Pennsylvania
If you’re going to receive a pension from an eligible employer-sponsored retirement plan you won’t be taxed in Pennsylvania- with one small exception! If you retire early, then you will be taxed.
Early retirement will also cause the Keystone State to tax your IRA and 401(k) distributions but if you don’t plan on doing that then you won’t have a thing to worry about going forward!
While the state has a flat income tax rate of 3.07%, your Social Security benefits won’t be taxed. Keep in mind, however, that municipalities can tax earned income too so if you plan on retiring to Pennsylvania make sure you don’t forget that little tidbit when trying to figure out your retirement budget.
South Dakota
Things will be easy for retirees living in South Dakota come tax season. Since the state has no income tax, you won’t have to worry about paying up on your pension income, Social Security benefits, 401(k), and IRA distributions.
No if’s, no buts, no nonsense that will make it difficult to figure out how much you have to pay and if you have to watch out for any exceptions.
Now all you have to do is take all your hard-earned money and enjoy your golden years!
