"Making the decision about where to spend your retirement can, unsurprisingly, have a pretty dramatic impact on how long your savings will last. While most financial planning focuses solely on the accumulation aspect, it isn't the only consideration. What many people, in fact, too many people ignore is that you have to consider just how much of a tax bite each state is going to take from your nest egg, and this deserves special attention."
"Determining the worst states for retirement taxes goes beyond looking at a single metric. A state might have no income tax but can crush retirees with property taxes. Another state might exempt Social Security but fully tax 401(k) withdrawals and IRA distributions. For this ranking, we looked at how each state treats the most common sources of retirement income, including Social Security benefits, pension payments, 401(k) and traditional IRA withdrawals, dividend income, and capital gains."
State tax structures significantly affect how long retirement savings last by varying treatment of income, property, and estate taxes. Retirees can face taxes on pensions, retirement account withdrawals, Social Security, dividends, and capital gains, while property and estate levies further erode nest eggs. Some states impose no income tax but offset that with high property taxes; others exempt Social Security but fully tax 401(k) and IRA distributions. The ranking compares each state's treatment of Social Security benefits, pension payments, 401(k) and traditional IRA withdrawals, dividend income, capital gains, property taxes, and estate taxes to show which tax combinations most threaten fixed-income retirees and inheritances.
Read at 24/7 Wall St.
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