Are your state taxes getting you down?
Maybe you’re thinking about moving to a state where the tax burden is lower.
If so, you’re not alone. According to a study by the libertarian Cato Institute, in 2016, 600,000 people moved from the 25 most expensive states to the lower 25.
Of course, that’s not specific.
The states losing the most people are New York, California, Maryland, and Minnesota.
The states receiving the newest immigrants include Florida, Nevada, Texas, and Washington.
Florida and Nevada have no state income taxes at all. They’re able to run their state governments on the sales taxes paid by tourists and, in the case of Nevada, taxes paid by casinos on their profits (which of course is also money left behind mainly by tourists).
Five other states have zero income taxes. They’re:
* Alaska
* Texas
* Washington
* Wyoming
* South Dakota
Besides the well-known New York and California, these states also have high-income taxes:
* Hawaii
* Iowa
* Minnesota
* New Jersey
* Oregon
* Vermont
* Wisconsin
Their tax rates are usually progressive, so check the details to see how much people with your income have to pay.
Quality of life matters a lot too. If you can afford to live in Hawaii, it’s worth a few extra percentage points of income.
Sales Taxes Count Too
In some places, tourists paying sales taxes subsidize the local residents. But if you move there, you’ll have to spend money too.
Sales taxes are difficult to calculate because local jurisdictions can add a sales tax on top of the state tax. These rates vary enormously. I didn’t see any clear patterns or trends.
New Hampshire, Oregon, and Montana have no sales taxes at all.
Alaska imposes no statewide sales taxes, but some jurisdictions have them up to 7.5%.
The other states range from about 4-7%. For local jurisdictions, you’ll just have to check out any specific city or town you’re particularly interested in.
Puerto Rico’s sales taxes are 11.5%.
Some States and Cities are Paying People to Live There
You may get a deal from:
* Maine
* Alaska
* Tulsa, Oklahoma
* Spokane, Kansas
* Vermont
* North Platte, Nebraska
* Newton, Iowa
The details of their offers are different. Some, such as Maine, are clearly trying to keep young people in the state.
Some want people who will buy homes and stay there. And take jobs there. Some are open to remote workers. I assume that would include freelancers.
You Have to Figure in What Lifestyle You Want
The trendy big cities on the East and West coasts are attracting Millennials with high tech and business skills. The warm states are attracting retirees and their pensions and Social Security checks.
If you’re willing to buck those trends, you can find high-quality food and housing for low prices in the UNtrendy areas.
Besides, there’s a way to live in a trendy environment in rural small towns.
Check Out University Towns
I began college at the University of Missouri in Columbia. Outside of the university, Columbia was just another small, rural Missouri town. But thanks to the university, there were plenty of bars, all kinds of restaurants and many cultural attractions.
Most university towns will have all the sports, recreation and culture you can find in expensive big cities, just not the glamor.
And they’ll be safer and cleaner too.
And you’ll still be close to the local outdoor activities, depending on your location.
Early Internet Advocates Predicted the Death of Big Cities
They said programs like Skype would reduce the amount of in-person meetings and conferences companies would require.
It turns out many young people in these jobs still want to live in the big cities. But if you’d prefer a small town, you can still enjoy all the benefits (including the lower expenses) of small-town America, while making a living online.
Make Sure You Consider Your Family and Medical Needs
Where are your family members now? Would you prefer to be closer or farther away from them?
What kind of medical care do you need? Is your current doctor a well-renowned specialist? Would a small-town doctor do just as well?
If you’re now using cannabis for a medical issue, you’ll need to make sure you go to one of the 33 states where that is available. Laws on CBD oil also vary a lot.
Lead Yourself Not Into Temptation
Nevada is high on my list of potential states to move to, but I’m not emotionally attached to losing my money by gambling. Some people are, including seniors who should know better, and they should avoid Nevada.
Slot machines can take a lot more of your money than any state government would ever tax away from you.
President Roosevelt erased Prohibition, but some states still erect barriers between you and alcohol. Utah is the toughest. In Pennsylvania, you can buy hard liquor only at state-owned stores.
If you’re into cannabis for recreation instead of medicinal purposes, there are now eleven states where it’s legal. Illinois is the most recent. Cannabis has its risks, but buying it legally is far safer than attempting to score from dealers.
Don’t Try a “Fake Move”
High-tax states are not letting their residents “escape” so easily. They perform audits to verify whether you have really moved.
For example: if you claim you have moved to Florida, but actually spend 183+ days a year in New York City, they will come after you – and will also charge you for the cost of the audit. That could run up to $100,000. (On top of the usual high taxes.)
