding our retirement plan and planning.
Like you, I review my retirement nestegg and plan from time to
time. Recently, I went though some continued
education for some credentials I maintain and it occurred to me that we all
could use a review about these issues.
So with your help, we will share and post articles and info that may be
helpful and of interest to many of you in this section.
Which are the least
tax-friendly states in America? California doesn’t crack the top 10, but
Illinois sure does
By Catey Hill
Published: Feb 15, 2020 3:18 p.m. ET
Plus, some of the main tax questions you need to answer before you relocate
in retirement
Illinois is the least tax-friendly state in the U.S.,
according to a new analysis by Kiplinger's based upon the burden faced by a
hypothetical family of four.
A number of analyses have found that Illinois is the least friendly tax state in America. Indeed, the financial visualization site HowMuch.net just released a graphic that shows that Illinois is the least tax-friendly state in America.
And this comes on the heels of personal-finance publication Kiplinger’s recently releasing its list of the most — and least — tax-friendly states in America, in which Illinois took the No. 1 spot on the list, thanks in large part to its high property taxes. To draw its conclusions, it used a hypothetical couple with two kids and $150,000 in income a year plus $10,000 in dividend income, and then looked at the income-, property- and sales-tax burden that family would face. The Land of Lincoln was followed by Connecticut and New York, both of which have pretty high-income taxes.
The 10 least tax-friendly states:
1. Illinois
2. Connecticut
3. New York
4. Wisconsin
5. New Jersey
6. Nebraska
7. Pennsylvania
8. Ohio
9. Iowa
10. Kansas
*Source: Kiplinger’s
Meanwhile, the most tax-friendly states (in order) were Wyoming, Nevada and Tennessee. The first two don’t levy an income tax; Tennessee has an income tax, but it only applies to interest and dividends and not to salaries and other wages.
The 10 most tax-friendly states:
1. Wyoming
2. Nevada
3. Tennessee
4. Florida
5. Alaska
6. Washington
7. South Dakota
8. North Dakota
9. Arizona
10. New Hampshire
*Source: Kiplinger’s
One surprise? California, widely considered a high-tax state, didn’t crack the top 10 least-friendly tax states in either analysis. (Of course, it’s important to point out that this Kiplinger’s ranking would look different if the hypothetical family and its income and dividends were different.)
See: Three cities that ‘have it all’: Chicago, Porto and Melbourne
Rocky Mengle, the tax editor for Kiplinger’s, told MarketWatch that’s because many people “when they talk about California tax, they focus on the 13.3% [income tax] rate, which is the top rate — but that is for people making more than $1 million.” For many others, the rate is much lower, he said, adding that “California has a fairly progressive income tax, with nine brackets.”
Mengle added that these kinds of analyses are often useful to people looking to relocate, such as in retirement. He said retirees should “pay attention to what type of income they are going to be relying on in their golden years.” That’s because states can tax income, Social Security, money from an IRA or 401(k), rental-property income and other sorts of income differently.
For example, Social Security income is not taxed in most states, but 13 states do tax it: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Rhode Island, Utah, Vermont and West Virginia. Even then, they don’t all tax it the same.
Retirees may also want to consider inheritance and estate taxes in the places they might consider moving to. Right now, 13 states and Washington, D.C., have an estate tax, and six have an inheritance tax. This NerdWallet guide can walk you through that.
Read on: What’s the worst city in the U.S. for flight delays?
More from MarketWatch Retirement
- Many Americans are feeling these 3 financial stresses
- Why is it still so hard for women to save for retirement?
- Why getting an annuity for your 401(k) is a terrible idea
Catey Hill
Catey Hill is MarketWatch's senior
content strategist. She writes about how to upgrade your life, and helps
readers find great deals on products and services. Follow her on Twitter
@CateyHill.
(As with any of these informative articles,
anyone who needs someone to talk to about
this very subject contact
me and I can direct you to a
knowledgeable advisor).~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Full post disclaimer in left column. PCN Home Page is located at: http://pcn.homestead.com/home01.html
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