Where to Spend Retirement With Low Taxes
One of the suggestions for frugal living in retirement is to downsize in a new location. Without careful study and evaluation, you may find that taxes are more expensive in your new location and that housing costs more, even with downsizing. Frugal retirement living requires a review of property taxes, state income taxes and sales taxes, particularly if you're moving from one state to another. Use completed recent studies to find a retirement location with low taxes.
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No Income Tax States
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Your federal income taxes will be the same in any state, but state taxes can make a difference in your standard of living. This includes income taxes, property taxes and sales tax. Nine states have no income tax: Alaska, Texas, Florida, Nevada, Tennessee, Washington, Wyoming, New Hampshire and South Dakota.
States With Low Real Estate Taxes and Sales Tax
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Five states have the lowest median real property or ad valorem taxes. Find low median real estate taxes in Arizona, New Mexico, Louisiana, Alabama and West Virginia. Five states have no sales tax: Alaska, New Hampshire, Oregon, Montana and Maryland. The five states with the lowest sales taxes are Hawaii, Wyoming, Wisconsin, Virginia and Kentucky.
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Retirement-Friendly Locations
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Of the states named above, only Alabama, Alaska and Maryland made the short list prepared by Kiplinger's Personal Finance magazine. The states most tax-friendly for retirees according to this study include Colorado, Wyoming, Michigan, Pennsylvania, Maryland, South Carolina, Georgia, Alabama, Alaska and Hawaii. Thirty-five states do not tax Social Security retirement benefits, and the trend has been for states to remove this as an income source. Kiplinger found the five least pension-friendly states to be Rhode Island, Connecticut, Vermont, California and Nebraska.
Best Retirement Towns in the U.S.
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CNN Money, AARP, Top Retirements and U.S. News have completed extensive studies to develop a list of the best retirement towns. The AARP list includes Tucson, Arizona; Greenville, South Carolina; Montpelier, Vermont; Logan, Utah; and Ames, Iowa. CNN Money chose Durham, North Carolina; Hanover, New Hampshire; Lexington, Kentucky; Prescott, Arizona; Bellingham, Washington; and Boise, Idaho. According to Top Retirements, cities most common to the lists are Asheville, North Carolina; Portland, Oregon; Paris, Tennessee; San Diego, California; Denver-Boulder-Ft. Collins, Colorado; Charlotte, North Carolina; and Austin, Texas. U.S. News chose areas to downsize and retire. Arlington, Texas; Des Moines, Iowa; Lawrence, Kansas; Little Rock, Arkansas; and Mobile, Alabama, were the top five for this magazine.
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