Retirees in general don’t have an inexhaustible supply of funds to pay for the necessities of life, never mind the nicer things, once they leave the workplace.
So they’re likely to want to make their money go as far as it can once they’ve retired.
However, that can be a lot harder to do in some places than in others, particularly if taxes on retirement income (and on income in general) are high.
Kiplinger has put together a list of the 10 states where taxes lay the greatest burden on retiree funds.
There’s plenty to choose from: estate taxes, inheritance taxes, high income or property or sales taxes (or any mix of the above), no exemptions from any of them for Social Security or other retirement income.
So have a look at the 10 states below before you decide where you’d like to retire. (If you’re contemplating moving, you might want to go here and check out the 10 states that are the most tax-friendly to retirees.)
All that snow and taxes too.
That’s the story in the Green Mountain State, which hits up all its residents, retirees included, for income tax that can go as high as 8.95%.
And property taxes are the 9th highest in the country.
State sales tax is 6%, to which local municipalities can add another percent. And forget about dining and drinking out; prepared foods are taxed at 9%, while wine or beer in a restaurant will be taxed at 10% per glass.
You won’t be celebrating, anyway; although there’s no inheritance tax, there is an estate tax.
Real estate taxes in the Constitution State are the fourth highest in the country, and most retirement income is taxed, too.
Then there’s the state’s own income tax, which can amount to as much as another 6.7%.
There’s an estate tax but no inheritance tax, but don’t get cocky. Not only is there a luxury tax, there’s also a gift tax—so forget about thinking to give your way out of the tax bill.
3. Rhode Island
Small state, big tax bill.
A 7% sales tax and a tax on most sources of retirement income (though not Social Security for some residents, depending on their total income) will eat away at your retirement funds, as will the 10th highest rate in the country of property taxes and an estate tax—though not an inheritance tax.
Tax, tax and tax — that’s the picture here.
While there’s no inheritance tax, there is an estate tax, and retirement income is all subject to taxation. Income tax, which will take its bite from that income, can go as high as 9.85%.
Sales tax is high, too, with the state’s cut set at 6.875%—and then there’s the additional tax from some cities and counties on top of that.
No state sales tax, no inheritance tax, but Oregon residents are liable for an estate tax, and Oregon’s income tax can be as high as 9.9%.
And then there’s property tax, which is average.