Here Are Thirteen States That Do Not Tax Hanesbrands Retirement Income

It is essential for Hanesbrands employees contemplating retirement to recognize that the majority of retirees will have to decide where to spend their golden years. It is essential to comprehend the cost of living in multiple locations, and depending on where you reside, your taxes may vary accordingly. It is important to note that states tax retirement income such as 401(k) distributions and IRA withdrawals differently. For Hanesbrands employees who are considering relocating to a more tax-friendly state, the following information is essential:

 

States without a state income tax

Considering that 401(k) and IRA distributions are categorized as taxable income, Hanesbrands employees may wonder whether there are any states where income is exempt from taxation. Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming are fortunately included on the list of states that do not tax retirement distributions. Another state that exempts retirement income from taxation is New Hampshire, which taxes interest and dividend payments. Considering the prominence of these income sources in many retirement portfolios, those looking to relocate to New Hampshire may wish to take note of this fact. Consideration should also be given to how this tax could be avoided through a distribution. When holding income-generating assets within a tax-advantaged plan, a distribution would qualify as income and, therefore, would not be subject to New Hampshire taxation.

 

States which do not tax pension income

In addition to states with no income tax, Hanesbrands employees and retirees should investigate states that do not tax retirement income. The four states listed below do not tax retirement income; the following information is pertinent.

 

Illinois

Illinois has a flat state income tax of 4.95 percent and exempts from taxation nearly all retirement income, including Social Security retirement benefits, pension income, and retirement savings account income. Those retiring from Hanesbrands who are contemplating a move to Illinois should be aware that this state has some of the nation's highest property and sales taxes. The Illinois state sales tax rate is 6.25 percent, with local governments permitted to add an additional 5.25 percent. The Tax Foundation reports that the average combined rate for this state is 8.73%. The median property tax rate is also high, at $2,073 per $100,000 of assessed property value per individual. Despite this, Hanesbrands retirees are eligible for a homestead exemption of up to $5,000 ($8,000 in Cook County and, beginning in 2023, neighboring counties). Seniors with a household income of $65,000 or less can have the assessed value of their property frozen. In addition, qualified residents aged 65 or older with a household income of $65,000 or less can defer property tax payments of up to $7,500. A city, village, or incorporated town may also refund property taxes paid by certain senior citizens aged 65 or older.

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Iowa

Due to a new law that takes effect in 2023, those over 55 who retire from Hanesbrands and relocate to Iowa will not be taxed on their retirement income. As of 2023, the income tax rate in the state of Iowa ranges from 4.4% to 6%. This range will narrow until the target of 3.9% is reached by the 2026 deadline. The median property tax rate in Iowa is $1,501 per $100,000 of assessed property value. Similar to Illinois, Iowa offers property tax exemptions for senior citizens. Residents aged 65 and older are eligible for a property tax credit of up to $1,000. Beginning in 2022, residents who are at least 70 years old and whose annual household income does not exceed 250% of the federal poverty level will be subject to a modified credit calculation.

 

Mississippi

While income tax rates in Mississippi range from 0 to 5%, retirement income is exempt from taxation if plan requirements are met. This means that early distributions from retirement plans may not qualify as retirement income and may be subject to tax and penalty for Hanesbrands employees. Also worthy of mention is The median property tax rate in Mississippi is $753 per $100,000 of assessed home value. Additionally, Mississippi offers tax breaks for seniors. For homeowners aged 65 or older or wholly disabled, the first $75,000 in value is exempt from property tax. In addition, there is no estate or inheritance tax in this state.

 

Pennsylvania

Hanesbrands retirees contemplating a move to Pennsylvania should be aware of the state's flat income tax rate of 3.07 percent. In Pennsylvania, retirement income is exempt from taxation if plan requirements are met, but early withdrawals from retirement plans may incur taxes. Also worthy of mention is The median property tax rate in Pennsylvania is $1,358 per $100,000 of assessed home value. Homeowners and renters aged 65 or older, as well as widow(er)s aged 50 or older, may qualify for Property Tax/Rent Rebate Program property tax or rent rebates. In general, a maximum standard rebate of $650 is available, but additional rebates can increase the amount to $975 for homeowners with exceptionally high tax obligations. For eligibility, a household's annual income cannot exceed $35,000 ($15,000 for renters), although 50% of Social Security and Railroad Retirement benefit payments are excluded from eligibility income. Public school districts may also provide property tax credits to senior volunteers. Credits are restricted to individuals aged 60 or older who (1) have been a resident of Pennsylvania for at least 90 days, (2) own real property in the school district, and (3) participate in the school district's volunteer program.

 

Other aspects of retirement income tax

While the previously mentioned states exempt retirement income from taxation, Hanesbrands retirees may also benefit from investigating other states that offer exemptions. Many states tax pension income differently than distributions from retirement plans, and others exempt military duty pay from taxation. In addition, some states tax Social Security benefits, while others offer exemptions and the majority do not tax these payments at all. Before committing, Hanesbrands retirees who are searching for a permanent residence must understand the tax implications of their desired location. Additionally, factors such as sales and property taxes are essential considerations. Upon weighing the advantages and disadvantages, you may conclude that paying a higher tax rate may be justified if the state offers compensating benefits.

 

Conclusion

When looking for a state that does not tax retirement income, Hanesbrands employees have 13 states to choose from, and even more options that offer exemptions. Prior to relocating, Hanesbrands employees should investigate the tax situation in order to avoid unpleasant surprises. It is also important to note that, although a lower tax bill increases the likelihood of a comfortable retirement, it is not the only factor to consider. When unsure of the best state to retire in, retirees from the Hanesbrands may find it advantageous to seek financial advice from a professional. By contacting The Retirement Group, you can receive a free cash flow analysis and speak with a consultant who will help you determine which decision best meets your needs.