Related: Couple Retired to Florida and Hated It— Here's the 'Half-Back' Move That Saved Their Retirement
The Hidden Costs
Moving to a no-income-tax state can be financially viable as long as other forms of taxes don’t come into play. While not every retiree will encounter these issues, many do end up paying these extra costs.
Sales tax: If you’re moving to a high tourism state like Florida, you’ll likely pay higher sales tax than in places that don’t see a lot of visitors. Moneywise notes that Florida has a statewide sales tax of 6%, but many counties add more.
Utilities: Air conditioning isn't really an option in Florida or Texas. To live comfortably, you'll be running it much of the year. Electric bills of up to $400 a month are common for typical single-family homes. As the energy crisis continues to drive up electricity prices, this will likely rise further.
Medicare: You won’t lose your coverage as long as you stay within the United States, but costs and premiums could change. You’ll have to check your individual plan and how where you live affects it before moving to avoid surprises.
Related: The Real Cost of Downsizing in Retirement (It's Not What You Think)
If you maintain a residence for 183 days, that is considered your state of residence, and you can be taxed there. But days of residence aren't the only indication. If you're still visiting doctors in your old state, keeping meaningful belongings, banking, or spending time with relatives, you'll likely be considered a resident.
The Type Of Account Matters
Traditional IRAs and 401(k) accounts are the most susceptible to taxation, but anyone with a Roth-heavy portfolio has more shielding. The type of retirement account you have matters, and can matter a great deal when considering tax laws in the place you choose to settle down.
Putting It All Together: A Real-World Example
It's easy to read all of this information and get lost in the details. Here's a simplified, illustrative comparison of what a retired couple with $80,000 in annual taxable retirement income and a $400,000 home might pay in Ohio (a modest-income-tax state) versus Florida (no income tax).
Ohio
State Income Tax
$0
$5,400
Home Insurance
~$4,000-$7,000+
$8,900
These numbers are averages that will vary depending on your county, insurance company, home value, and your personal tax circumstances. However, the basics are the same. The deep "savings" states like Florida brag about usually don't add up, and that's even before you factor in other costs like utilities and medical.
Disclaimer: This article is for informational purposes only and does not constitute advice.
Sources:
AARP, "6 Hidden Costs of Moving in Retirement"AARP, "What happens to my Medicare coverage if I move to another state?"Moneywise, "Florida homeowners drown in insurance costs — paying $3,400 more than the national average. 3 ways to stay afloat"Millman, "Comparison of annual beneficiary health care costs across Medicare coverage options, 2025"Retire Guide, "States That Don’t Tax Retirement Income"Hence then, the article about the no income tax states retirees love most are hiding a financial trap nobody warns them about was published today ( ) and is available on Parade ( Saudi Arabia ) The editorial team at PressBee has edited and verified it, and it may have been modified, fully republished, or quoted. You can read and follow the updates of this news or article from its original source.
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