People who are nearing the age of retirement plan where they want to live during their golden years. Their retirement plans include the house they want to get and the state they want to live in. However, the thing to note here is that not every state in the USA is tax-friendly for people who retire or leave the workforce. William Schantz says that there are various states in the USA that are not suitable at all for retirees to live in as they will cause you to lose money in several ways.
When you start planning for your retirement, make sure that you do ample research and get a good grasp of the local tax situation in the city that you want to live in. This will help you save your life’s savings, and you will be able to reap a lot of benefits meant for the retirees.
So, before you pack your bags and relocate, take a look at the least tax-friendly states in the USA!
Least Tax-Friendly States That Are Not Suitable for Retired People
A state that isn’t tax-friendly requires retirees living in the state to bear higher overall and local tax expenses compared to the other states. The state and local taxes vary from state to state, says William Schantz. This difference can be around several thousand dollars which would mean a great deal to a retired person with limited income. In order to avoid any such unforeseen tax expenses, people should do their homework and choose the state wisely.
Here are some of the least tax-friendly states, as per William Schantz:
The State of Vermont offers very inadequate subsidies to retirees on the tax front. They have very high-income tax rates where a major chunk of your retirement income will be taxed. To top it all off, Vermont taxes a certain amount of your Social Security benefits as well. The property and real estate tax amounts are also extremely high in Vermont if you compare them with properties of the same value in any other state.
Nebraska is known to be one of the least tax-friendly states in the United States, and rightly so. Despite the fact that the income tax burdens are coming down, the income and property taxes in Nebraska are higher than most of the other states in the US. The tax percentage on the Social Security benefits for the retirees is anticipated to increase by a whopping 100% by the year 2025. The average property and inheritance taxes are also very high in Nebraska.
Kansas, the sunflower state, is one of the most expensive states in the USA to retire in, live, or shop. The cumulative local and state sales tax rates are deemed the ninth-highest in the USA. When it comes to income taxes, the 401(k) plans, the IRAs, and the out-of-state public pensions are all fully taxed in Kansas. Moreover, if your gross income is over $75000, Kansas taxes the Social Security benefits of the residents as well, explains William Schantz.
Every person dreams and plans for the day that they will retire and enter the golden years of their life. They have everything planned, from the savings to the travel plans and even their dream home for the rest of their life. However, one key thing to keep in mind while planning your retirement is that you need to choose a tax-friendly state for yourself.
As our research suggests, you should avoid retiring in Nebraska, Kansas, and Vermont. These states have been ranked as the least tax-friendly states by William Schantz. So, choose wisely, as this decision can have a significant effect on your savings, pensions, social security benefits, property taxes, and other finances as well.