In terms of personal finances, California is one of the five worst states for retirees to live, according to a report published in the October issue of Kiplinger's Personal Finance magazine.
The report, also available online, said: "California is a retiree's tax nightmare. Although Social Security benefits are exempt, all other forms of retirement income are fully taxed. With a top rate of 10.30 percent (and rising to 10.55 percent, on taxable income of more than $1 million), Golden State residents pay some of the highest income taxes in the country."
The four states that rank with California at the bottom of the list for retirees are Connecticut, Nebraska, Rhode Island and Vermont.
Kiplinger's found that the most tax-friendly states for retirees are Alabama, Alaska, Arkansas, Colorado, Florida, Georgia, Idaho, Mississippi, North Carolina, South Carolina, South Dakota, Texas and Wyoming.
The magazine noted that the best place for a person to retire will depend greatly on one's source of income. The report said: "Many states that have an income tax exempt certain types of income – such as government and military pensions, Social Security benefits or even distributions from private pensions or retirement savings up to a certain amount each year. In fact, income taxes may be the least of your worries in retirement. Property taxes can be a bigger ongoing concern, with huge fluctuations from city to city and county to county. And remember: state and local sales taxes will nick you every time you open your wallet." (Cal-Tax: Even with Proposition 13 protecting Californians from unexpected property tax increases, the Golden State ranks among the worst states for retirees because all other taxes are so high. Imagine how much worse it would be without Proposition 13!) (Source: Kiplinger.com, September 29.)
Cal-Taxletter, October 2, 2009
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