Austin, Albert Lea make list of tax-friendly MN cities
Published 6:39 pm Saturday, October 17, 2015
Austin and Albert Lea were included in a Top 10 list of the most tax-friendly places for retirees in Minnesota in a recent study.
Austin finished fifth in the study released by SmartAsset, a New York-based financial technology company.
The company said the study takes into account the effect local taxes would have on a retiree with a $50,000 income.
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Albert Lea finished in 10th place. Under the scenario, $15,000 of the income would be from Social Security benefits, $10,000 from a private pension, $15,000 from retirement savings and $10,000 in wages.
The company said to calculate the expected income tax, the person would pay in each location it applied deductions and exemptions. It then calculated how much the person would pay in income tax at the federal, state, county and local levels.
The company said for each location it determined whether Social Security income was taxable. Using Census data, it identified the median property taxes paid by homeowners in each place and then ranked and indexed the cities by income tax paid and property tax paid.
An overall index was then created to capture the taxes that most affect retirees. Income tax was given the most weight, followed by Social Security income taxability, then property tax paid.
Austin was named fifth in the state in the study.
The study included 86 communities in Minnesota and more than 4,600 nationwide. According to SmartAsset, all cities for which the company had data were included.
Six of the Top 10 nationally-ranked cities on the list were in Texas. Each of the Top 10 cities nationwide had no Social Security taxes.
Albert Lea was listed as No.3 in a listing of Top 10 affordable small towns where people would actually want to live in a Realtor.com survey released last week.