After working and saving for retirement, you’re ready to enjoy a life of ease. But one thing might not change: Most retirees still have to deal with income taxes. While there are ways to establish non-taxable income in retirement, Social Security benefits can actually be taxed in many cases. But with advance planning, there might be ways to avoid or minimize that risk.
Do all states tax Social Security income? We’re talking about income taxes, which are not actually imposed by all states. So the easiest way to avoid taxes on your benefits might be to simply move to a state without an income tax. Those states are:
- New Hampshire
- South Dakota
However, there are other states that do impose a state income tax, but have provisions to exclude Social Security benefits from those calculations.
That leaves just 13 states that do tax Social Security benefits:
- New Mexico
- Rhode Island
- West Virginia
Each of these states imposes slightly different regulations regarding taxes on Social Security income, so do investigate those before making a decision.
Of course, remember that an evaluation of income taxes won’t paint the entire picture. A state might not tax your income, but imposes higher property tax or sales tax. So be sure to assess all aspects of a state’s tax structure, if that’s important to you, before deciding upon a new destination for your retirement years.
We’re available to help you weigh all of the different aspects of retirement planning, so that you can chart a course that’s right for you. Call us to schedule an appointment, and we can discuss your concerns in more detail.