Overview of Nevada Retirement Tax Friendliness
Nevada has no state income tax, which means all retirement income is tax-free at the state level. It also has relatively low property taxes, while the state sales tax is somewhat higher than average.
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Nevada Retirement Taxes
If you’re searching for a great place to retire, Nevada may be a safe bet. It has an arid climate that receives 220 to 300 days of sunshine per year, depending on where in the state you live. Recreational opportunities in the Silver State abound. It has the most casinos of any U.S. state and many golf courses.
Nevada also has some of the lowest retirement taxes of any U.S. state. It has no state income tax, which means that all retirement income is tax-free at the state level. It also has relatively low property taxes, while the state sales tax is somewhat higher than average.
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Is Nevada tax-friendly for retirees?
Nevada is extremely tax-friendly for retirees. Since Nevada does not have a state income tax, any income you receive during retirement will not be taxed at the state level. This includes income from both Social Security and retirement accounts.
Additionally, the average effective property tax rate in Nevada is just 0.54%. The average total sales tax rate is 8.23% with the state sales tax rate being 6.85%. That is higher than the national average, but it is the only relevant tax that is higher in Nevada than in most of the rest of the country. Nevada has no estate or inheritance tax.
Is Social Security taxable in Nevada?
Social Security retirement benefits, even those taxed at the federal level, are not taxed in Nevada. In combination with the low cost of living in rural parts of the state, this can make it possible for many retirees in Nevada to use Social Security as their primary or only source of income.
Are other forms of retirement income taxable in Nevada?
Since Nevada does not have a state income tax, any income from a pension, 401(k), IRA or any other retirement account is not taxable. This can represent significant savings when compared to most other states, which generally tax at least some forms of retirement income.
How high are property taxes in Nevada?
Property taxes in Nevada are relatively low. A typical homeowner in Nevada spends almost $1,705 annually in property taxes. That varies significantly between counties, however. That's with an average home value in the state at $315,900.
Does Nevada have any property tax exemptions for seniors?
While there is no general property tax exemption for seniors, there are a number of specific programs from which some retirees may benefit. The exemptions available include a veteran’s exemption that is available to veterans who served in active duty during a recognized war period. There is also a disabled veteran’s exemption that is available to veterans with a service-connected disability of no less than 60%.
The blind exemption is available to Nevada residents whose vision is no better than 20/200 when wearing contact lenses or glasses. The surviving spouse’s exemption is available to homeowners whose spouse has passed away. This is equal to about $47 in savings.
How high are sales taxes in Nevada?
Sales tax rates in Nevada is 6.85%. Local rates average anywhere from 0% to 2.5%. Combined, the overall state average is a little more than 8%.
Nevada has some important sales tax exemptions designed to benefit seniors. These include prescription drugs, durable medical equipment like wheelchairs and prosthetic devices, groceries and newspapers.
What other Nevada taxes should I be concerned about?
Nevada collects significant revenue through sin taxes on products such as alcohol and tobacco. The state’s gas excise tax is 23 cents per gallon.
Nevada does not have an estate tax or an inheritance tax.
Most Tax Friendly Places for Retirees
SmartAsset’s interactive map highlights the places in the country with tax policies that are most favorable to retirees. Zoom between states and the national map to see the most tax-friendly places in each area of the country.
Methodology Our study aims to find the areas with the most tax-friendly policies for retirees. To do that we looked at how the tax policies of each city would impact a retiree with a $50,000 income. Our hypothetical retiree is getting $15,000 from Social Security benefits, $10,000 from a private pension, $15,000 from retirement savings like a 401(k) or IRA and $10,000 in wages.
To calculate the expected income tax this person would pay in each location we applied deductions and exemptions. This included the standard deduction, personal exemption and deductions for each specific type of retirement income. We then calculated how much this person would pay in income tax at the federal, state, county and local levels.
We calculated the effective property tax rate by dividing median property tax paid by median home value for each city.
In order to determine sales tax burden we estimated that 35% of take-home (after-tax) pay is spent on taxable goods. We multiplied the average sales tax rate for a city by the household income less income tax. This product is then multiplied by 35% to estimate the sales tax paid.
For fuel taxes, we first distributed statewide vehicle miles traveled down to the city level using the number of vehicles in each county. We then calculated miles driven per capita in each city. Using the nationwide average fuel economy, we calculated the average gallons of gas used per capita in each city and multiplied that by the fuel tax.
For each city we determined whether or not Social Security income was taxable.
Finally, we created an overall index weighted to best capture the taxes that most affect retirees. We gave a 4x weighting to income tax, 3x weighting to property tax rate, a 2x weighting to sales tax and 1x weighting to fuel tax.
Sources: Internal Revenue Service, Social Security Administration, state websites, local government websites, US Census Bureau 2014 American Community Survey, Avalara, American Petroleum Institute, GasBuddy, UMTRI, Federal Highway Administration
