Both living costs and taxes are high in California—which can make retiring here a challenge. Maybe you feel tempted to leave the Golden State when you retire. If so, how can you move assets out of California without incurring a tax? How do other states tax retirement income differently? Hint: just because there’s no state income tax doesn’t mean there aren’t other SNEAKY taxes in some supposed havens!
Among the topics we’ll discuss in this legal webinar are:
Wages – Planning on working in retirement? Since wages are higher in California, seniors can potentially make more money here in retirement than they would elsewhere.
Personal income tax exemptions – Although many states do tax Social Security, in California, all Social Security benefit payments to retired people are exempt from personal income tax. (Although this doesn’t apply to your pension or IRA).
Prop 13 – Prop 13, which kicked in on April 1, 2021, gives homeowners a big incentive to stay in California for retirement. In a nutshell, Prop 13 sets property tax caps that allow homeowners to accurately project what their property taxes will be next year, ten years from now, or when they’re ready to retire.
Prop 19 – Prop 19, which went into effect in February of 2021, gives Californians further incentive to stay in the state for retirement as it allows homeowners to transfer their tax basis pretty much however they choose.
Death Taxes – California doesn’t have one!
Retiring sooner – In order to retire comfortably, you need to replace 70%-90% of your annual pre-retirement income through savings and Social Security. You might be able to do that more easily outside of California.
Income tax, IRAs, and stocks: California residents do not pay California income tax on IRA distributions, capital gains on stocks, interest on non-California bank accounts.
Source Tax Law – Although you can’t take it with you when you die, thanks to something called Source Tax Law, you can at least avoid certain taxes if you move out of state.
Sales and Income Tax – Although California has both a sales tax and an income tax, there are states that only have one or the other (and two that have neither).
Watch this legal webinar to find out how an estate planning attorney can help you figure out the best place for your retirement!