Americans approaching retirement age and those who have already left the workforce have to decide where to spend the rest of their lives. Determining the cost of living in different areas is an important part of the process, and taxes are a key consideration. Not all states treat retirement income in the same way, according to a recent analysis by Bankrate.com. A financial advisor can help sort through the complexities. Consider that 13 states do not tax retirement income. Among those that do tax it, some provide exemptions. Several states don't tax military retirement pay, while other states treat pension income differently from distributions from retirement plans such as 401(k)s or IRAs. In addition, 39 states and the District of Columbia do not tax retirees' Social Security income. Eleven still do: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah and Vermont. But Missouri will stop taxing Social Security benefits in 2024.
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