If you’re a beach bum and want to spend your days in the sun, retiring to Iowa is probably not for you. But for the rest of us, Iowa has numerous tax advantages and a low cost of living making it a desirable place to retire.
The Blacktower Group, a wealth management and financial advice firm ranked Iowa among the top states to retire in 2020. Rankings were based on: cost of living, proportion of population 60 and over, average home price, and life expectancy.
- 14th for cost of living, at 92 on the Council for Community & Economic Research scale, where 100 is the U.S. average.
- 14th for proportion of its population age 60 or older, at 22.4%, according to U.S. Census estimates.
- Eighth for average home price at $173,561, as calculated by the census.
- 12th for life expectancy at 79.4 years, according to the Institute for Health Metrics and Evaluation at the University of Washington.
BestPlaces.net has given Iowa an 83.7 cost of living index based on a U.S. average of 100, meaning the cost of living in Iowa is lower than the U.S. average and allowing your hard earned dollar to stretch farther. The report considered the cost of food, medical, housing, median home cost, transportation, and utilities.
The Hawkeye state also has some of the most desirable tax benefits for seniors:
Social Security Income Exemption
Social security income is 100% tax exempt in Iowa. However, income from an IRA or 401K is taxable.
Retirement Income Deductions
1. If you are over 65 with an income of less than $32,000 are exempt from the state income tax.
2. If you are 55 or older you can exclude up to $6,000 of retirement income on your state taxes. If you are a married filer, you can exclude up to $12,000.
1. Active duty armed forces, military reserve and National Guard personnel can exclude pay received from the federal government for military service, to the extent it was included in line 15, Gross Income.
2. Retired military pension income is not taxable in Iowa. This benefit is in addition to the $6,000 general retirement exemption.
Homestead Tax Credit
The Homestead Tax Credit is a reduction of the taxable value of their property up to $4,850. You must own and occupy the property as a homestead on July 1 of each year, declare residency in Iowa for income tax purposes and occupy the property for at least six months each year.
The tax advantages are a real plus when retiring in Iowa, but Iowa is much more than tax advantages.
Iowa is made up of lovely picturesque towns with boutique shopping and dining, safe and affordable neighborhoods, friendly people, outdoor recreation galore, events and festivals year ‘round, no traffic jams, exemplary education opportunities, serious football fans, and all four seasons to enjoy!
If you are considering Iowa as your retirement home, give Jane Fischer and Associates a call, 641-424-HOME (4663). It would be our pleasure to assist you with your move. Visit us at https://www.janefischer.com/