海角大神

Warm weather makes Florida a popular retirement destination 鈥� but a lack of taxes on retirement benefits and estates makes it a smart destination too.

鈥淎s more and more baby boomers are reaching retirement age, they鈥檒l have many factors to consider in choosing where to live in retirement,鈥� said聽CCH, an international accounting company, in a report last week. 鈥淭axes are one of the things they should consider when determining the costs of different areas they are looking at.鈥�

According to CCH, how much retirees pay in taxes can vary wildly depending on which state they chose to retire in. They found that five particular types of taxes can add up the most鈥�

1. State taxes on benefits from retirement plans

Seven states don鈥檛 tax individual income at all and therefore don鈥檛 tax retirement income either鈥�

• Alaska
• Florida
• Nevada
• South Dakota
• Texas
• Washington
• Wyoming

Two states only tax income from dividends and interest:聽New Hampshire听补苍诲听Tennessee.聽So while retirees in these states won鈥檛 have to pay taxes on Social Security or pension benefits, they will still owe some taxes to the state if they own dividend-paying stocks or bonds, for example.

n the other 41 states and in Washington, D.C., taxes on Social Security and pension benefits vary. Some states exempt pension benefits or Social Security benefits while other states tax both. For details, check out CCH鈥檚聽state-by-state breakdown聽of taxes on pension and Social Security benefits.

2. State income taxes

There are 41 states that tax income, and if you live or plan to retire in one of them, how much of your retirement benefits you could owe depends on that state鈥檚 tax rate.

Some states have a relatively low income tax rate across all brackets. The rate for even the highest tax bracket in聽Arizona,听New Mexico, and聽North Dakota, for example, is less than 5 percent. Some states 鈥� for example,听Indiana聽(3.4 percent) and聽Pennsylvania聽(3.07 percent) 鈥� have a relatively low flat tax rate.

But in other states, income tax is a double whammy: Not only is the tax rate for the highest bracket relatively high, the bar to qualify for the highest bracket is low. In聽Arkansas, for example, any filer earning $33,200/year pays the highest bracket鈥檚 rate of 7 percent. In聽Maine, couples earning $40,700 and single filers earning $20,350 pay the highest bracket鈥檚 rate of 8.5 percent.

For more details on your state or the one you鈥檇 like to retire in, check out the state-by-state income tax breakdowns from聽CCH聽and the聽Federation of Tax Administrators.

3. Sales tax

Five states don鈥檛 have a sales tax, according to the FTA:聽Alaska,听Delaware,听Montana,听New Hampshire, and聽Oregon.

In the other 45 states, the rate varies from 2.9 percent (Colorado) to 7.25 percent (California) 鈥� and that鈥檚 after California lowered its rate from 8.25 last year.

What types of goods sales tax applies to also varies from state to state. In聽Hawaii听补苍诲听New Mexico, for example, doctor services are taxed. In聽South Dakota, accountant and attorney services are taxed. Other goods and services taxed in some states but not others include barber services, landscaping, prescriptions, clothing, and food.

For details, check out the聽FTA鈥榮 state-by-state breakdown of sales tax rates, which also lists which states exempt food, prescriptions, and over-the-counter meds.

4. State and local property taxes

Because property taxes can be significant, CCH suggests learning not only an area鈥檚 current property tax rate, but also the history of how it has changed over time.

To learn more about a state or county, try this search engine formula:聽[state/county] + state/county property tax. That should lead you to the applicable revenue department鈥檚 website. Here鈥檚聽Florida, for example.

While reading up on a state鈥檚 property tax rates, don鈥檛 forget to check for tax breaks too. Some states and local jurisdictions offer some form of property tax exemption, credit, abatement, deferral, refund, or other benefit to senior homeowners or renters.

5. State estate tax

Wealthier retirees must also consider the estate tax of the state they鈥檇 like to retire in. If that state does tax estates, find out both the tax rate and what size estate the tax applies to.

To learn more about a state, try this search engine formula:聽[state] + state estate tax. Again, that should lead you to the state revenue department鈥檚 website. Here鈥檚聽Florida聽again 鈥� where the estate tax was eliminated in 2004.

If you鈥檙e preparing for retirement, you may also want to check out聽Is It Too Late for a Happy Retirement?听补苍诲听Can a Photograph Boost Your Retirement Plan?

鈥撀燢arla Bowsher is a writer for聽Money Talks News, a consumer/personal finance TV news feature that airs in about 80 cities as well as around the Web. This column first appeared in Money Talk News.