After a lifetime of hard work, it’s time to exchange long hours for languid days. Yes, retirement looms — but so does Uncle Sam, and that might mean cuts to your traditional IRA, pension income, or 401(k). Most states tax some portion of retirement income (excluding Social Security benefits) but twelve states completely exempt the most common retirement incomes from taxation. What does that mean for you? More money in your pocket when you’re ready to spend less time on the job.
Check out these places where you can avoid the high cost of free time.
The Last Frontier might not be your first choice for retirement but it doesn’t have an income tax, which means 401(k)s, IRAs, or pensions aren’t taxed.
No tax on Social Security benefits, 401(k)s, IRAs, or pension, plus no inheritance or estate tax. Little wonder people warm up to moving here.
The Prairie State could be an answer to your prayers: Your 401(k), IRA, and pension income are all exempt from tax; so, too, Social Security benefits.
It’s a sure bet that Nevada lures a significant number of retirees. No income tax means that your 401(k), IRA, and pension income remain untouched.
It just could be the key to a life of ease: The Keystone State doesn’t tax Social Security benefits, pension income from an eligible employer-sponsored retirement plan (unless you retire early), 401(k) plans, or IRAs.
The income tax here is very limited and only covers interest and dividends. You’ll also see a more robust bottom line as Tennessee doesn’t have an inheritance or estate tax.
Simply put, the Lone Star State leaves your retirement alone. Because Texas doesn’t have a personal income tax, your 401(k), IRA, and pension income will be left untouched.
Why wouldn’t you retire to Wyoming? No income tax, inheritance or estate tax, and no tax on payments from 401(k) plans, IRAs, or pensions.