Earlier this week we talked about the recent survey which ranked Florida among the three states to do business in tax-wise. Now it is time to discuss why Florida is a great state for retirees as well.
While people certainly enjoy the year round sunshine, sandy beaches, and copious availability of world-class golf courses, it is Florida’s generous tax structure that truly makes it a great retirement destination. This is primarily because Florida residents pay absolutely no income tax or intangibles tax (a tax on the value of intangible personal property, such as stocks, corporate bonds, mutual funds, U.S. government agency bonds, notes, and accounts receivable). Additionally, the much-maligned Florida property tax can be somewhat offset by any one of our numerous homestead exemptions, several of which are more likely to be available to retirees than to any other class of society.
Just how important is the tax issue? Consider this fact, at the end of 2010 the U.S. Census Bureau estimated that there was nearly $17.5 trillion held in all retirement accounts. That’s almost 650% more value than the $2.7 trillion held in the social security trust fund! A large percentage of these assets have been allowed to grow tax free for years, but when that magic age comes around (70 ½) it will be time to pay the piper.
Right now, the implications for future federal tax rates appear grim. Even if the healthcare bill is overturned, the impending expiration of the Bush tax cuts means that some retirees could find themselves paying even more in taxes during retirement than they did when they were employed. If you are a current retiree or contemplating retirement in the near future, take a moment to compare Florida’s 0% income tax rate with the those of the other states in our union (how about Oregon or Hawaii’s 11% top marginal rate!) and the Florida sunshine might start seeming more attractive than you ever thought it would be.