Tennessee Economic Stories: Jon & Linda Freeman

August 5, 2013 3:34PM

Jon & Linda Freeman

Jon and Linda Freeman have been married for over 30 years. Not long after meeting through their work at Boeing in Colorado, the young couple relocated to Alabama in 1965 with dreams of starting a family. Jon began planning for their retirement early, and Linda even enrolled in a “women in investing” course during a time when women were rarely active in this role. Both were dually committed to building a sound future for themselves and their children. In 2007, the couple decided to retire so they could spend more time with loved ones and finally enjoy a mountain home in their favorite alcove of Coldwater, nestled in the Tennessee hills. “It’s beautiful. We love the outdoors,” reflects Linda. “Huntsville (Alabama) was getting too big, with too much traffic. We wanted to get back to land, yet stay close enough to Huntsville to still go to church there and see friends. But this is home now.” Yet, as much as Jon and Linda have embraced and relished their sunset years in Tennessee, they were met with a surprising and alarming tax that’s been a harsh reality for Tennessee’s retirees: the Hall Income Tax on investment income, enacted in 1929. Since retiring and relocating, Jon and Linda have largely relied upon their income from investments to support their cost of living. Unfortunately, the Hall Tax negates the state’s claims of being income tax-free. As a result, Jon and Linda are finding it difficult to sustain their retirement as Tennessee residents. If he had known about the Hall Tax, John suggests that he “would have had to seriously reconsider moving here. I might have considered Texas or Florida instead. I wish these harsh taxes had been more clear to us before we came here.” Unfortunately, Jon and Linda’s middle-class status means that much of their retirement income is subject to the tax. “We very carefully planned our retirement,” says Jon. “We made sure to save throughout our careers and were very proactive with our investments. We were never so ‘well-to-do’ that we didn’t have to be concerned about our future, or our children’s futures.” When asked how the Hall Tax has impacted their quality of living, Jon responds, “We have to be a lot more careful about what we do with the structure of our income stream. Linda and I have to consider every investment we make, looking at whether it is taxable or not. Before knowing about this hefty tax, I made some investments that were prudent for our financial futures, but that I nevertheless would not have made, simply because they subject us to these heavy penalties.” So is the case with thousands of Tennessee seniors just trying to maintain a quality lifestyle and provide for their families. To learn more about Beacon’s efforts to reform the Hall Tax, click here.