Taxes for Retirees in Colorado

When planning for retirement in Colorado, taxes are a factor, whether you rely on Social Security, personal income, or a combination of both. According to Robert Powell of MarketWatch, taxes are one of the biggest expenses retirees face, and finding the place that is the most tax-friendly for retirees can be a challenge. The good news, if you're considering retirement in Colorado, is that it is one of the better states for retirees when it comes to taxes.

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Social Security - While Colorado is one of the 14 states that tax Social Security, that shouldn't be a deal breaker, even if you rely on it. According to Kiplinger, the first $24,000 of Social Security income can be excluded, greatly reducing or wiping out the amount owed.
Income Tax vs. Property Tax - One thing that makes finding the ideal retirement tax situation tricky is that, if one type of tax is low or "free," the money is usually coming from somewhere else. States with no income tax may have high property or sales tax, for example. Colorado's tax rates are low-to-moderate overall, with various tax breaks available for residents age 60 and older. For example, according to Kiplinger, Colorado residents age 65 and older may qualify for a homestead exemption on property tax if they've lived in the state for 10 years while those who are more than 60 years old who don't qualify for the tax break may qualify to work off a portion of their property tax by volunteering for their city or county government. Jobs include part-time positions in libraries, public schools, and county offices.  If you're over 65 and receive a pension, you made exclude up to $24,000 of that income at tax time – and that include pensions issued in other states.

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Inheritance and Estate Tax - If you retire in Colorado, you won't have to worry about leaving a tax burden for your children or others eligible for an inheritance. The Centennial State has neither an inheritance tax nor an estate tax. This benefits retirees with small and large nest eggs alike.