While your expenses will likely decrease once you reach retirement age, many retirees don't factor in potential taxes when budgeting out what their future expenses will be. Many states choose to tax some or all retirement income. You may also live in a state that doesn't tax any type of retirement income. Here’s an overview of how some states tax income.
Whether you have recently retired or are nearing retirement age, you'll likely be thinking about your long-term financial situation. Before you start withdrawing from your 401(k) or spending your Social Security benefits, keep in mind that your retirement income can be taxed depending on the state you live in. Each state has different laws that dictate how retirement income is taxed, some of which are detailed in the following guide.
If you're starting to think of retirement, you may be looking forward to moving past the daily commute and grind that are currently part of your everyday life. Whether you want to move to a different state or are content with staying where you are, the largest expense that most people have after reaching retirement age involves income taxes. However, many states keep retirement income taxes to a minimum. If you live in a state with high retirement income taxes, making a move in the near future may be beneficial. Here's a closer look at the retirement laws in 10 states and how they differ.
Retirement is one of life’s most significant milestones, up there with the birth of a child and getting married.
Whether you're currently making large contributions to your IRA account or want to know what's going to happen to your Social Security benefits, you should know how retirement income is taxed in the state you live in. Every state has different requirements and laws related to retirement income taxation. While some states hardly tax any retirement income, other states tax almost all income types. This guide takes a closer look at how some states tax retirement income and if these taxes are balanced by property and sales taxes.
Retirees often have multiple sources of income. These can include Social Security benefits, pension plans, individual retirement accounts, brokerage, and other investment accounts, and even side hustles like driving for Uber or Lyft.