One of the main things I hear from friends and clients these days is about moving away from Illinois because of all of the taxes. Income taxes, property taxes (ouch!), sales taxes. They certainly seem to take a big bite out of our income. And with the recent tax reform, most of these taxes might be limited and not even available for a deduction. This is certainly true for those of us who are working. However, it may be a different story if you are retired.
If you are considering moving out of state, a key thing to know is that Illinois does not tax retirement income. That includes income from Social Security, pensions and IRA/401k distributions. For most people, that is a huge surprise. At the current Illinois tax rates, that is a 5% savings immediately when you retire.
As an example, if you are single and you have $30,000 in social security income and $30,000 in IRA distributions, you would pay no income tax in Illinois. However, if you lived over the border in Wisconsin, you might be subject to 4%-7% on the IRA/pension income. While this tax savings may not offset our high property taxes, it is a good thing to consider if you are thinking of moving just because of the taxes.
As you contemplate a move either for work or retirement, it is important to understand all the taxes that you might be subject to. A couple resources you can use are https://www.retirementliving.com/taxes-by-state and https://smartasset.com/retirement/retirement-taxes. If you are considering moving, lets make sure we build that into your plan.
Live Fully. Plan wisely.