Should I move to a state with no income tax to save on taxes?

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MrNarwhal
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Re: Should I move to a state with no income tax to save on taxes?

Post by MrNarwhal »

I have thought about moving to Sioux Falls, SD for lower cost of living (including lower overall tax burden) compared with the Twin Cities. But it doesn't feel worth being 4 hours farther from family and friends. Also the winters are harder in terms of ice and wind.

What are your financial goals? With such high income in an area with low cost of living (most Ohio metros are cheap) it seems like you can afford to pay the taxes. But the calculation might change if you have a specific goal (e.g. early retirement) requiring a higher savings rate.
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TomatoTomahto
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Re: Should I move to a state with no income tax to save on taxes?

Post by TomatoTomahto »

tuningfork wrote: Sat Mar 18, 2023 10:08 am One consideration that seems so important to many bogleheads is if you live in a state without state income tax, you can buy the cheaper version of tax preparation software every year. Huuuuuge savings! 😁
Heck, the only reason we have a CPA is because of state tax. For Federal, I would just use TurboTax for our simple return.
I get the FI part but not the RE part of FIRE.
er999
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Re: Should I move to a state with no income tax to save on taxes?

Post by er999 »

capran wrote: Sat Mar 18, 2023 10:17 am
mega317 wrote: Wed Mar 15, 2023 8:06 pm States with no income tax need to get revenue somehow, if those affect you the savings may not be as much as you think. Property, sales, gasoline taxes are common. If you’re renting and not commuting maybe it doesn’t impact you much.
We live in Washington state. I'm in the camp that each state will get the money it wants in some way. Our Gas tax quite high, sales tax if you make a big purchase (we bought a different boat last year which included 23k sales tax), liquor tax is highest in country and the estate tax limit has not been raised from the 2.13million in quite a few years. Other states may have other issues. Earthquake or hurricane insurance, drought, utilities etc. Family and friends should be a significant issue.
I pay over $25k / year in income tax to Oregon so unless you are buying an expensive boat every year you’ll come our way ahead in Washington, at least for those years when you are still earning a W2 income.
smitcat
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Re: Should I move to a state with no income tax to save on taxes?

Post by smitcat »

capran wrote: Sat Mar 18, 2023 10:17 am
mega317 wrote: Wed Mar 15, 2023 8:06 pm States with no income tax need to get revenue somehow, if those affect you the savings may not be as much as you think. Property, sales, gasoline taxes are common. If you’re renting and not commuting maybe it doesn’t impact you much.
We live in Washington state. I'm in the camp that each state will get the money it wants in some way. Our Gas tax quite high, sales tax if you make a big purchase (we bought a different boat last year which included 23k sales tax), liquor tax is highest in country and the estate tax limit has not been raised from the 2.13million in quite a few years. Other states may have other issues. Earthquake or hurricane insurance, drought, utilities etc. Family and friends should be a significant issue.
"We live in Washington state. I'm in the camp that each state will get the money it wants in some way. Our Gas tax quite high, sales tax if you make a big purchase (we bought a different boat last year which included 23k sales tax),"
Please consider expanding your thoughts and examples to all states - in some states you would pay more than that for the boat and still have a state tax to pay.
bltn
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Re: Should I move to a state with no income tax to save on taxes?

Post by bltn »

hachiko wrote: Sat Mar 18, 2023 9:17 am
bltn wrote: Sat Mar 18, 2023 7:18 am
tibbitts wrote: Sat Mar 18, 2023 12:06 am
bltn wrote: Fri Mar 17, 2023 9:57 pm
tibbitts wrote: Fri Mar 17, 2023 8:33 am
The difference is that there are almost no other factors involved with credit card rebates: you either get them or don't while the products and services you buy remain identical. There are no quality of life differences between credit cards. The cards more or less imply "all other factors being equal", while the choice of where to live doesn't. This post perhaps should have been titled "Should I move to a location with a lower cost of living", whether in the same or different state or even ex-U.S.

As I mentioned earlier, when I was younger I went to the point of visiting a no-income-tax state specifically to view homes to buy, based entirely on the state having no income tax. I never did move. So I understand the motivation. Now I own a property in a no-income-tax state as well one in an income tax state, but my residence is in the income-tax state. In fact my residence used to be the no-income-tax state property, so I could just "move back", and the income-tax state isn't one of the ones likely to argue over my residence or not. I just haven't done that, and probably won't, even though it would have saved me tens of thousands of dollars in income tax. My income has averaged well-below-Boglehead standards throughout my career so it's not like I have tens of thousands of dollars to burn. There are just so many other considerations, maybe more when you get older. And I don't want to be one of the multiple people I know who frankly cheat on establishing residency to eliminate income taxes, but never intend to have the no-income-tax state be their actual home.
I understand all of the above post and generally agree with it except for the last sentence. Having a home in a state with state income taxes as well as a home in a no income tax state, and spending approximately equal time in both in my retirement, I thought it was wise to declare the no income tax state my domiciliary. I switched homestead exemptions from the tax to the no tax state and complied with the other requirements for the change. Is that “frankly cheating”? Paying property taxes, sales taxes and other tax costs of living in both places, with no earned income in either, paying unnecessary income taxes seems foolish to me. Not cheating. And I always prided myself on scrupulous honesty . Maybe I m missing something. Maybe not.
Maybe, I can't tell from what you wrote. I'm talking about people who reside most of the time "back home" in the income-tax state, enough time to qualify as a resident there. For the most part these people "moved" their domicile with the intention of not really moving it. Then yes if that's you, you're cheating. The rules for the states involved are whatever they are, and the rules may not be the same everywhere. I wouldn't get very excited if you miss by a day or two every few years; that's like driving a few mph over the limit sometimes, especially if it's unintended, maybe due to a medical or family situation. I guess for me intent counts for something and yes I think it's cheating if you don't intend to follow the domicile rules.
So if one complies with the domicile rules, he s not cheating. Just like complying with any set of rules when paying taxes. Either it s legal or it s not. If a behavior is legal, then any opinion of cheating becomes merely a value judgment. Sort of like politics.
You can't "declare" a state your state of domicile. Well - you can - it just doesn't have the effect you're implying it has.

People who own places to live in multiple states do "declare" a state their state of domicile when they file returns, but whether that's actually their domicile or not depends on their intent. In order to prove intent you need to do certain things. The default is that you didn't change your domicile. Whichever party is saying the taxpayer changed domicile has the burden of proof. So if you go from living 100% in state A to living 50% in state A and 50% in state B, state A is your domicile. You could even go from living 100% in state A to living 50% in state B and 50% in state C with state A still being your tax domicile, even though you no longer spend any time there and sold your house there. Yes, I've made that argument successfully (once).

By the way, since day counts were mentioned, this is completely unrelated to statutory residency, which is the 183 day test, where, for the vast majority of situations, intent is irrelevant.
In which state did you make that argument successfully? How were you able to prove a continued domiciliary in a vacated state? Having a state consider itself your tax domicile even after you sell your residence and move from the state and legally establish a domicile in another state seems like a stretch. Of course I m not a lawyer. But it seems I ve heard that some states are more aggressive than others in trying to retain a worker s tax status after a relocation. I believe I learned that on this forum.

I don t think I understand what you mean by "intent". If one complies with a state s requirements in establishing a domicile there, why would there be a problem with this?
capran
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Re: Should I move to a state with no income tax to save on taxes?

Post by capran »

er999 wrote: Sat Mar 18, 2023 10:30 am
capran wrote: Sat Mar 18, 2023 10:17 am
mega317 wrote: Wed Mar 15, 2023 8:06 pm States with no income tax need to get revenue somehow, if those affect you the savings may not be as much as you think. Property, sales, gasoline taxes are common. If you’re renting and not commuting maybe it doesn’t impact you much.
We live in Washington state. I'm in the camp that each state will get the money it wants in some way. Our Gas tax quite high, sales tax if you make a big purchase (we bought a different boat last year which included 23k sales tax), liquor tax is highest in country and the estate tax limit has not been raised from the 2.13million in quite a few years. Other states may have other issues. Earthquake or hurricane insurance, drought, utilities etc. Family and friends should be a significant issue.
I pay over $25k / year in income tax to Oregon so unless you are buying an expensive boat every year you’ll come our way ahead in Washington, at least for those years when you are still earning a W2 income.
I agree. Many states tax everything, and some exempt social security. We actually thought about moving to Vancouver to get a better climate than eastern Wa, but family is here, and affordability of housing is much worse even in Vancouver. Our retirement income is 200 and the thought of paying income tax on that is a deal breaker! Under our current plan, we'd have the 200 through 2031-32 if we both stay alive. After that, income could moderate to 100 so income tax would be considerably less.
spammagnet
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Re: Should I move to a state with no income tax to save on taxes?

Post by spammagnet »

bltn wrote: Sat Mar 18, 2023 12:26 pm... Having a state consider itself your tax domicile even after you sell your residence and move from the state and legally establish a domicile in another state seems like a stretch. ...
"You can check out any time you like, but you can never leave."
smooth_rough
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Re: Should I move to a state with no income tax to save on taxes?

Post by smooth_rough »

Fisher Investments announced they are moving HQ to Texas for tax reasons.
jocdoc
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Re: Should I move to a state with no income tax to save on taxes?

Post by jocdoc »

I have looked at this for myself moving to avoid taxation of IRA distributions and dividend income. The amounts are far less for me than you.
In your position I would move to save the 25K in state taxes if the new place offers you lifestyle that you desire. Family ties and social connections are important and I would establish a residency in a low income tax state as long as property taxes and insurance costs make it worthwhile but I would keep your Ohio residence and perhaps spend six months a year there. With your income this is feasible. Most states only require you spend six months and one day to establish and maintain a tax domicile.

In my case I will be a snow bird spending the colder months and establishing tax residency in a lower cost state with a warmer climate and during the pleasant season move north to be with family and grandchildren. I would maintain smaller dwellings than I have now to lower costs.

jc
OrangeKiwi
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Re: Should I move to a state with no income tax to save on taxes?

Post by OrangeKiwi »

smitcat wrote: Sat Mar 18, 2023 10:44 am
capran wrote: Sat Mar 18, 2023 10:17 am
mega317 wrote: Wed Mar 15, 2023 8:06 pm States with no income tax need to get revenue somehow, if those affect you the savings may not be as much as you think. Property, sales, gasoline taxes are common. If you’re renting and not commuting maybe it doesn’t impact you much.
We live in Washington state. I'm in the camp that each state will get the money it wants in some way. Our Gas tax quite high, sales tax if you make a big purchase (we bought a different boat last year which included 23k sales tax), liquor tax is highest in country and the estate tax limit has not been raised from the 2.13million in quite a few years. Other states may have other issues. Earthquake or hurricane insurance, drought, utilities etc. Family and friends should be a significant issue.
"We live in Washington state. I'm in the camp that each state will get the money it wants in some way. Our Gas tax quite high, sales tax if you make a big purchase (we bought a different boat last year which included 23k sales tax),"
Please consider expanding your thoughts and examples to all states - in some states you would pay more than that for the boat and still have a state tax to pay.
Yes, different states have different costs, depending on weather/natural resources/size/population of high income people/management of the state itself. Just like any business, it is possible that one state can have lower costs or debt burdens than another state, but provide services at or above the quality level that a higher cost state can.

Of course this can change any time, and everyone’s situation is different, but I can definitely see a dual high income earning couple come out ahead by living in a no income tax state by at least a few hundred thousand assuming they invest their tax savings.
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Re: Should I move to a state with no income tax to save on taxes?

Post by muffins14 »

OrangeKiwi wrote: Sat Mar 25, 2023 9:22 pm I can definitely see a dual high income earning couple come out ahead by living in a no income tax state by at least a few hundred thousand assuming they invest their tax savings.
Many jobs do not pay the same in all locations. At least for the majority of tech companies I’m aware of, the pay scales different in different locations at least to some degree
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smitcat
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Re: Should I move to a state with no income tax to save on taxes?

Post by smitcat »

OrangeKiwi wrote: Sat Mar 25, 2023 9:22 pm
smitcat wrote: Sat Mar 18, 2023 10:44 am
capran wrote: Sat Mar 18, 2023 10:17 am
mega317 wrote: Wed Mar 15, 2023 8:06 pm States with no income tax need to get revenue somehow, if those affect you the savings may not be as much as you think. Property, sales, gasoline taxes are common. If you’re renting and not commuting maybe it doesn’t impact you much.
We live in Washington state. I'm in the camp that each state will get the money it wants in some way. Our Gas tax quite high, sales tax if you make a big purchase (we bought a different boat last year which included 23k sales tax), liquor tax is highest in country and the estate tax limit has not been raised from the 2.13million in quite a few years. Other states may have other issues. Earthquake or hurricane insurance, drought, utilities etc. Family and friends should be a significant issue.
"We live in Washington state. I'm in the camp that each state will get the money it wants in some way. Our Gas tax quite high, sales tax if you make a big purchase (we bought a different boat last year which included 23k sales tax),"
Please consider expanding your thoughts and examples to all states - in some states you would pay more than that for the boat and still have a state tax to pay.
Yes, different states have different costs, depending on weather/natural resources/size/population of high income people/management of the state itself. Just like any business, it is possible that one state can have lower costs or debt burdens than another state, but provide services at or above the quality level that a higher cost state can.

Of course this can change any time, and everyone’s situation is different, but I can definitely see a dual high income earning couple come out ahead by living in a no income tax state by at least a few hundred thousand assuming they invest their tax savings.
As you say it depends on the person and the states - the difference for us is about $30K per year. We are two people/retired/homeowner, and fairly active.
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Harry Livermore
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Re: Should I move to a state with no income tax to save on taxes?

Post by Harry Livermore »

For us, it's the general trend of things in our little corner of the world. Not only do state and local taxes take a seemingly punitive, and growing, bite out of our income, it never seems to be "enough". The last 20 years has seen ever-climbing state income taxes, local property taxes, and many new "incidental" taxes and surcharges that are not big numbers by themselves, but add up and are trending in a direction that increases the burden on us. I look at some of these small-dollar increases and mentally compare them to what I'd rather spend the money on- maybe it's a vacation with my spouse, maybe it's something as simple as dinner out. Life is too short for excess taxation.
Additionally, I'm very sensitive to development/ over development. We live in a woodsy, quiet town with an excellent school system. For a variety of reasons, some state-mandated, developers have noticed our little town and are targeting it with proposals for 5-story apartment buildings (for example) in quiet residential neighborhoods that are currently zoned 2-acre. I have traveled all over the country, extensively, enough to be acutely aware of the lack of traffic jams and the overall quiet, polite nature of life in our quaint little downtown, and can easily see a future where the population doubles, and my little town basically becomes the very thing people were fleeing.
Now that our kids are getting closer to launching, I have a choice: do I stay and "fight" the coming changes, accept the changes, or move to a more rural location fare from employment centers and less "desirable" for the developer's bulldozer?
The decision hinges on our desire and ability to leave old friends and some family, and go somewhere new, meeting new people. As long as we are considering that, many other factors come into play- cost of living, state taxes, local culture, and weather. A no-income tax state would be a high-level factor for me.
Cheers
danaht
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Re: Should I move to a state with no income tax to save on taxes?

Post by danaht »

You need to also consider real estate taxes and other things as well. But if your income is that high - then a no-income tax state makes a lot of sense. I don't have the high income the OP has - but I still prefer to live in a no income tax state when I can. It also gives me a chance to do Roth conversions without the added state taxes. I also like not having to file the additional state income tax each year.
danaht
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Re: Should I move to a state with no income tax to save on taxes?

Post by danaht »

SnowBog wrote: Thu Mar 16, 2023 2:18 pm
piper wrote: Thu Mar 16, 2023 9:39 am
cchrissyy wrote: Wed Mar 15, 2023 8:38 pm I've never understood moving to save income taxes by the exact people who make so much the taxes can't impact their lifestyle.
Live wherever you like! You can afford it.
For many people getting taxed at around 50 percent of income, How does that NOT impact their lifestyle?
If I lived in a lower tax state, I could work less, retire sooner, and retire with less... That seems like an impact to me...

In my job at least, it gets progressively harder to make more money, only to see less and less of that money land in my account, so much so that I'll start to work less when it's clear that the effort (post tax) doesn't justify the rewards. When the combined tax rate is > 50%, the government is making more money than I am even though I'm the one working... IMHO that impacts me - and those around me...
I agree with this. A good strategy might be to work in a no income tax state when your income is very high. Then retire wherever you want to when your income is much lower. So the OP could live in a no income tax state for 5 to 10 years - with their high income they could retire after that time. Their future income would be enough to retire but much lower - since it's just interest or dividends from their prior investments.
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changingtimes
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Re: Should I move to a state with no income tax to save on taxes?

Post by changingtimes »

Kandinsky wrote: Wed Mar 15, 2023 8:31 pm
hachiko wrote: Wed Mar 15, 2023 8:23 pm Why would you be fine living in South Dakota or Alaska but not Wyoming?
I know I'm stereotyping but Wyoming just sounds boring. Alaska would be preferable out of the three you mentioned just from the views I've seen on the History channel.
Those of us who know about the places in Wyoming that aren't boring are thanking you for not finding out about them. :)
Florida Orange
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Re: Should I move to a state with no income tax to save on taxes?

Post by Florida Orange »

I believe Florida is the only state that doesn't tax any kind of income. The other states you mentioned don't tax ordinary income but they all tax some combination of things like interest, dividends, capital gains, pensions, social security and gambling winnings.
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Re: Should I move to a state with no income tax to save on taxes?

Post by smitcat »

Florida Orange wrote: Sun Mar 26, 2023 1:47 pm I believe Florida is the only state that doesn't tax any kind of income. The other states you mentioned don't tax ordinary income but they all tax some combination of things like interest, dividends, capital gains, pensions, social security and gambling winnings.
Not really, the details are here....
https://www.investopedia.com/financial- ... e-tax.aspx
Florida Orange
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Re: Should I move to a state with no income tax to save on taxes?

Post by Florida Orange »

smitcat wrote: Sun Mar 26, 2023 6:13 pm
Florida Orange wrote: Sun Mar 26, 2023 1:47 pm I believe Florida is the only state that doesn't tax any kind of income. The other states you mentioned don't tax ordinary income but they all tax some combination of things like interest, dividends, capital gains, pensions, social security and gambling winnings.
Not really, the details are here....
https://www.investopedia.com/financial- ... e-tax.aspx
That article is about income tax in general along side other kinds of taxes like sales tax and property tax. But on the subject of income tax only, I'm pretty sure only Florida doesn't tax any kind of personal income at the state level.
danaht
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Re: Should I move to a state with no income tax to save on taxes?

Post by danaht »

Florida Orange wrote: Sun Mar 26, 2023 8:26 pm
smitcat wrote: Sun Mar 26, 2023 6:13 pm
Florida Orange wrote: Sun Mar 26, 2023 1:47 pm I believe Florida is the only state that doesn't tax any kind of income. The other states you mentioned don't tax ordinary income but they all tax some combination of things like interest, dividends, capital gains, pensions, social security and gambling winnings.
Not really, the details are here....
https://www.investopedia.com/financial- ... e-tax.aspx
That article is about income tax in general along side other kinds of taxes like sales tax and property tax. But on the subject of income tax only, I'm pretty sure only Florida doesn't tax any kind of personal income at the state level.
At least in Nevada people can avoid the gambling tax by not gambling. I don't think Nevada has any other "income" type personal taxes.
smitcat
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Re: Should I move to a state with no income tax to save on taxes?

Post by smitcat »

Florida Orange wrote: Sun Mar 26, 2023 8:26 pm
smitcat wrote: Sun Mar 26, 2023 6:13 pm
Florida Orange wrote: Sun Mar 26, 2023 1:47 pm I believe Florida is the only state that doesn't tax any kind of income. The other states you mentioned don't tax ordinary income but they all tax some combination of things like interest, dividends, capital gains, pensions, social security and gambling winnings.
Not really, the details are here....
https://www.investopedia.com/financial- ... e-tax.aspx
That article is about income tax in general along side other kinds of taxes like sales tax and property tax. But on the subject of income tax only, I'm pretty sure only Florida doesn't tax any kind of personal income at the state level.
Please post a link to that data.
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Re: Should I move to a state with no income tax to save on taxes?

Post by Sandtrap »

Kandinsky wrote: Wed Mar 15, 2023 8:28 pm
dukeblue219 wrote: Wed Mar 15, 2023 8:16 pm Honest opinion?

You make so much money that quality of life is not a concern. You've won the money game. Don't sacrifice time with family and friends just to make another 5.3% every year.

If you *want* to live in Nevada or Texas go for it, but I'd let the tax savings be icing on the cake because it won't change your life meaningfully. Leaving behind your family will.
Thank you for your opinion. I think this sort of response is what I was looking for to get my head right. I've just been trying to approach this in the most logical mindset but I guess it's one of those "how you feel" decisions that ends up being the most logical.

I think another option I've toyed with is building out a van to camp in and traveling across the country to get a feel for different areas and experiences while keeping my current home base. It's either that or I try to stay in budget hotels and just travel around in my car and see different areas while working on the road. I think I just have this angst that I'm still somewhat young at 35 and I need to be creating some memories before the years get ahead of me and I look back with regret.
To OP:

This is the "elephant in the room" that needs to be addressed. It will not go away on its own.

Matters of "stage of life" and existential.
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BrooklynInvest
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Re: Should I move to a state with no income tax to save on taxes?

Post by BrooklynInvest »

piper wrote: Thu Mar 16, 2023 9:39 am
cchrissyy wrote: Wed Mar 15, 2023 8:38 pm I've never understood moving to save income taxes by the exact people who make so much the taxes can't impact their lifestyle.
Live wherever you like! You can afford it.
For many people getting taxed at around 50 percent of income, How does that NOT impact their lifestyle?
I guess it impacts my lifestyle a bit, but positively and negatively -

From a purely financial perspective - I'd rather not pay the income taxes of course but on the other hand my property taxes are minimal relative to the price of our house (.2% a year if I've got the decimal in the right place.) The property taxes on my FIL's house in very rural TN are half of mine but the property value is less than 10% of ours.

The public schools here are excellent so private tuition isn't needed. The public transport is decent so we don't need a car. I got my MBA from a city college at a fraction of the price of other schools. I guess I see the high taxes paying for/subsidizing stuff that I want so no biggie. And when I retire I still get that stuff and don't have to pay for it anymore ;-)
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Re: Should I move to a state with no income tax to save on taxes?

Post by Florida Orange »

smitcat wrote: Mon Mar 27, 2023 7:54 am
Florida Orange wrote: Sun Mar 26, 2023 8:26 pm
smitcat wrote: Sun Mar 26, 2023 6:13 pm
Florida Orange wrote: Sun Mar 26, 2023 1:47 pm I believe Florida is the only state that doesn't tax any kind of income. The other states you mentioned don't tax ordinary income but they all tax some combination of things like interest, dividends, capital gains, pensions, social security and gambling winnings.
Not really, the details are here....
https://www.investopedia.com/financial- ... e-tax.aspx
That article is about income tax in general along side other kinds of taxes like sales tax and property tax. But on the subject of income tax only, I'm pretty sure only Florida doesn't tax any kind of personal income at the state level.
Please post a link to that data.
I don't know how to post a link.
smitcat
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Re: Should I move to a state with no income tax to save on taxes?

Post by smitcat »

Florida Orange wrote: Mon Mar 27, 2023 10:50 am
smitcat wrote: Mon Mar 27, 2023 7:54 am
Florida Orange wrote: Sun Mar 26, 2023 8:26 pm
smitcat wrote: Sun Mar 26, 2023 6:13 pm
Florida Orange wrote: Sun Mar 26, 2023 1:47 pm I believe Florida is the only state that doesn't tax any kind of income. The other states you mentioned don't tax ordinary income but they all tax some combination of things like interest, dividends, capital gains, pensions, social security and gambling winnings.
Not really, the details are here....
https://www.investopedia.com/financial- ... e-tax.aspx
That article is about income tax in general along side other kinds of taxes like sales tax and property tax. But on the subject of income tax only, I'm pretty sure only Florida doesn't tax any kind of personal income at the state level.
Please post a link to that data.
I don't know how to post a link.
"But on the subject of income tax only, I'm pretty sure only Florida doesn't tax any kind of personal income at the state level."

Articles on states which have no income taxes....
AARP
https://www.aarp.org/money/taxes/info-2 ... e-tax.html
Nerdwallet
https://www.nerdwallet.com/article/taxe ... income-tax
CNBC
https://www.cnbc.com/select/states-with-no-income-tax/
USnews
https://money.usnews.com/money/personal ... income-tax
Capitalone
https://www.capitalone.com/learn-grow/m ... ome-taxes/


To attach a link to an article:
- open the selected article
- highlight the entire line in the browser and then click 'copy'
- return to Bogle post and then click 'paste'
- link should show up in that post where you clicked
Florida Orange
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Re: Should I move to a state with no income tax to save on taxes?

Post by Florida Orange »

smitcat wrote: Mon Mar 27, 2023 11:15 am To attach a link to an article:
- open the selected article
- highlight the entire line in the browser and then click 'copy'
- return to Bogle post and then click 'paste'
- link should show up in that post where you clicked
Thanks smitcat. I'll see if I can find the article I'm thinking of.
smitcat
Posts: 13300
Joined: Mon Nov 07, 2016 9:51 am

Re: Should I move to a state with no income tax to save on taxes?

Post by smitcat »

Florida Orange wrote: Mon Mar 27, 2023 11:54 am
smitcat wrote: Mon Mar 27, 2023 11:15 am To attach a link to an article:
- open the selected article
- highlight the entire line in the browser and then click 'copy'
- return to Bogle post and then click 'paste'
- link should show up in that post where you clicked
Thanks smitcat. I'll see if I can find the article I'm thinking of.
That would be great - I have looked and cannot find any other than the above.
None say Florida is unique with income taxes.
FWIW - Florida is our home state.
Bcdkgf
Posts: 310
Joined: Sat Aug 01, 2020 9:43 am
Location: Florida

Re: Should I move to a state with no income tax to save on taxes?

Post by Bcdkgf »

smitcat wrote: Mon Mar 27, 2023 11:58 am
Florida Orange wrote: Mon Mar 27, 2023 11:54 am
smitcat wrote: Mon Mar 27, 2023 11:15 am To attach a link to an article:
- open the selected article
- highlight the entire line in the browser and then click 'copy'
- return to Bogle post and then click 'paste'
- link should show up in that post where you clicked
Thanks smitcat. I'll see if I can find the article I'm thinking of.
That would be great - I have looked and cannot find any other than the above.
None say Florida is unique with income taxes.
FWIW - Florida is our home state.
We were born in Florida and moved to Atlanta 45 years ago, came back home for retirement. Florida has grown!!!

Plus side
No Income tax, estate tax
No snow or ice storms
No sales tax on groceries, we paid county sales tax on groceries in Georgia
If you get sued, no-one can touch your house, retirement income (broadly defined) or social security.
Really great weather 9 months out of the year
Good medical care
Great fresh water springs, parks, ocean activities
Liquor is sold everywhere :beer

Cons
Out of control growth.
Real estate taxes are high
4 months of hot, cut with a knife humidity
Hurricane season
High electricity costs
Seriously high car and house insurance. Many people drive with no insurance!
If you have kids, the public school's funding is the lowest in the country, if I had school age kids I would consider private school.

These were some of my thoughts since a decision based on income tax alone is not enough.
Women and men plan, the Gods laugh.
smitcat
Posts: 13300
Joined: Mon Nov 07, 2016 9:51 am

Re: Should I move to a state with no income tax to save on taxes?

Post by smitcat »

Bcdkgf wrote: Mon Mar 27, 2023 1:02 pm
smitcat wrote: Mon Mar 27, 2023 11:58 am
Florida Orange wrote: Mon Mar 27, 2023 11:54 am
smitcat wrote: Mon Mar 27, 2023 11:15 am To attach a link to an article:
- open the selected article
- highlight the entire line in the browser and then click 'copy'
- return to Bogle post and then click 'paste'
- link should show up in that post where you clicked
Thanks smitcat. I'll see if I can find the article I'm thinking of.
That would be great - I have looked and cannot find any other than the above.
None say Florida is unique with income taxes.
FWIW - Florida is our home state.
We were born in Florida and moved to Atlanta 45 years ago, came back home for retirement. Florida has grown!!!

Plus side
No Income tax, estate tax
No snow or ice storms
No sales tax on groceries, we paid county sales tax on groceries in Georgia
If you get sued, no-one can touch your house, retirement income (broadly defined) or social security.
Really great weather 9 months out of the year
Good medical care
Great fresh water springs, parks, ocean activities
Liquor is sold everywhere :beer

Cons
Out of control growth.
Real estate taxes are high
4 months of hot, cut with a knife humidity
Hurricane season
High electricity costs
Seriously high car and house insurance. Many people drive with no insurance!
If you have kids, the public school's funding is the lowest in the country, if I had school age kids I would consider private school.

These were some of my thoughts since a decision based on income tax alone is not enough.

Here are some feedbacks compared to NY where we also spend time
Cons
Out of control growth.
Already worse in NY
Real estate taxes are high
Not compared to NY
4 months of hot, cut with a knife humidity
Depends what you like, no snow and ice
Hurricane season
Was worse in NY
High electricity costs
Much higher in NY
Seriously high car and house insurance. Many people drive with no insurance!
Car about the same, home is a bit more (10%?) as best I can figure.
If you have kids, the public school's funding is the lowest in the country, if I had school age kids I would consider private school.
No kids in school

"These were some of my thoughts since a decision based on income tax alone is not enough."
We agree - based on all costs we are about $30K per year less in Florida for all costs. (2 persons/retired/homeowners/very active)
Bcdkgf
Posts: 310
Joined: Sat Aug 01, 2020 9:43 am
Location: Florida

Re: Should I move to a state with no income tax to save on taxes?

Post by Bcdkgf »

smitcat wrote: Mon Mar 27, 2023 1:11 pm
Bcdkgf wrote: Mon Mar 27, 2023 1:02 pm
smitcat wrote: Mon Mar 27, 2023 11:58 am
Florida Orange wrote: Mon Mar 27, 2023 11:54 am
smitcat wrote: Mon Mar 27, 2023 11:15 am To attach a link to an article:
- open the selected article
- highlight the entire line in the browser and then click 'copy'
- return to Bogle post and then click 'paste'
- link should show up in that post where you clicked
Thanks smitcat. I'll see if I can find the article I'm thinking of.
That would be great - I have looked and cannot find any other than the above.
None say Florida is unique with income taxes.
FWIW - Florida is our home state.
We were born in Florida and moved to Atlanta 45 years ago, came back home for retirement. Florida has grown!!!

Plus side
No Income tax, estate tax
No snow or ice storms
No sales tax on groceries, we paid county sales tax on groceries in Georgia
If you get sued, no-one can touch your house, retirement income (broadly defined) or social security.
Really great weather 9 months out of the year
Good medical care
Great fresh water springs, parks, ocean activities
Liquor is sold everywhere :beer

Cons
Out of control growth.
Real estate taxes are high
4 months of hot, cut with a knife humidity
Hurricane season
High electricity costs
Seriously high car and house insurance. Many people drive with no insurance!
If you have kids, the public school's funding is the lowest in the country, if I had school age kids I would consider private school.

These were some of my thoughts since a decision based on income tax alone is not enough.

Here are some feedbacks compared to NY where we also spend time
Cons
Out of control growth.
Already worse in NY
Real estate taxes are high
Not compared to NY
4 months of hot, cut with a knife humidity
Depends what you like, no snow and ice
Hurricane season
Was worse in NY
High electricity costs
Much higher in NY
Seriously high car and house insurance. Many people drive with no insurance!
Car about the same, home is a bit more (10%?) as best I can figure.
If you have kids, the public school's funding is the lowest in the country, if I had school age kids I would consider private school.
No kids in school

"These were some of my thoughts since a decision based on income tax alone is not enough."
We agree - based on all costs we are about $30K per year less in Florida for all costs. (2 persons/retired/homeowners/very active)
My parents moved back to Florida from NYC in the late 60's and couldn't get over how everything in Florida was so much cheaper. My public school education at that time was top notch both in NYC and Dade County.
Women and men plan, the Gods laugh.
Bcdkgf
Posts: 310
Joined: Sat Aug 01, 2020 9:43 am
Location: Florida

Re: Should I move to a state with no income tax to save on taxes?

Post by Bcdkgf »

Bcdkgf wrote: Mon Mar 27, 2023 1:39 pm
smitcat wrote: Mon Mar 27, 2023 1:11 pm
Bcdkgf wrote: Mon Mar 27, 2023 1:02 pm
smitcat wrote: Mon Mar 27, 2023 11:58 am
Florida Orange wrote: Mon Mar 27, 2023 11:54 am
Thanks smitcat. I'll see if I can find the article I'm thinking of.
That would be great - I have looked and cannot find any other than the above.
None say Florida is unique with income taxes.
FWIW - Florida is our home state.
We were born in Florida and moved to Atlanta 45 years ago, came back home for retirement. Florida has grown!!!

Plus side
No Income tax, estate tax
No snow or ice storms
No sales tax on groceries, we paid county sales tax on groceries in Georgia
If you get sued, no-one can touch your house, retirement income (broadly defined) or social security.
Really great weather 9 months out of the year
Good medical care
Great fresh water springs, parks, ocean activities
Liquor is sold everywhere :beer

Cons
Out of control growth.
Real estate taxes are high
4 months of hot, cut with a knife humidity
Hurricane season
High electricity costs
Seriously high car and house insurance. Many people drive with no insurance!
If you have kids, the public school's funding is the lowest in the country, if I had school age kids I would consider private school.

These were some of my thoughts since a decision based on income tax alone is not enough.

Here are some feedbacks compared to NY where we also spend time
Cons
Out of control growth.
Already worse in NY
Real estate taxes are high
Not compared to NY
4 months of hot, cut with a knife humidity
Depends what you like, no snow and ice
Hurricane season
Was worse in NY
High electricity costs
Much higher in NY
Seriously high car and house insurance. Many people drive with no insurance!
Car about the same, home is a bit more (10%?) as best I can figure.
If you have kids, the public school's funding is the lowest in the country, if I had school age kids I would consider private school.
No kids in school

"These were some of my thoughts since a decision based on income tax alone is not enough."
We agree - based on all costs we are about $30K per year less in Florida for all costs. (2 persons/retired/homeowners/very active)
My parents moved back to Florida from NYC in the late 60's and couldn't get over how everything in Florida was so much cheaper. My public school education at that time was top notch both in NYC and Dade County.
Edited to say we are saving a ton of money doing Roth Conversions here. :D
Women and men plan, the Gods laugh.
bendix
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Re: Should I move to a state with no income tax to save on taxes?

Post by bendix »

What an interesting discussion.

Isnt it that Ohio will assume you owe the full amount of taxes, even if you dont live in Ohio all the time, but will grant you a credit for taxes paid in other states, which is useless if that other state is a state that doesnt levy taxes? I tried to research that a while back and that was the impression I closed with. Would be great news if I was wrong!
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Mel Lindauer
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Re: Should I move to a state with no income tax to save on taxes?

Post by Mel Lindauer »

capran wrote: Sat Mar 18, 2023 10:17 am
mega317 wrote: Wed Mar 15, 2023 8:06 pm States with no income tax need to get revenue somehow, if those affect you the savings may not be as much as you think. Property, sales, gasoline taxes are common. If you’re renting and not commuting maybe it doesn’t impact you much.
We live in Washington state. I'm in the camp that each state will get the money it wants in some way. Our Gas tax quite high, sales tax if you make a big purchase (we bought a different boat last year which included 23k sales tax), liquor tax is highest in country and the estate tax limit has not been raised from the 2.13million in quite a few years. Other states may have other issues. Earthquake or hurricane insurance, drought, utilities etc. Family and friends should be a significant issue.
We're lucky (and grateful) here in Florida. The taxes on residents are low because tourists pay such a large part of our taxes.
Best Regards - Mel | | Semper Fi
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Re: Should I move to a state with no income tax to save on taxes?

Post by KirklandCoug »

mega317 wrote: Wed Mar 15, 2023 8:06 pm States with no income tax need to get revenue somehow, if those affect you the savings may not be as much as you think. Property, sales, gasoline taxes are common. If you’re renting and not commuting maybe it doesn’t impact you much.
This!
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Mel Lindauer
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Re: Should I move to a state with no income tax to save on taxes?

Post by Mel Lindauer »

KirklandCoug wrote: Mon Mar 27, 2023 4:54 pm
mega317 wrote: Wed Mar 15, 2023 8:06 pm States with no income tax need to get revenue somehow, if those affect you the savings may not be as much as you think. Property, sales, gasoline taxes are common. If you’re renting and not commuting maybe it doesn’t impact you much.
This!
See my response to this in the post just above this one.
Best Regards - Mel | | Semper Fi
smitcat
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Re: Should I move to a state with no income tax to save on taxes?

Post by smitcat »

KirklandCoug wrote: Mon Mar 27, 2023 4:54 pm
mega317 wrote: Wed Mar 15, 2023 8:06 pm States with no income tax need to get revenue somehow, if those affect you the savings may not be as much as you think. Property, sales, gasoline taxes are common. If you’re renting and not commuting maybe it doesn’t impact you much.
This!
Just not the case - best to compare a complete summary on any states that may interest you.
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changingtimes
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Re: Should I move to a state with no income tax to save on taxes?

Post by changingtimes »

bendix wrote: Mon Mar 27, 2023 4:23 pm What an interesting discussion.

Isnt it that Ohio will assume you owe the full amount of taxes, even if you dont live in Ohio all the time, but will grant you a credit for taxes paid in other states, which is useless if that other state is a state that doesnt levy taxes? I tried to research that a while back and that was the impression I closed with. Would be great news if I was wrong!
My understanding as well, with DC. Will have to change my domicile with my employer and officially make Wyoming my state of residence to reap the benefits of working there six months out of the year.
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Kandinsky
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Re: Should I move to a state with no income tax to save on taxes?

Post by Kandinsky »

Glockenspiel wrote: Thu Mar 16, 2023 2:35 pm You may be paying $25k/year less per year in state INCOME taxes, but a portion of that will be made up with increased property taxes, sales taxes, gas taxes, toll tax, user fees, homeowner's insurance premiums, etc. I reject the notion that someone is really saving $25k/year, if they make $400k/yr.
Well I don't plan on spending all of my income every year so I don't think I will face sales tax on $400K of income. Plus I would live in a similar home to the one I have now at about $220K home value. I've looked at higher property tax states and the difference was less than $2K. Everyone keeps pointing out "you pay somewhere". Yes I get that. But when you're income is high, that will trump all the other ways you might be taxed every time.
Cat Herder
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Re: Should I move to a state with no income tax to save on taxes?

Post by Cat Herder »

Kandinsky wrote: Wed Mar 29, 2023 8:45 pm
Glockenspiel wrote: Thu Mar 16, 2023 2:35 pm You may be paying $25k/year less per year in state INCOME taxes, but a portion of that will be made up with increased property taxes, sales taxes, gas taxes, toll tax, user fees, homeowner's insurance premiums, etc. I reject the notion that someone is really saving $25k/year, if they make $400k/yr.
Well I don't plan on spending all of my income every year so I don't think I will face sales tax on $400K of income. Plus I would live in a similar home to the one I have now at about $220K home value. I've looked at higher property tax states and the difference was less than $2K. Everyone keeps pointing out "you pay somewhere". Yes I get that. But when you're income is high, that will trump all the other ways you might be taxed every time.
This point is often underappreciated. Income taxes hit high earners with high savings rates much harder than other forms of taxation.
smitcat
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Re: Should I move to a state with no income tax to save on taxes?

Post by smitcat »

Kandinsky wrote: Wed Mar 29, 2023 8:45 pm
Glockenspiel wrote: Thu Mar 16, 2023 2:35 pm You may be paying $25k/year less per year in state INCOME taxes, but a portion of that will be made up with increased property taxes, sales taxes, gas taxes, toll tax, user fees, homeowner's insurance premiums, etc. I reject the notion that someone is really saving $25k/year, if they make $400k/yr.
Well I don't plan on spending all of my income every year so I don't think I will face sales tax on $400K of income. Plus I would live in a similar home to the one I have now at about $220K home value. I've looked at higher property tax states and the difference was less than $2K. Everyone keeps pointing out "you pay somewhere". Yes I get that. But when you're income is high, that will trump all the other ways you might be taxed every time.
You need to check each state as they are all different - here is our example from earlier in this thread...

"That has not been our experience with changing states. Here is a reasonable summary estimate of the changes in expenses for the first full year since we changed states.
Retired/married/own home/equivalent home/same cars/active in both states.

$16,000 income tax
$ 7,000 property tax
$ 3,500 utilities
$ (750) home insurance
$ 0 vehicle insurance
$ 2,250 sales tax
$ 1,000 registration, fees, tolls, ramps, etc
$29,000 difference in spendable dollars in the first year...this will rise a bit more in the second year.
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Re: Should I move to a state with no income tax to save on taxes?

Post by Jack FFR1846 »

8301 wrote: Thu Mar 16, 2023 12:35 pm
Massachusetts does not take 50% from you as income taxes. Our state income taxes are about 1/3 of the federal taxes. I-5 is much longer than I-90.
I agree with your first point (MA state income tax is 5%) but the second is way wrong. I5 is less than 1400 miles, running north to south on the west coast.
https://en.wikipedia.org/wiki/Interstate_5

I90 is literally sea to shining sea, running from Boston to Seattle and more than double the length of I5 at 3021 miles.
https://en.wikipedia.org/wiki/Interstate_90

Even the east coast version of I5, I95 is longer than I5 at 1924 miles.
https://en.wikipedia.org/wiki/Interstate_95



anyways, smitcat made a good starting list for what taxes and fees one would pay in each state.
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Harry Livermore
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Re: Should I move to a state with no income tax to save on taxes?

Post by Harry Livermore »

I think an important point to note (an I'm not trying to be political here) is that some states lean towards more "services", and some lean towards fewer "services". More services = more spending = higher budget =/= always equal more spending per person/ more taxes collected per person... but often does. Every state is different, and it's advisable to look at the state's culture of governance, not just taxes, when considering a move.
The city, town, or county you choose will differ in services offered, budget, and property tax as well, and this is very important to think about. If you are a younger person, with kids in the school system and older parents using the local senior center and dial-a-ride, choosing an area with good services and high taxes might be right at your current phase in life. If you are older, kids are launched, and you need "less" from a local government, perhaps the time has come to move to a place with different priorities.
Also, my own casual observation is that the average citizen has the most impact on local matters, and the average citizen's ability to affect government mandates and budgets decreases as you go "up the ladder"; what I mean by that is, you can have a pretty direct impact on local matters if you are willing and have enough time and energy. If you think your small town's budget is too high or too low, you can get involved, serve on a committee, get signatures on a petition from friends and neighbors, and directly affect the process. You have less influence at the county or state level, and almost zero influence at the federal level.
My retirement relocation decision tree (and it may be flawed) leads me to think seriously about a no-income-tax state, where my influence at the state capitol does not matter at all, and carefully choose the county and/ or town in which I settle. If it seems like a town full of thrifty folks and a mostly volunteer/ sleepy town government, as a retiree that would appeal to me. I'm perfectly willing to stay involved in the community, help keep costs down, volunteer and be a good citizen. With no state income tax, I just have to keep a causal eye on the state capitol, and the feds... well, whatever is going to happen in DC is going to happen :)
That's my logic anyway... and it certainly may be flawed.
Cheers
smitcat
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Re: Should I move to a state with no income tax to save on taxes?

Post by smitcat »

Harry Livermore wrote: Thu Mar 30, 2023 9:00 am I think an important point to note (an I'm not trying to be political here) is that some states lean towards more "services", and some lean towards fewer "services". More services = more spending = higher budget =/= always equal more spending per person/ more taxes collected per person... but often does. Every state is different, and it's advisable to look at the state's culture of governance, not just taxes, when considering a move.
The city, town, or county you choose will differ in services offered, budget, and property tax as well, and this is very important to think about. If you are a younger person, with kids in the school system and older parents using the local senior center and dial-a-ride, choosing an area with good services and high taxes might be right at your current phase in life. If you are older, kids are launched, and you need "less" from a local government, perhaps the time has come to move to a place with different priorities.
Also, my own casual observation is that the average citizen has the most impact on local matters, and the average citizen's ability to affect government mandates and budgets decreases as you go "up the ladder"; what I mean by that is, you can have a pretty direct impact on local matters if you are willing and have enough time and energy. If you think your small town's budget is too high or too low, you can get involved, serve on a committee, get signatures on a petition from friends and neighbors, and directly affect the process. You have less influence at the county or state level, and almost zero influence at the federal level.
My retirement relocation decision tree (and it may be flawed) leads me to think seriously about a no-income-tax state, where my influence at the state capitol does not matter at all, and carefully choose the county and/ or town in which I settle. If it seems like a town full of thrifty folks and a mostly volunteer/ sleepy town government, as a retiree that would appeal to me. I'm perfectly willing to stay involved in the community, help keep costs down, volunteer and be a good citizen. With no state income tax, I just have to keep a causal eye on the state capitol, and the feds... well, whatever is going to happen in DC is going to happen :)
That's my logic anyway... and it certainly may be flawed.
Cheers
"If it seems like a town full of thrifty folks and a mostly volunteer/ sleepy town government, as a retiree that would appeal to me. I'm perfectly willing to stay involved in the community, help keep costs down, volunteer and be a good citizen."
It did not work that way in our sleepy little town but that is only a sample of one. Hope you have better luck with your plan.
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Shift4
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Re: Should I move to a state with no income tax to save on taxes?

Post by Shift4 »

I stumbled on this NPR post just now that seemed relevant: https://www.npr.org/2023/03/30/11669705 ... erty-sales

Excerpt: "WalletHub, a personal finance website, released a report this week analyzing total tax burden by state. Tax burden is defined as the proportion of a person's income that goes toward taxes."

Highest tax burdens

New York - 12.47%
Hawaii - 12.31%
Maine - 11.14%
Vermont - 10.28%
Connecticut - 9.83%
New Jersey - 9.76%
Maryland - 9.44%
Minnesota - 9.41%
Illinois - 9.38%
Iowa - 9.15%

Lowest tax burdens

Alaska - 5.06%
Delaware - 6.12%
New Hampshire - 6.14%
Tennessee - 6.22%
Florida - 6.33%
Wyoming - 6.42%
South Dakota - 6.69%
Montana - 6.93%
Missouri - 7.11%
Oklahoma - 7.12%
Last edited by Shift4 on Thu Mar 30, 2023 9:21 am, edited 1 time in total.
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Harry Livermore
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Re: Should I move to a state with no income tax to save on taxes?

Post by Harry Livermore »

smitcat wrote: Thu Mar 30, 2023 9:04 am
"If it seems like a town full of thrifty folks and a mostly volunteer/ sleepy town government, as a retiree that would appeal to me. I'm perfectly willing to stay involved in the community, help keep costs down, volunteer and be a good citizen."
It did not work that way in our sleepy little town but that is only a sample of one. Hope you have better luck with your plan.
True! Things change. My current small town has changed quite a bit during my tenure (I've lived here for 30 years) There are many newcomers who want "shiny things" (turf fields, new municipal buildings, and other "amenities") to "compete" with other bedroom communities. The thrifty, blue-haired Yankee ladies who went to every town meeting and watched over things are gone now. The trajectory of spending seems unsustainable, so my spouse and I are seriously considering a move to somewhere more rural and less "trendy".
All I can do is try my strategy and hope for the best!
:sharebeer
Cheers
OrangeKiwi
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Re: Should I move to a state with no income tax to save on taxes?

Post by OrangeKiwi »

Shift4 wrote: Thu Mar 30, 2023 9:20 am I stumbled on this NPR post just now that seemed relevant: https://www.npr.org/2023/03/30/11669705 ... erty-sales

Excerpt: "WalletHub, a personal finance website, released a report this week analyzing total tax burden by state. Tax burden is defined as the proportion of a person's income that goes toward taxes."

Highest tax burdens

New York - 12.47%
Hawaii - 12.31%
Maine - 11.14%
Vermont - 10.28%
Connecticut - 9.83%
New Jersey - 9.76%
Maryland - 9.44%
Minnesota - 9.41%
Illinois - 9.38%
Iowa - 9.15%

Lowest tax burdens

Alaska - 5.06%
Delaware - 6.12%
New Hampshire - 6.14%
Tennessee - 6.22%
Florida - 6.33%
Wyoming - 6.42%
South Dakota - 6.69%
Montana - 6.93%
Missouri - 7.11%
Oklahoma - 7.12%
This would be more useful if broken down by W-2 income decile, or at least quintile. For example, it shows Washington as having a higher tax liability than Oregon, which, if you are on the upper end of the income scale, cannot be true.


This report might be more useful for the purposes of figuring out potential tax liability on an individual basis.

https://itep.org/whopays-map/
er999
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Re: Should I move to a state with no income tax to save on taxes?

Post by er999 »

Shift4 wrote: Thu Mar 30, 2023 9:20 am I stumbled on this NPR post just now that seemed relevant: https://www.npr.org/2023/03/30/11669705 ... erty-sales

Excerpt: "WalletHub, a personal finance website, released a report this week analyzing total tax burden by state. Tax burden is defined as the proportion of a person's income that goes toward taxes."

Highest tax burdens

New York - 12.47%
Hawaii - 12.31%
Maine - 11.14%
Vermont - 10.28%
Connecticut - 9.83%
New Jersey - 9.76%
Maryland - 9.44%
Minnesota - 9.41%
Illinois - 9.38%
Iowa - 9.15%

Lowest tax burdens

Alaska - 5.06%
Delaware - 6.12%
New Hampshire - 6.14%
Tennessee - 6.22%
Florida - 6.33%
Wyoming - 6.42%
South Dakota - 6.69%
Montana - 6.93%
Missouri - 7.11%
Oklahoma - 7.12%
We need a boglehead version of that list — high W2 income, high savings rate, and consequently low spending. I suspect like mentioned earlier the income tax states are the ones who are really costly in that scenario.

Of course there are other situations — not w2 worker, high income from a business and the list would be different. Retirees would have a different list — places like California might be better than they seem with a low property tax basis for people living there for decades, perhaps that’s why California isn’t top of the list despite otherwise having high income and sales tax.
muffins14
Posts: 5528
Joined: Wed Oct 26, 2016 4:14 am
Location: New York

Re: Should I move to a state with no income tax to save on taxes?

Post by muffins14 »

Shift4 wrote: Thu Mar 30, 2023 9:20 am I stumbled on this NPR post just now that seemed relevant: https://www.npr.org/2023/03/30/11669705 ... erty-sales

Excerpt: "WalletHub, a personal finance website, released a report this week analyzing total tax burden by state. Tax burden is defined as the proportion of a person's income that goes toward taxes."

Highest tax burdens

New York - 12.47%
Hawaii - 12.31%
Maine - 11.14%
Vermont - 10.28%
Connecticut - 9.83%
New Jersey - 9.76%
Maryland - 9.44%
Minnesota - 9.41%
Illinois - 9.38%
Iowa - 9.15%

Lowest tax burdens

Alaska - 5.06%
Delaware - 6.12%
New Hampshire - 6.14%
Tennessee - 6.22%
Florida - 6.33%
Wyoming - 6.42%
South Dakota - 6.69%
Montana - 6.93%
Missouri - 7.11%
Oklahoma - 7.12%
I feel like this is missing the point that no one is average, and you have to consider your personal situation.

As I mentioned before for New York ( I am in New York City):

1) My property taxes are < 1%
2) When retired, Social Security is untaxed at the state and local level
3) The first $20k of retirement withdrawals are tax-free
4) When your income is lower in retirement, and when you are a senior, your property taxes get extra abatements that further reduce property taxes
5) You do not have to have a car, and have good access to entertainment, hospitals, lots of social options etc

2 and 3 above imply that a couple may be able to pull in like $120k-$130k of income without paying ANY NY/NYC tax in retirement, and enjoy lower property taxes, too (even lower than my < 1%). Combined with 5), New York is a pretty good place to retire. I'm planning a pretty opulent retirement budget of $175k, and it looks the New York tax on that will be about 1.5% in total if it were all from a traditional IRA. It will be even lower than that in reality because some will be from a Roth IRA, and some will be return of basis from taxable investments. I'll find a way to live with the 1% tax burden from my scary "high-tax state"
Last edited by muffins14 on Thu Mar 30, 2023 10:51 am, edited 4 times in total.
Crom laughs at your Four Winds
donaldfair71
Posts: 1241
Joined: Wed Mar 06, 2013 3:15 pm

Re: Should I move to a state with no income tax to save on taxes?

Post by donaldfair71 »

Kandinsky wrote: Wed Mar 15, 2023 7:47 pm I've heard the phrase that goes something like "don't let the tax tail wag the dog" but there is something very appealing about living somewhere with no state or city taxes. There are eight states with no personal income tax: Wyoming, Washington, Texas, Tennessee, South Dakota, Nevada, Florida, and Alaska. I could see myself living in any of those places except Wyoming.

My income is $465,000 per year working 100% remote from home so it doesn't matter where I reside for my work. According to some income tax calculators I could expect to save about $25,000 per year in state and local taxes just sitting in another state. The problem is I've grown up in Ohio and my family/friends are here. So the logical/rational side of my brain tries to break it down into whether $2,000 per month in extra taxes is worth living here just to be around people I know. I've even had thoughts of driving 3 hours north up into Canada to take advantage of the foreign earned income credit which would require me to stay outside the U.S. for 330 days but in return I would also forgo being taxed on roughly the first $100K in income at the federal level.

In some ways I love the thought of how liberating it might be to move away and feel more independent. On the other hand, knowing me I'd probably just settle into doing what I always do where I reside currently.

I guess I'm just curious how others have made the decision to leave their hometown? If you're not moving for a job and the place you currently live is decent but maybe not the most exciting, moving for tax purposes probably shouldn't be the main contributor?
If you want to move away because you feel you will feel liberated and independent, please do so. I moved about a 7 hour drive away from home/family and it did just that for me.

If you want to move away for money, I would second think it.

You could always commit to moving away a year at a time, no?
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