The Outer Banks of NC is known as a top ranked vacation destination and for its top rated beaches, but it is also a popular retirement haven. In addition to the aesthetic reasons listed in our previous post, there are reasons that make sense for your pocketbook and estate planning .
NC Tax Reform Act 2013
NC took drastic measures back in 2013 that radically changed the tax landscape for both individuals and businesses. These changes will save potentially thousands of dollars in taxes compared to other states and retirement venues. The state of North Carolina has completely revamped the tax structure. The non-partisan Tax Foundation ranks NC as the 11th best in the country; improving from 44th. In a short period of time, NC has become a model for conservative tax reform and a potential model for the entire country.
Income Tax Rate
It is a modified flat tax system featuring a single income tax rate. The current rate is 5.49%. In January 2019 it will drop to 5.25%. Previously, the state had a 3 tiered system with rates as high as 7.75%.
The standard deduction was increased from $3,000 to $7,500 for single filers and $6,000 to $15,000 for those married and filing jointly.
In addition to the standard deduction, there are still deductions allowed for charitable contributions, a child tax credit, mortgage interest and property taxes.
The combined mortgage interest and property tax deduction is capped at $20,000.
Retirees whom rely on income from social security will not have to pay state income tax.
State Estate Tax
Retirees concerned about leaving behind a legacy for their children or other heirs, will find NC very hospitable. The Tax Reform Act of 2013 eliminated the estate tax.
The sales tax rate is 6.75%. This is shared between the state at 4.75% and 2% benefiting local government. Groceries are currently taxed only at the local tax rate of 2% and prescription drugs are untaxed.
The current corporate tax rate is also reduced to 3% and is one of the lowest rates for any state. In January 2019 it will drop to 2.5%. This is a bonus to folks who are semi-retired or wish to start a new business after retirement.
North Carolina has been fiscally responsible while cutting taxes to also control spending. Annual increases in spending are kept below the rate of population growth and inflation. The result is citizens keeping more income and the state experiencing budget surpluses.
The Outer Banks of NC has condos and modest homes available for retirees interested in downsizing while still remaining active and independent. Many are in communities with shared amenities for a carefree lifestyle. Schedule an appointment today to visit available homes or get familiar with each neighborhoods unique vibe to find the best place to retire to the good life!