States With Zero Tax on Retirement Income in 2025
Okay, here’s a breakdown of the facts provided in the text, focusing on key takeaways about taxes and retirement:
Key Points:
* States with No income Tax: Nine states do not have state income tax:
* alaska
* Florida
* Nevada
* New Hampshire
* South Dakota
* Tennessee
* Texas
* Washington (taxes onyl capital gains of high earners)
* Wyoming
* Critically important Note: These states may still have othre taxes like property and sales taxes.
* Age and Pension Taxes: There is no age at which you automatically stop paying taxes on your pension. Pension income is generally subject to both federal and state income taxes (depending on the state).
* Required Minimum Distributions (RMDs): You must begin taking RMDs from tax-deferred accounts (like 401(k)s and IRAs) at age 73.
* Strategies to Reduce Taxes in retirement:
* Withdrawal Order: withdraw funds from taxable accounts before tax-deferred accounts (401(k)s, IRAs) to allow the tax-advantaged accounts to grow longer.
* Roth IRA Conversions: consider converting some traditional IRA money to a Roth IRA before age 73 to avoid RMDs on that portion.Roth IRAs are not subject to RMDs.
* Delay Social Security: Delaying Social security benefits until age 70 increases your benefit amount, but can also help keep taxes lower early in retirement.
* charitable Donations: Donating to charities can reduce your taxable income.
* Tax-Amiable Living: Consider living in a state with no or low income taxes.
Let me know if you’d like me to elaborate on any of these points or have other questions!