Residency Concerns

Where you decide to retire can be very important because state income and estate taxes can have a pronounced impact on your overall tax picture.

Changing your domicile (residency) to a state with a more favorable tax climate can save you a lot of tax dollars. For example, some states don’t tax retirement account distributions, while some states assess estate tax at much higher marginal tax rates than others.

A state can tax you and your assets only if you are domiciled in that state. To determine your residency status, states will consider factors such as the following:

• Where you are registered to vote

• Where your automobiles are registered

• Where you own real estate

• Where you lived for most of the tax year