Northwest Iowa — Three northwest Iowa communities rate in the Top 10 for Most Tax-Friendly Towns in the state of Iowa, according to the website smartasset.com.
The website’s study named Orange City as #4, with Sheldon coming in at #7, and Le Mars at #9.
To find the cities with the most tax-friendly policies for retirees, smartasset.com looked at how the tax policies of each city would impact a retiree with a $50-thousand income. Their hypothetical retiree is getting $15-thousand from Social Security benefits, $10-thousand from a private pension, $15-thousand from retirement savings like a 401(k) or IRA and $10-thousand in wages.
To calculate the expected income tax this person would pay in each location, the website applied deductions and exemptions. This included the standard deduction, personal exemption and deductions for each specific type of retirement income. They say they then calculated how much this person would pay in income tax at the federal, state, county and local levels. Average property taxes paid were also calculated.
In order to determine sales tax burden the study estimated that 35% of take-home (after-tax) pay is spent on taxable goods. they multiplied the average sales tax rate for a city by the household income less income tax. That product is then multiplied by 35% to estimate the sales tax paid.
For fuel taxes, they first distributed statewide vehicle miles traveled down to the city level using the number of vehicles in each county, then calculated miles driven per capita in each city. Using the nationwide average fuel economy, they calculated the average gallons of gas used per capita in each city and multiplied that by the fuel tax.
For each city they also determined whether or not Social Security income was taxable.
Finally, they created an overall index weighted to best capture the taxes that most affect retirees.
Here is the complete Top 10 List of Most Tax-Friendly Iowa Cities For Retirees:
#1 – Eldridge, IA
#2 – Algona, IA
#3 – Carroll, IA
#4 – Orange City, IA
#5 – Asbury, IA
#6 – Clive, IA
#7 – Sheldon, IA
#8 – Bondurant, IA
#9 – Le Mars, IA
#10 – Iowa City, IA
For more information, visit the smartasset.com website .