Retirement Tip #4: State Income Tax
We know talking with a parent about money is hard. That’s why at Kindur we’re here to help you start the conversation that will help Mom and Dad #retirefearlessly.
Our next topic is about State Income Tax. Do Mom and Dad plan to relocate to Florida?
No matter if your parents are approaching retirement or already in their retirement years, one major consideration that can affect their income is state taxes. Income taxes, property taxes, and sales taxes vary by state. Perhaps they are thinking about relocation or simply want to be able to better plan for the taxes in their current state; below are some facts to think about regarding their planning.
- States such as Florida and Texas have no state income tax
- 40 states actively tax their residents’ withdrawals from an IRA account (including RMDs)
- 14 states have mandatory withholding requirements
- 27 states have voluntary withholding requirements
- 13 states consider Social Security income and it is subject to state taxes
Most tax-friendly states
These states are at the top of the list because of their reasonable rates – not only for income tax, but sales and property taxes as well.
- South Dakota
And the not so tax-friendly states
States that are not so tax-friendly and are at the bottom of the list are
- Rhode Island
When your parents or loved ones create a plan on our site we factor in state income tax so that they withhold the appropriate amount so they can avoid nasty surprises during tax season. We also provide a guide that analyzes state taxes across the country and consolidates it into one helpful guide as part of SmartDraw.
Kindur is a New York based financial technology company dedicated to helping Baby Boomers feel prepared moving into retirement. We provide smart, automated advice to personalize your retirement strategy so you can manage your savings with confidence. Learn more at kindur.com
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