Georgia, Florida & Mississippi on the top 10 list of tax friendly states for retirees

These 10 states impose the lowest taxes on retirees, according to Kiplinger's 2018 analysis of state taxes. All of them exempt Social Security benefits from state taxes. Most exempt at least a portion of other retirement income, such as pensions and withdrawals from tax-deferred retirement plans. Most also have low property taxes. That's important because the Tax Cuts and Jobs Act limits the amount you can deduct in state and local taxes on your federal return to $10,000 a year.

Ever wonder why so many retirees have Georgia on their minds? The Peach State's low tax climate may have something to do with it. Social Security income is exempt from state taxes, and so is up to $35,000 of most types of retirement income for those age 62 to 64. (For those 65 and older, the exemption is $65,000 per taxpayer, or $130,000 per couple.) Retirement income includes pensions and annuities, interest, dividends, net income from rental property, capital gains, royalties, and the first $4,000 of earned income, such as wages. Plus, income taxes will be falling a bit: The top rate will fall to 5.75% in 2019 and 5.5% in 2020, if the governor and legislature reconfirm the reduction in that year's legislative session.

One caveat: Georgia is one of a handful of states that doesn't provide special treatment for military pensions. The state's retirement-income exemption may not cover all of your military pension, and if you also have retirement savings from a private-sector job, you could end up paying taxes on that, too.

Continue reading on Yahoo! Finance.

connect

get updates