As you near retirement, you may consider relocating to a state that is not just more affordable but that is also retirement friendly. Though many of your friends and peers may prepare to head south to Florida or Texas, you may hesitate to move so far away from your home in the Northeast.
Fortunately, the mid-Atlantic region boasts one of the most retirement-friendly states in the country: Delaware. SmartAsset provides an overview of Delaware’s retirement taxes and what, exactly, makes the First State so appealing to retirees.
Taxes on retirement income in Delaware
Delaware is one of 38 states that exempt Social Security income from its state income taxes. Though it does tax other forms of retirement income, such as income from pensions and 401(k) plans, it offers significant deductions for certain age groups. For instance, if you are younger than 60 years old and receive income from a retirement account, you can deduct up to $2,000 per person per year. If you are 60 or older, that deduction jumps to $12,500. For any retirement income you receive in excess of the applicable deduction amount, Delaware will tax it in accordance with its state tax rates.
Sales taxes, property taxes and inheritance taxes
Delaware is just one of four states that do not tax the sale of goods or services at either a state or local level. It also has the seventh-lowest property tax rates in the nation, at just 0.56%. Though the median home value is slightly higher than the national median, it is relatively low compared to other states in the mid-Atlantic region. Moreover, the low property taxes offset the slightly inflated property values. Delaware also does not have an estate tax, and nor does it have an inheritance tax.
Senior school property tax credits
As a senior homeowner in Delaware, you must pay school taxes for your district. However, state lawmakers recognize that your children likely do not attend the district’s schools and so offer a credit that is equivalent to 50% of the local school property taxes. The credit caps off at $400.
Relocating to Delaware in your retirement may be the best money move you make in your golden years. Before you pack up and go, though, get your ducks in a row, and make sure that any moves you make now will align with your estate planning goals.