What Taxes do Retirees Pay in Nevada?

Austin Carroll is a financial advisor at Cornerstone based in Reno, NV. Austin has passed his Series 65 Securities Registration Examination. He helps clients create customized financial plans based on their unique financial goals by addressing topics such as income, investments, and taxes.

WHAT TAXES DO RETIREES PAY IN NEVADA?

Whether you are retiring in Nevada as a long time resident or moving here to benefit from the lack of a state income tax, you might have some questions about what kind of taxes you might be subjected to in retirement. All the taxes that you pay comes down to how you are taking income from your investments and which investments you are taking income from. Whether you have a pension and social security or use your IRA and Roth IRA, it’s all taxed dependent upon the account, not necessarily the state’s tax laws.

DOES NEVADA HAVE AN INCOME TAX?

In the state of Nevada, there is not an income tax. Meaning that if you are taking money directly from your IRA to use as income, you are not subjected to a state income tax. However, this does not mean that you don’t pay any taxes, because you are still subject to a federal income tax on that money. Remember, when you deferred your income and contributed to your IRA, you made a deal with the IRS that you would one day pay the income tax on that money when you pulled it out of the account.

RETIREES DRAWING FROM A PENSION OR SOCIAL SECURITY

But what about the retirees that have a pension or those that are taking their social security benefit? Do you owe any taxes on that? The short answer, no. Again, there is no state income tax in the state of Nevada, so if you had any money coming to you that would normally be considered income, it’s not taxed here as an income tax.

RETIRING IN NEVADA

So, if you are getting ready to retire in Nevada, you should focus more on how your investments are going to be taxed and not be so concerned with the state’s income taxes. Reason being is that you will likely find more tax benefits in how you withdraw your income than from the states’ taxes that you are residing. For example, it’s more important to focus on the benefits of an account like a Roth IRA versus a traditional IRA when examining how to maximize your tax benefits.

WHERE TO GO FROM HERE

When looking at how to withdraw your income in retirement, questions you have should be directed to your advisor. You could also contact our team here at Cornerstone today to schedule a meeting. Our advisors look at the big picture, and use that among several best-in-class resources to curate a personalized plan for you. We want to help you live the life you want to live through fiduciary-based financial planning. Call us today at (775)-853-9033 if you’d like to see how Cornerstone could help you.

FREE RETIREMENT TAX BILL ESTIMATE

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