With your house paid off and your kids no longer living under that same roof, you are limited in the deductions you can take from your income in retirement. It’s important to understand how your retirement income is taxed in the state you live in so you can make your retirement savings go farther.
In Arizona, retirement income is taxed and you do not get a federal income tax deduction. However, Social Security and Retirement Railroad benefits are exempt from taxes. If you have pensions or retirement income from the military, civil service, or Arizona state/local governments, then you can deduct up to $2,500 of that income. And if you happen to have an out-of-state government pension, then you are fully exempt from paying state taxes on that retirement income.
We recommend you consult your financial advisor or tax professional with any specific questions on how your retirement income is taxed. If you don’t have one, we would be happy to recommend one in your local area. Give us a call at Retirement Think Tank at (888) 282-3653 or email us at firstname.lastname@example.org. We would welcome the opportunity to speak with you!