Is a No Income Tax State Right for Your Retirement?

Much is made of making your permanent home in retirement in a state that has no state income tax.  I posit that there are other considerations.  First, what are the no-income-tax states?  They are Alaska, Tennessee, Wyoming, Florida, New Hampshire, South Dakota, Texas, Washington, and Nevada.


Question #1:  The MOST important consideration is do you want to live in any of these places?  Looking at this list I can say yes to possibly two, definitely no to seven, and I’m not saying which in order to avoid nasty commentary.


Question #2:  If the state is not getting income taxes, where are they getting their revenue?  Sales tax?  Property tax?  Poor state services such as road maintenance and law enforcement? If you are a person that spends a lot at restaurants, stores, or wants to live in a really nice house, the taxes you pay instead of income taxes may be just as high.


Question #3:  How affordable is the state overall?  If property and other costs of living are higher than your current state-with-income-tax, maybe you are better off where you are.


With investments and life decisions, taxes are a consideration.  However, my favorite saying applies:  Don’t let the tax tail wag the life dog.



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