A study has proven that Alabama is a fairly tax friendly state for retirees. Though it does have some high tax rates, most of the taxes on retirement income are not there. The study was aimed at finding the tax-friendly places for retirees by comparing their income against tax expenses. The income of the potential retirees was hypothetically taken while conducting the study so that the results can be as accurate as possible.
Why is Alabama a fairly tax friendly state for retirees?
The study conducted by SmartAsset, a financial technological company mentions that Alabama is a fairly tax friendly state for retirees because it has lowest property tax rates in the nation so retirees who are looking to buy their own homes can build a nest here. The cost of living in the state is 10 percent lower than the nationwide cost of living. The state also does not levy a tax on most types of retirement income.
The Side Effect
A single side benefit of living in Alabama by retirees is that the sales taxes in the state are the third largest in the USA.
The Top Three Cities
The top three cities that are a great option for retirees who seek to spend their golden years in a Yellowhammer State are Attalla, Wetumpka, and Tallassee. These cities are a great place for those who wish to avoid the pressure of taxman.
The study aimed to find the areas that had most tax-friendly policies. To conduct the study the fixed income was compared with a large variety of tax expenses such as property taxes, income taxes, sales taxes, fuel taxes and many others. This comparison helped to find out that how much of the money of a retiree would go into paying varied taxes.
In the study that says Alabama is a fairly tax friendly state for retirees, the people who were in charge of the study looked at how the tax policies of each city are impacting a retiree who has an income of about $50,000. It was also assumed that a hypothetical retiree was getting about $15,000 from the social security benefits, about the same amount from retirement savings plans like IRA, etc. and $10,000 each from private pension and wages. All these assumptions helped the organizers of the study to do a just comparison.