From Kiplinger · · 1m 40s
Moving for Lower Taxes in Retirement? 5 Ways the Taxman Can Trip You Up
Retirees moving for tax savings face five pitfalls: income, capital gains, sales, property and estate taxes.
In brief
Retirees moving for tax savings face five pitfalls: income, capital gains, sales, property and estate taxes. Retirees should avoid moving for tax savings without understanding all tax implications. Originally reported by Kiplinger.
Income tax
Retirees often move to avoid income taxes, but state income tax rates vary significantly.
Capital gains tax
Capital gains taxes differ by state, with some states taxing capital gains at income tax rates.
Sales tax
Delaware has no sales tax but charges income and property taxes, while Washington, D.C. has high sales tax rates.
Property tax
Property taxes can be high in states like Texas, but assessed values may be much lower than market value.
Estate and inheritance tax
Fewer states have estate or inheritance taxes, but these can be punitive for high net worth individuals.
Tax complexity
Tax rules vary by state, with exemptions for retirement income and property tax discounts for qualifying residents.
Moving for tax savings
Retirees should consider all tax implications before moving, including estate and property taxes.
State tax differences
States like Texas have no income tax but high property taxes, while Washington, D.C. has high sales tax rates.
Tax planning
Retirees should use tax planning tools to understand how moving affects their tax burden.
Tax consequences
Moving for tax savings can lead to higher estate taxes or unexpected property tax bills.
Tax advice
Retirees should consult a tax professional before moving to avoid costly mistakes.
Tax planning tools
Specialist software helps retirees calculate tax savings from moving to different states.
In short
Retirees should avoid moving for tax savings without understanding all tax implications.
