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Carolina
Tax Benefits
for Retirees |
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oth North and South Carolina are states where people of all ages, but especially seniors, are
migrating to enjoy the many benefits that are offered.
One of the reasons is the
reasonable tax burden when compared with other states in the nation.
Other relocation factors are climate, cost of living, medical facilities, leisure activities,
and distance from friends and family.
Based upon analyses by the Tax Foundation
and Kiplinger's Magazine in its July, 2002 issue, we can see how these two states
compare to one another and to the nation.
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hen looking at total tax burden for the calendar year 2002, the Tax Foundation
compares and ranks all states in terms of federal, state and local taxes.
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When this is done, the Carolinas compare as follows:
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North Carolina Rank Per Capita ~ 35th
South Carolina Rank Per Capita ~ 40th
Both North and South Carolina rank relatively low based on this study.
Kiplinger's Magazine in its July, 2002 article entitled "Where You Stay = What You Pay"
by Mary Beth Franklin, reviews state and local tax burdens on a typical retiree for each state
and ranks them. The author considers state income tax, property taxes and state sales taxes.
The retiree couple is 65 or older, and has taxable income of $60,000 annually.
The income is derived from the following: $24,000
Social Security benefits,
$21,000 from private pension
benefits, $10,000 from IRA
distributions, and $5,000
from taxable dividends and
interest. The couple owns a
home with 2,000 square feet,
that is located in the state capital. The study does not
include personal property tax on cars or boats. The three taxes are then
added and ranked. Based upon this, the Carolina's compare as follows:
North Carolina
State Income: $455
Sales Tax: $1,030
Property Tax: $1,845
Total: $3,330
Rank: 24
South Carolina
State Income: None
Sales Tax: $1,000
Property Tax: $518
Total: $1,518
Rank: 4
South Carolina is the fourth lowest state in ranking for tax burden for seniors in the nation.
North Carolina is ranked 24th. Automobiles, trucks, boats and motor homes are subject to
personal property tax in South Carolina. This will narrow the gap between North and South
Carolina. In addition to these general facts, there are special provisions that the taxpayer
should know about in the Carolinas.
Both states have special provisions for retirees aged
65 and older and for persons with disabilities. They are
outlined by state in the following provisions.
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North Carolina has several major exclusions for real property.
Property Tax Homestead Exclusion - "The greater of $20,000, or fifty percent of the appraised
value of real property owned by a North Carolina resident and occupied by the owner as his or
her permanent residence is excluded from the taxpayer's assessment,
if the following requirements are met:
1. The owner is 65 years of age, or older or is totally and permanently disabled.
2. The disposable income of the owner did not exceed $18,000 for calendar year 2001 if
applying in 2002, or $18,500 for calendar year 2002 if applying in 2003. The income
eligibility limit is adjusted each year by the social security cost-of-living adjustment.
The disposable income limit amount includes all monies received plus the disposable
income of the applicant's spouse if they reside together.
3. The owner completes the required application in a timely manner and the assessor approves it."
Source:
NC Dept. of Revenue - Exemptions and Exclusions
Disabled Veterans - The first $38,000 in assessed value of housing together with the
necessary land therefore owned and used as a residence by a disabled veteran who receives
benefits under 38 U.S.C Section 2101 is excluded from property tax. Additionally, a motor
vehicle owned by a disabled veteran (as defined in 38 U.S.C. Section 101 (2) that is altered
with special equipment to accommodate a service-connected disability as provided in 38 U.S.C.
Section 3901 is excluded from property tax.
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South Carolina has several major exclusions for real property for persons with disabilities. They are as follows:
Property Tax Homestead Exclusion - South Carolina also allows a $50,000 Homestead exemption
on the fair market value of a home for residents who are age 65 or older, for persons totally and
permanently disabled, or are legally blind.
State Property Tax Exclusions - A home and a one-acre
home site are tax exempt for the
following people:
1) Veterans who are totally and permanently disabled due to a service-related disability
(a special license tag is required or a certification from the Veteran's Administration that the disability is service related)
2) Surviving spouse of a service person killed in action
3) Paraplegic/quadriplegic and surviving spouse (a special license tag is required or
physician's certificate is required stating that the person is required to use a wheelchair.
Personal Property Tax Exclusions- Paraplegics, quadriplegics, disabled veterans, former
prisoners of war, and Medal of Honor winners are exempt from property taxes for up to two
of their personal vehicles. See Form PT 401, PT 401-1
from the
State Department of Revenue (See Property Tax Exemptions).
A personal vehicle is exempt from property taxes if owned by a legal
guardian of a minor who is blind or uses a wheelchair, if the vehicle is used to transport the minor.
In order to exempt these home and vehicle property taxes, you must first file an
application at the county auditor's office.
It is recommended that persons annually check with the appropriate state department of revenue
for changes in the tax laws, and when in doubt consult a tax specialist from that state.
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Bruce E. Bondo is a professional public
administrator and policy analyst who has been involved with health and human services issues for over thirty
years. He holds a B.A. in Political Science/Public Administration from the University of Wisconsin and an M.A. in Public
Administration from the University of North Carolina-Chapel Hill. His specialty has been in the area
of public finance, health and human services programs, managed care, aging issues, and disability issues.
He is the
author of Tax Options and Strategies: A State-By-State Guide for Persons with Disabilities, Senior Citizens,
Veterans and their Families, January 1995, Demos Vermande, New York, NY. He is also author
of "Wheeling Through The Tax Maze,"
Paraplegia News, December 1995. He has also authored
many other articles and state publications concerning health care and senior issues.
Reach him at bbondo3096@aol.com.
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