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Moving for Retirement? Key State Tax Insights for Target Employees

'Target employees weighing a move in retirement should look beyond just income tax and consider the full state tax landscape to support smarter long-term planning,'—Paul Bergeron, a representative of The Retirement Group, a division of Wealth Enhancement.

'Target employees exploring relocation in retirement can benefit from understanding how different state tax rules may influence everyday expenses and long-term goals,'—Tyson Mavar, a representative of The Retirement Group, a division of Wealth Enhancement.

In this article, we will discuss:

How moving to a new state may influence income taxes in retirement.
The effect property and sales taxes can have on long-term living expenses.
Why estate and inheritance taxes matter for legacy planning.

Potential tax implications of moving

If you are thinking of moving to a new state when you retire, there are several factors to consider in advance. Beyond determining if the location suits your needs and lifestyle, it's important to find out how much you will owe in state taxes. That's because both your short- and long-term living expenses can be influenced by property and sales taxes. Additionally, certain states have estate and inheritance taxes that may affect your legacy planning.

Even if you plan to move to a state with no income tax after retiring from Target, look closely at the full tax landscape before making the leap. In truth, income tax is just one piece of a larger equation. Here are four core tax categories to keep in mind:

1. Income taxes

As of 2025, wage income is not taxed at the state level in nine U.S. states: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. This can make these states attractive to Target retirees who anticipate earning a higher income even after retirement.

If you plan to meet most of your income needs from pensions, traditional IRAs, and employer retirement plans, this income is generally subject to federal taxes and may be subject to state taxes. That said, most states do not tax Social Security benefits. Be sure to check if that's true in the state you'd like to move to. There are still nine states that impose income tax on Social Security, although they typically also offer exemptions or credits based on your income level. ¹

Comparing estimated state and federal taxes on retirement withdrawals can help clarify how your income could differ depending on where you live. State rules, exemptions, and formulas can vary widely.

2. Property tax

Property tax costs differ greatly depending on where you live. New Jersey, for instance, has an effective property tax of 2.23%, while Hawaii's property tax is only 0.27%. ² According to the U.S. Census Bureau, the national average is 1.02%. ³

In some states, eligible homeowners could see cost reductions through age-based or homestead exemptions. However, this is not universally true. This makes it important to understand the property tax landscape in advance of making any moves. Location and real estate values will heavily influence your total housing-related expenses in retirement.

3. Sales tax

Sales taxes can shape everyday spending, especially for retirees living on fixed income sources of revenue. As of 2025, 45 states impose a statewide sales tax, and 38 states have additional local sales taxes levied by counties or municipalities. ⁴ While exemptions for items like groceries or clothing may exist, they vary widely between states. And these exemptions typically do not mitigate sales taxes on other items, which average 7.52% nationwide. ⁴ Even in places without income taxes, the combined sales tax burden can noticeably impact the cost of living.

4. Inheritance and estate taxes

Other taxes you should consider before moving include those levied on estates and inheritances. These can be crucial as they may influence how much your heirs ultimately receive.

In addition to federal estate tax, 12 states and the District of Columbia impose estate taxes and five states levy inheritance taxes. And then there's Maryland, the only state that charges both. ⁵

Before relocating, be sure to review estate tax laws in both your current and future state of residence since rules and thresholds differ.

The bottom line

Taxes are only one piece of the cost-of-living puzzle. Housing, health care, and insurance may also factor heavily into retirement planning for those leaving the Target workforce.

Taking a full view of a state’s tax environment can help you make sound, well-considered choices. Working with a financial planner or tax professional can help you evaluate how a move could influence your income, assets, and long-term goals.

Want help analyzing your retirement move?

The Retirement Group can help you explore how taxes and benefits might shape your retirement income and relocation decisions.

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Sources:

1. Fidelity. ' Is Social Security still taxable? ' by Fidelity Viewpoints. 2025.

2. Rocket Mortgage. ' Property taxes by state: Ranked from highet to lowest in 2025 ,' by Joel Reese. September 12, 2025.

3. USA Today. ' These states have the highest property taxes ,' by Sara Chernikoff. July 18, 2024.

4. Tax Foundation. ' State and Local Sales Tax Rates, Midyear 2025 ,' by Jared Walczak. July 8, 2025.

5. Tax Foundation. ' Estate and Inheritance Taxes by State, 2025 ,' by Katherine Loughead. Oct. 28, 2025.

Other Resources:

1. Markowitz, Andy. “ Taxes on Social Security Are Based on Your Income .” AARP , 16 Apr. 2025, updated 12 Aug. 2025, www.aarp.org/social-security/retirement/federal-income-taxes/ .

2. “ Thinking of Moving to Another State? Before You Pack, Understand How Taxes Could Affect Your Finances .” Fidelity Viewpoints , 16 Oct. 2025, www.fidelity.com/learning-center/personal-finance/moving-to-another-state-taxes .

3. TurboTax Editorial Team. “ 9 States with No Income Tax .” Intuit TurboTax , 21 Sept. 2025, turbotax.intuit.com/tax-tips/fun-facts/9-states-with-no-income-tax/c9RZgthD3/.

4. “ How Do State and Local Estate and Inheritance Taxes Work? ” Urban-Brookings Tax Policy Center , Updated Jan. 2024, taxpolicycenter.org/briefing-book/how-do-state-and-local-estate-and-inheritance-taxes-work.

5. “ Property Tax Exemptions .” Texas Comptroller of Public Accounts , n.d., comptroller.texas.gov/taxes/property-tax/exemptions/.

What are the key benefits provided by Target Corporation's Personal Pension Account and Traditional Plan for employees approaching retirement, and how do these plans ensure financial security during retirement years? Understanding the synergy between these two plans is essential for retirees, as they work together alongside Social Security and personal savings to replace a portion of an employee's paycheck after retirement.

Key Benefits of the Personal Pension Account and Traditional Plan: Target Corporation's pension plan includes two components: the Personal Pension Account and the Traditional Plan. These plans work in tandem to replace a portion of an employee's paycheck during retirement. The Personal Pension Account provides pay credits and interest that accumulate over time, while the Traditional Plan uses a final average pay formula. Together with Social Security and personal savings, these plans help ensure financial security in retirement(Target Corporation_Dece…).

How can employees elect different payment options, such as the Single Life Annuity or the Joint and Survivor Annuities, within Target Corporation's pension plans? It is crucial for employees to grasp not only the financial implications of these choices but also the necessary spousal consent required when designating a joint annuitant, particularly if the chosen joint annuitant is not the employee's spouse.

Payment Options and Spousal Consent: Employees can elect different payment options, including the Single Life Annuity, which provides the highest monthly benefit and ceases at the retiree’s death, or the Joint and Survivor Annuity, which continues payments to a surviving spouse. To elect a non-spouse as a joint annuitant, spousal consent is required, and this must be notarized to ensure compliance with plan rules(Target Corporation_Dece…).

In what circumstances might benefits not be paid under the Traditional Plan, and what steps can employees take to ensure they remain eligible for their pension benefits upon termination of employment? Target Corporation's policy outlines several scenarios where benefits could be denied, making it necessary for employees to be proactive in understanding their rights and responsibilities concerning plan participation.

Circumstances for Denial of Benefits under the Traditional Plan: Benefits under the Traditional Plan may not be paid if an employee leaves before becoming vested (less than three years of service). Employees should ensure they meet the vesting requirements and maintain eligibility by avoiding termination before they reach the minimum service period(Target Corporation_Dece…).

What procedures should employees follow to report changes in marital status, address, or beneficiaries to ensure compliance with the requirements of Target Corporation's pension plan? Employees must understand the importance of timely reporting these changes to avoid potential issues with their retirement benefits and ensure that their pension plan information remains up-to-date.

Reporting Changes in Marital Status or Beneficiaries: Employees must promptly report changes in marital status, address, or beneficiaries to Target's Benefits Center to ensure their pension records remain up-to-date. Failing to do so can lead to delays or issues in processing pension benefits(Target Corporation_Dece…).

How does Target Corporation determine the final average pay used to calculate retirement benefits under its pension plans, and what factors may affect this calculation? Employees nearing retirement should be fully informed about how their compensation is considered in determining their pension benefits, including aspects such as bonuses and overtime that may influence their final average pay calculation.

Final Average Pay Calculation: Target Corporation calculates final average pay based on the five highest years of earnings out of the last 10 years of service. This includes regular pay, overtime, bonuses, and commissions but excludes items like workers' compensation or long-term disability payments(Target Corporation_Dece…).

How can employees begin the process of rolling over their Target 401(k) accounts into the Pension Plan, and what advantages does this Pension Purchase Program offer? Understanding this rollover option is vital for maximizing retirement benefits, as it can provide employees with a stable income stream while avoiding unnecessary fees typically associated with purchasing annuities outside the plan.

Rolling Over 401(k) into the Pension Plan: Employees can roll over their 401(k) accounts into the Pension Plan using the Pension Purchase Program. This option offers several advantages, including avoiding fees associated with purchasing annuities outside the plan and receiving a stable income stream during retirement(Target Corporation_Dece…).

What are the implications of a participant's age and joint annuitant's age on the payment amounts under the various Joint and Survivor Annuity options at Target Corporation? Employees should be aware of how age differences can impact their pension payouts, as the specific percentages payable under these options may vary based on the ages of both the participant and their designated joint annuitant.

Effect of Participant and Joint Annuitant’s Age on Payments: The Joint and Survivor Annuity options are influenced by the ages of both the participant and the joint annuitant. The younger the joint annuitant, the lower the monthly payout due to actuarial adjustments. Employees should consider these factors when selecting an annuity option(Target Corporation_Dece…).

How are retirement benefits managed during potential plan terminations or amendments at Target Corporation, and what protections are in place for employees in these scenarios? Employees should be well-informed regarding their rights in the event of changes to the pension plan, including how benefits would be distributed and under what circumstances they may remain fully vested.

Plan Terminations or Amendments: In case of plan terminations or amendments, vested benefits are protected, and employees will receive their earned pension. If the plan is amended or terminated, Target ensures that vested benefits are distributed according to the plan's terms(Target Corporation_Dece…).

For employees retiring or leaving Target Corporation, what options are available with respect to unused vacation time and how might this be factored into pension calculations? Understanding how accrued time off translates into benefits could have a significant impact on an employee's financial positioning upon retirement.

Unused Vacation Time and Pension Calculations: Unused vacation time does not directly affect pension benefits but can be included in eligible earnings calculations that determine final average pay. Employees nearing retirement should consult with Target’s Benefits Center to understand how unused time may impact their overall benefits(Target Corporation_Dece…).

How can employees contact Target Corporation for assistance with their retirement benefits to address any questions or concerns they may have about their pension plans? Accessing the right resources and support is essential for employees to navigate their retirement benefits effectively. They can reach out to the Target Benefits Center at 800-828-5850 for more specific inquiries related to their personal circumstances. These questions aim to enhance employees' understanding of their retirement benefits, ensuring they are well-prepared for their transition into retirement.

Contacting Target for Pension Assistance: Employees can contact the Target Benefits Center at 800-828-5850 for assistance with their retirement and pension plans. This center provides support with any questions related to pension options, payments, and administrative requirements(Target Corporation_Dece…).

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For more information you can reach the plan administrator for Target at 10 South Dearborn Street 48th Floor Chicago, IL 60603; or by calling them at 1-800-440-0680.