London is an attractive place for those who may be looking towards retirement. The City of London ranks in the top 10 cities in Kentucky for retirees regarding taxes, according to New York-based SmartAsset. The city ranks 6th in the state, and ranks 505th nationally.
London Mayor Troy Rudder said the city prides itself on being able to annually lower the real estate tax rate.
According to the study, a retiree in London bringing in $50,000 in retirement income can expect to pay just under $7,000 in income, sales and fuel taxes each year. In addition, the retiree’s home value will be taxed at 0.61 percent. But, for those over 65, a portion of their home value will not be taxed due to Kentucky’s Home-stead Exemption. In 2015-2016, the amount of the exemption was $36,900; the amount changes yearly.
The study is based on a retiree receiving $15,000 in Social Security benefits, $10,000 from a private pension, $15,000 from retirement savings such as a 401k or IRA and $10,000 in wages.
Social security income is entirely exempt from state income taxes, Other types of retirement income receive significant reductions in the state income tax. In fact, a retiree can have more than $40,000 in retirement income and not be required to pay any state income taxes, as up to $41,110 in income is deductible. Home values are relatively low, essentially meaning less of a retiree’s income will go to property taxes.
To calculate its findings, SmartAsset determined income tax expected to be paid, then calculated the effective property tax rate by dividing the average property tax paid by median home value for each city.
“The city has worked very hard to keep the tax rate as low as we possibly can,” Rudder said.