No matter where you retire, you'll owe the same to Uncle Sam in federal taxes. But your choice of retirement destination could have a significant impact on what you'll owe in state taxes. State tax burdens vary widely across the U.S.
Where will you retire? Will it be beaches versus mountains, north versus south, or cool versus warm? As long as you are staying in the States, your choice of location is more than a choice of geography.
Each state is different when it comes to the legal and tax environment a retiree or estate planner will face.
A recent Kiplinger article titled “States Differ on Retiree Tax Burden” is well worth your read. Furthermore, you will want to save it to your “reading file” for future reference.
Remember, you are planning for that special place where you intend to spend your golden years. That means you will need to consider the effect of location on both your retirement and your estate.
The Kiplinger article provides a state-by-state run down on the tax basics and a colorful map to guide you. Each state offers various perks and challenges to the retirees that are well worth investigating and understanding.
Since choosing your retirement location is one of those significant life events, you should follow the carpenter’s rule of thumb: measure twice and cut once.
Reference: Kiplinger (September 2013) “States Differ on Retiree Tax Burden”