Introduction: What Are the 3 States That Don’t Tax Retirement Income?
Retirement is a time to relax, enjoy life, and reap the rewards of all your hard work. But if you’re not careful about where you choose to live during retirement, those rewards may be diminished by hefty taxes on your income. That’s why it pays to know which states don’t tax retirement income – so you can maximize your savings and optimize your financial situation. The three states that don’t tax retirement income are Alabama, Alaska, and Mississippi. All other US states levy some form of taxation on retirees’ incomes – either through an age-based exemption or an exclusion for certain types of income sources (such as Social Security benefits).
Taxes in Alabama
Alabama does not impose any state taxes on Social Security or pension benefits received by its residents who are 65 years old or older in 2021. However, there are still some forms of taxable income within the state that must be reported for federal purposes such as capital gains from investments made outside the state’s borders. Also note that while most counties do not have local taxes in Alabama, there are 14 out of 67 counties with local sales tax rates up to 8%. As a result, it’s important for potential retirees looking into moving to this state to investigate their county-level rates before committing themselves financially. Finally, keep in mind that property values tend to increase faster than inflation when living in this region due largely because of low real estate prices compared with many other parts of the country.
Taxes in Alaska
Alaska is one of only two US states without an individual or corporate state-level income tax system; instead they depend heavily upon natural resource revenues – primarily oil royalties paid by businesses operating within their territorial borders – as well as tourism dollars generated from visiting cruise ships and tourists taking advantage of activities like fishing trips and excursions into wildlife reserves like Denali National Park & Preserve among others.. These revenue streams combined make up approximately 90%+ percent total government revenue each year thus ensuring no need for personal levies against working Alaskan Residents seeking retirements here at home.. Furthermore there are numerous exemptions available depending upon how much money is earned annually (not exceeding $50K) so even if one continues part time work after leaving full employment they can maintain their status quo regarding taxation free earnings whilst enjoying year round outdoor recreation opportunities found nowhere else throughout these United States!
Taxes In Mississippi
Mississippi offers both a generous age-based exemption as well as various exclusions designed specifically for retired individuals receiving nonwage/salary compensation such as pensions or Social Security Benefits.. A senior citizen over 65 years old living off pension payments alone will receive complete exemption from all imposed State Taxes including Sales Taxes however should they have substantial wealth accrued prior then additional Federal Taxes may apply due too much having been saved up beforehand… Additionally Mississippi has several cities offering special incentives towards seniors via housing discounts/exemptions along with Senior Citizen Centers providing everything from nutrition classes too computer lessons making settling down here quite attractive should one decide too do so!.