TheTaxGuy

Retirement should be about enjoying life, not worrying about surprise tax bills. Yet many retirees in Greensboro and across North Carolina are caught off guard by how their income is taxed once they stop working. Having a smart tax strategy in place before you retire can help you keep more of your hard-earned money.

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1. Social Security Benefits and Taxes

Many people assume Social Security benefits are tax-free, but the IRS may tax up to 85% of your benefits depending on your “provisional income” (your adjusted gross income + nontaxable interest + half your Social Security benefits).

For individuals, the tax kicks in at $25,000 of provisional income.

For married couples filing jointly, the threshold is $32,000.

Tax Strategy Tip: Time your withdrawals from IRAs, pensions, and other income sources so you can minimize how much of your Social Security is taxable.

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2. Retirement Account Withdrawals

Withdrawals from traditional IRAs and 401(k)s are taxed as ordinary income. In North Carolina, there’s no extra state tax beyond the flat 4.5% income tax rate, but that can still add up.

Required Minimum Distributions (RMDs) begin at age 73, forcing you to take taxable withdrawals whether you need the money or not.

Tax Strategy Tip: Consider partial Roth conversions in lower-income years before RMDs begin, so more of your retirement income can be withdrawn tax-free later.

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3. Roth Accounts

Withdrawals from a Roth IRA or Roth 401(k) are generally tax-free if you’re over 59½ and meet the five-year rule. Roth accounts can be a powerful tool in a balanced Greensboro retirement tax strategy because they provide a pool of income that doesn’t increase your taxable income.

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4. Pension Income

If you have a pension, expect it to be fully taxable at both the federal level and in North Carolina (unless you qualify for certain grandfathered exemptions under the Bailey Settlement).

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5. Investment Income

Capital gains, dividends, and interest can still impact your tax bill in retirement.

Long-term capital gains often have lower tax rates, but they still count toward your provisional income, which can make more of your Social Security taxable.

North Carolina taxes all capital gains at the flat 4.5% rate.

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6. Property Taxes and Greensboro Perks

If you own a home in Greensboro, property taxes remain a consideration in your retirement budget. Guilford County offers certain property tax relief programs for seniors who meet income requirements.

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7. Healthcare and Medicare Premiums

Higher taxable income can increase your Medicare Part B and Part D premiums under the IRMAA rules.
Tax Strategy Tip: Coordinate your withdrawals so you don’t unintentionally push yourself into a higher premium bracket.

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The Bottom Line

A clear, proactive tax strategy can make all the difference in retirement. By knowing which types of income are taxable and planning withdrawals strategically, you can stretch your retirement savings further — and avoid costly surprises.

If you’re in Greensboro and approaching retirement, now is the time to map out a plan that minimizes taxes and maximizes peace of mind.