Thinking of retiring in NC? Think again

By Stephanie Carson
Public News Service-NC

CARY — Seventy-five-year-old Ken Cowick and his wife moved to Cary from Michigan with their retirement in mind. What’s top of mind now for the stroke survivor is that the Tarheel State seems increasingly less supportive of its retiree population.

This year Cowick paid $1,200 in additional taxes because medical expenses are no longer tax deductible in North Carolina, a result of the state’s 2013 tax reform.

Photo courtesy: Ken Cowick. Retiree Ken Cowick of Cary paid $1,200 more in taxes this year as a result of the 2013 elimination of the medical expense deduction in the North Carolina tax code.

Photo courtesy: Ken Cowick.
Retiree Ken Cowick of Cary paid $1,200 more in taxes this year as a result of the 2013 elimination of the medical expense deduction in the North Carolina tax code.

“Immediately my mind went back to when Gov. McCrory signed the bill, stating everybody would benefit from the new tax law,” says Cowick. “I realized that anybody with medical expenses would not benefit, but would indeed be punished.”

The financial publication Kiplinger’s recently rated North Carolina as the sixth worst state for retirement. In addition to the elimination of medical deductions, most other income is subject to tax other than Social Security benefits.

The average income for 65-and-over households in North Carolina is $39,000 per year.

North Carolina lawmakers are considering restoring the medical-expense tax deduction for seniors, but there is ongoing discussion about how to pay for the tax break’s annual $37 million price tag. Cedric Johnson, public policy analyst with the North Carolina Budget and Tax Center, says the extra tax bill weighs heavily on the bottom line of retirees on a fixed income.

“When you look at the different tax changes that yield upon one another, you get into a situation where seniors can find themselves easily paying more in taxes,” he says. “That has implications in regards to whether North Carolina is a state that retirees will see as a place or destination.”

With retirees having less money to spend, or even leaving the state altogether, Johnson says the entire economy of the state is impacted.

“Dollars that are not able to go out into local economies takes away from economic activity here in North Carolina,” he says. “That’s important when we’re talking about vibrant communities and creating jobs, and making sure the economy grows so we all benefit.”

Other tax changes that were signed into law in 2013 that impact retirees include a doubling of the electricity tax, and tax increases on entertainment, auto repair contracts and a gas tax.

Filed in: Featured News, Health, Latest Headlines, News, Region

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