Indiana unfriendly to retirees

[ripper1]

Recently retired from Illinois and planning on move to Indiana in March of 2011. In Illinois they do not tax your pension. In Indiana they do. I can handle that. But now I learned they also tax it at the Local or County level. Doesn't seem fair. Feels like double taxation. Now I also have an inherited IRA. I've read on the internet that there is an inheritance tax in Indiana. What does this mean for my inherited IRA. Anybody have any thoughts or does anybody live in Indiana that knows about this.

 

[kumquat]

Stay out of Indiana?

 

[Running_Man]

Recently retired from Illinois and planning on move to Indiana in March of 2011. In Illinois they do not tax your pension. In Indiana they do. I can handle that. But now I learned they also tax it at the Local or County level. Doesn't seem fair. Feels like double taxation. Now I also have an inherited IRA. I've read on the internet that there is an inheritance tax in Indiana. What does this mean for my inherited IRA. Anybody have any thoughts or does anybody live in Indiana that knows about this.

While you may pay taxes on the pension that will be 3.4% of the amount of your pension. The local taxes are typically only about 0.25% of the total and are being used to offset the property tax in Illinois to fund schools. You should find that personal property taxes are far lower in Indiana than in Illinois. My home in Indiana has property taxes of about $1,000 and the same house in a suburb of Chicago would be in excess of $5,000.

The sales tax rate of 7% will also be about 3-4% lower than what you are paying in Cook County.

 

[ripper1]

Thank you, Running man. We really like it there in St. John. I guess you make up the difference in the other taxes.

 

[Orchidflower]

I did alot of homework on Indiana, and your costs overall are soooo much cheaper there than most other places to retire I found. I was looking into living in Indiana near Chicago, but, I have to admit, the thought of the ice and snow 5 months of the year nixed that idea.
If you want a low tax base, move to Alabama...preferably Huntsville where lots of Yankees are, Chicago person.

 

[stevelb]

I live in a Chicago suburb very close to Indiana. We do most of our shopping there for the lower sales tax. Also gas is always cheaper. My property taxes are ridiculious. Giving lots of thought to moving just a few miles away to gain the benefits.

 

[JPatrick]

We've got loads of those Chicago folks here in the MO Ozarks and none seem anxious to return.
It is a bit of a race between California and Chicago. I guess each are running from something

 

[Midpack]

We're thinking of retiring in a suburb of Indianapolis because the cost of living, taxes, etc. are well below average. I have also read that Indiana taxes pensions whereas many other states don't - but DW and I don't have pensions so not an issue for us.

 

[samclem]

Lots of folks want a special deal excluding their particular brand of income. In comparison to many states, Indiana has kept their tax base broad and their rates low, which is a great approach.

 

[ziggy29]

Lots of folks want a special deal excluding their particular brand of income.

+1

I would prefer a moderate tax rate on a wide variety of income and economic activity with few (if any) exceptions than a higher tax rate that comes with sweetheart deals for the sacred cows that the legislators are afraid to treat like everyone else. I think treating some situations as more "special" than others is adding to an us versus them mentality that isn't healthy. IMO, taxes should generally be based on what you make and what you spend, not whether or not you are part of a favored class the legislators are pandering to.

Having said that, I don't blame anyone for seeking the best tax deal for their own situation. I just think it's unfortunate that "some people are more equal than others" in some taxing jurisdictions. I don't think retirement income should be considered any more sacrosanct than earned income, but if that's still the case in some places when I retire, yes, it could be a factor in potential relocation.

 

[haha]

+1

I don't think retirement income should be considered any more sacrosanct than earned income, but if that's still the case in some places when I retire, yes, it could be a factor in potential relocation.

I think the reason usually is that retirees are considered a free lunch. They import cash into the local economy, via pensions, SS, and Medicare spending. They rarely have young children so no burden on schools or most other infrastructure. They may need ambulance rides, but those are paid for by SS or insurance, and for the most part not the local government.

ha