Would you like to retire and live in a state where your civil service annuity isn’t taxed?

Wouldn’t it be nice if your Social Security benefits were all yours, at least as far as your state of residence was concerned?

For tax purposes (forget amenities like sunshine and grizzly bears) should you consider retiring in Alaska or Hawaii. One of them (the warm place) exempts federal annuities from taxes. The other doesn’t tax personal income.

California, Virginia and Maryland, the three states with the most federal residents, offer retiree tax breaks that vary.

Is Kentucky a better deal than Tennessee? What’s the tax tradeoff between Oregon and Washington?

When people plan where they want to spend their golden years, the issue of taxes can be an important one. In most cases, they will have less income — at least from the government — so they need to stretch their retirement dollars. So where they live can be a big deal.

North Carolina, Texas and Washington are popular states for federal and military retirees. North Carolina provides a major tax break (in some cases no tax at all) on civil service annuities. Florida and Texas don’t have personal income taxes. Neither do Alaska, Nevada, New Hampshire, South Dakota, Wyoming or Washington.

(I know a retired fed who lives in Washington state but shops in Oregon which has no sales tax.)

Some places, like the District of Columbia, give a partial ($3,000) tax break on federal, military and D.C. government annuities for people over age 62. The tax laws vary from state-to-state, and there are lots of asterisks and footnotes.

Montana, Oregon and Delaware don’t have a sales tax while their neighbors sock it to residents. Go figure!

So how do we know these things. Check out the April issue of NARFE, the magazine of the ,National Active and Retired Federal Employees association. Each year — appropriately at tax time — NARFE updates state tax laws.

If you are a NARFE member, be sure to check out the April issue with the tax-information on Page 34. If you are not, and post-retirement tax issues are part of your retirement planning you might consider checking out the outfit at www.narfe.org. Or at least find a NARFE member and take them to lunch!

Tomorrow: More tax information!

NEARLY USELESS FACTOID:

By Michael O’Connell

Benjamin Franklin’s cure for flatulence was a mixture of attar of roses and dried rhubarb, which he’d dissolve in wine.

Source: Food Reference

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