Changing states after retirement: How moving affects taxes
05 August Moving States After Retirement: What Taxes Can You Expect?
Posted on 05:29h
If your retirement is nearing and you are considering moving to another state, or if you plan to move after retiring, you may wonder how it will impact your income. You probably have many questions if you are considering moving to a different state. Will my taxes change if I move? What will happen to my social security benefits if I move? What changes should I make to my retirement plan? How will moving after retirement affect my tax situation?
Our advisors in estate planning can answer these questions and many more. Here’s an overview of how moving following retirement could affect your taxes.
Each state has different laws governing retirement income and social insurance benefits. It’s important that you research the tax laws in your new state before moving. This will help you understand how your income might be taxed differently compared to your current state of residence.Retirement income can come in many different forms, and so it should! Diversifying your retirement portfolio is important. Depending on where you live, some retirement income streams are taxable. For example, standard IRAs, 401Ks, and military pensions are all taxable income sources. Social Security income is taxed differently in each state. The amount of your benefits won’t change if you move states after retiring. The tax laws of your new state may affect the amount you receive to
keep. Moving to a state that does not tax your social security could increase the amount of income you earn. Arizona is one of the states that do not tax social security..
Talk to a tax expert for personalized advice.Make sure your move is in line with your estate plan
.10Consider the pros and cons of different types of state taxes, including property, corporate, sales, etc.–tax rates can vary greatly from state to state. Steps to take before moving:
Talk to a tax expert to get personalized advice.
- Make sure your decision to move aligns well with your
- estate plan.Consider the pros and cons of different types of state taxes, including property, tax, corporate tax, sales tax, etc.– tax rates can vary greatly from state to state.
- For example, if you’re a business owner, and you move your business with you when you change states, you could end up paying more corporate income tax. The corporate tax rate is 4.9% in Arizona, 8.8% in California, and 2.5% in North Carolina.
Arizona Retirement Highlights
Retiring in Arizona can be a wise financial move. Arizona has a lower cost-of-living than many other states. This allows you to save more for retirement. Arizona’s tax environment is relatively friendly. Here are six points to consider:
The individual income
- tax rate in Arizona is set at 2.5%.Arizona has no tax on social security benefits.
- Average retirement
- expenses are $63,600 per year.There is tax on distributions from traditional IRAs and 401Ks.
- The property tax rate in Arizona is 0.45% of the appraised value of a primary residence.
- Military
- pensions are exempt from income tax in Arizona.Fiscal considerations alone won’t help you decide where to retire. Consider other factors, such as the climate, lifestyle compatibility and healthcare accessibility, or even walkable amenities. Arizona is a wonderful place to consider for these five big benefits:
Warm weather all winter long
- Affordable cost of living in many areas.
- Abundant outdoor, cultural, and recreational activities.
- Numerous active adult communities with a variety of amenities.
- Meet with an Estate Planning Professional at Phelps LaClair
An estate planning expert can help you with all the finer details, from reducing your
taxes to avoiding probate. You can also ask them how moving out of the state where you worked may affect your retirement plan. If you are moving to Arizona, and need help with estate planning and set an appointment
with the legal advisors of Phelps LaClair. We’ve been assisting Arizona families for over 40 years and would be happy to help you. Photo
by Kamelia Hayati on
Unsplash on 7.26.2024 | used under the creative commons license for commercial use.
