The pandemic-induced work-from-home trend has prompted many Americans in high-cost areas to uproot and move to cheaper states, using the opportunity to create more room in their budgets. money.
With inflation currently on the rise despite months approaching 40-year highs, retirees and soon-to-be retirees are looking for ways to cut costs – and moving can make sense. similar living for those who are not hampered by the burden of commuting to the office.
Jeff Smith, chief executive officer of Retirement Living, told FOX Business that half of his readers would consider moving to another state if it would save them more money and lower their taxes.
“One consistent theme we’ve noticed in our reader polls is that many retirees are taking a closer look at the taxes the government takes from them—especially now, as their incomes they’re increasingly driven by the macro economy and inflation,” Smith explained.
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Earlier this month, the outlet released its ranking of the best states to retire in 2023, for those thinking about moving in the new year. Here’s a look at the results:
The Last Frontier tops the list of tax-friendly states for 2023, with no state income, social security, estate or inheritance taxes, and “very low and local tax” of 1.76%. Alaska also has the lowest gas tax in the country at $0.09 per gallon, helping push it to the front of the pack in this year’s rankings.
Retirement Living added gas and diesel taxes to the data metrics in the latest analysis, Smith said, “because we know that the price at the pump is affecting our wallets now more than ever.”
Alaska has one of the highest median property taxes in the U.S. at 1.19%, but the annual dividend check residents receive as a share of state income offsets the costs. those.
Delaware has no sales tax or property tax, Social Security income tax is limited to the state and residents 60 and older can deduct up to $12,500 in pension and other retirement income. It also has a low gas and diesel tax of $0.22 cents per gallon, and the sixth lowest tax in the country.
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However, the state has an income tax of 6.6%, which the analyst said “can give the budget pension as a reason to stop.”
Residents of the Equality State do not pay state income tax, estate tax, or inheritance tax. The state’s sales tax is one of the lowest in the country, as is the median property tax at 0.61%.
The average state and local sales tax for Wyoming comes in at 5.22%, but sales and prescription drugs are tax-free in the state, and the Gas tax is $0.24 per gallon.
Florida’s beautiful climate and tax environment make it a great vacation spot for retirees. The Sunshine State has no estate, inheritance, or state income taxes, and it does not tax any Social Security benefits, pensions, or income from an IRA or 401(k) s.
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Although the sale of groceries and drugs is exempt, Florida’s local and state sales tax is 7.01%. Smith said the state has always done a good job as a tax-friendly state, but Retirement Living readers “indicate that the mood on the ground is changing.”
“We are seeing a change in attitudes as more and more people are migrating to the states to find better climates and lower taxes,” he explained. “As a result, the cost of living is increasing while the quality of life is decreasing.
5. New Hampshire
The Granite State is the only New England state that does not pay an income tax, and has no corporate or local taxes. Land and inheritance taxes are also helpless.
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New Hampshire jumped three spots on the 2023 list from #8 in 2022, after it proposed a 5% tax on dividends and interest for the next five years.
Retirement Living analysts said the state would be higher in the new rankings if it weren’t for its 1.86% property tax rate, which is the third highest in the nation.