Tags: Retirement | retirement | Alabama | taxes

Taxes for Retirees in Alabama

By    |   Saturday, 30 May 2015 10:52 AM

Alabama is attracting more and more retiring Baby Boomers with each passing year. There are a number of reasons why people are flocking to this Southern state on the Gulf of Mexico for retirement, and these include Alabama's proclivity for mild winters and not too hot summers, its miles of coastline and excellent golf, but also for its low taxes for retirees. So low in fact, that Forbes magazine named Alabama one of its top states for retirement in America from a tax perspective in a recent report. "Our consideration of a state's tax climate for retirees takes into account the notion that what is low tax for retirees isn't always the same as for working-age folks," stated the Forbes 2015

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From a tax perspective alone, Alabama is certainly a lucrative state to retire in. With income taxes set at just 8.6 percent, it has a low overall tax burden when compared to other parts of the country. It also does not apply its "graduated income tax of 2 percent to 5 percent to Social Security retirement benefits," Zacks Investment Research reports.

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Best of all, Alabama also offers a number of retirement tax breaks that help lower what people age 65 and older pay in state income taxes even more. Sources of income that are exempt from taxes included federal and station pensions, "defined benefit plan pensions, and Social Security benefits, according to the Alabama Department of Revenue.

Sales tax is also low at just 4 percent, but it is included on food, and its real estate tax is also among the lowest in the United States. Also, homeowners that are age 65 or older are exempt from paying any state property taxes if they make less than $12,000 per year or are disabled.

When it comes to end of life planning and taxes, it is also good to know that Alabama does not impose a separate state estate or inheritance tax, although the state does collect the maximum credit the federal estate tax return for state death taxes allows.

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Alabama is attracting more and more retiring Baby Boomers with each passing year.
retirement, Alabama, taxes
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2015-52-30
Saturday, 30 May 2015 10:52 AM
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