Most Tax-Friendly States To Save Your Federal Retirement Benefits
When selecting the location for life after federal retirement, no doubt sun n’sand and some golf courses figure prominently. But Florida and Arizona are not even in the top five in terms of taxes and making your federal retirement benefits last longer.
For that, you need to find the most tax-friendly states, and this is where Kiplinger’s latest ranking of states might come in handy. The magazine ranks Alaska as the No.1 most tax-friendly state for retirees, with no state income tax, sales tax or estate/inheritance tax.
This means that your Social Security benefits and any federal retirement plan distributions and income such as a TSP withdrawal, IRA earnings, etc. won’t be subject to any state income tax in Alaska. It helps you manage your savings plan better, while at the same time making your retirement income last longer. Throw in low gas tax, low property taxes, and refunds for state residents from oil revenues, and it all adds up to make your retirement income feel like it’s much bigger than you thought it was.
Of course, you also have to select the right location within Alaska. This is because local taxes imposed by municipalities may result in you having to pay a higher net tax in Alaska than you would in other states where retirement benefits are taxed at the state level. So if you choose Anchorage or Fairbanks, you don’t have to worry about local taxes. But other cities and smaller municipalities may not be so benevolent.
Top 10 Most Tax-Friendly States To Safeguard Federal Retirement Benefits
Here’s the top 10 most tax-friendly states, as per Kiplinger’s, where you can make your federal retirement benefits last longer.
- South Dakota