Sweet Spot, Living Where Low Taxes

[Elbata]

Are there sweet-spots to live in US to get lower taxes?

For instance, living in FL-no income tax, but living near a border state that may have lower sales tax. Or low real-estate tax in the state but a border state has low sales tax.

 

[Good_Life]

Washington state has no income tax. Oregon has no sales tax. Not exactly the best shopping in North Eastern OR (it is pretty remote and rural) but you could live in SW Washington and take advantage of no sales tax in Portland and NW Oregon area. Depending where you are though constantly battling traffic going back and forth across Columbia River could get old.

 

[davebarnes]

If you are going to play this game, don’t forget property taxes and homeowners’ insurance.

 

[Badger]

If you are going to play this game, don’t forget property taxes and homeowners’ insurance.

Also look into the car insurance and gas tax.

 

[brucethebroker]

When checking property taxes per state, be sure to include possible senior discounts/exemptions. (Many are only for "low income" seniors, based on AGI, while some take assets into consideration.).

I have always liked that Texas has no sales tax, but their property taxes are quite a bit higher than I currently pay. Personally, with lower income in retirement, the property taxes are a larger concern.

 

[pjigar]

If you are going to play this game, don’t forget property taxes and homeowners’ insurance.

Second that. I live in Texas and we have no income tax which is great while I am making salary over median income. But the property tax is high (to me) and 8.25% sales tax in our county. A median home of $250K at median tax rate of 2.25% will cost $5625 in real estate taxes every year.

PS: In retirement, you should be looking at real estate tax (actual dollar amount, not percent) and sales tax rate if you can manage your taxable income. If you will have lot of taxable income then income tax is back in the mix. I don't plan to move from the great state of Texas but I plan to move to rural property which will have lower real estate tax due to its price.

 

[f35phixer]

liquor tax, county add on tax etc etc, they all get you somehow right...

 

[COcheesehead]

They get their money one way or another.
Buying your state specific muni bonds are one way I found to fight back. Sales taxes can also vary by county, so making big purchases in one versus another may also help.

 

[Dtail]

It's a tough combo. FLA overall is still much cheaper then the Northeast except very select places. No state tax and cheaper housing still goes a long way
It is all relative. People here complain about the high car insurance rates (especially compared to the Midwest), but our car insurance is half of what it used to be.

 

[Bamaman]

Alabama property taxes are ridiculously low. My $400k lake house taxes are $1147 next year. Our main home has no property taxes because my wife is disabled.

Our best thing is the low house prices--less than half the cost of houses 100 miles north. Cannot imagine a lower cost of living anywhere.

And having 3 premier fishing lakes (Pickwick/Wilson/Wheeler) in the middle of town works well.

 

[USGrant1962]

The Tax Foundation has a nice map of state and local tax burden here https://taxfoundation.org/publications/state-local-tax-burden-rankings/

The methodology page lists 26 different taxes included in the calculation. Every one mentioned here and then some are included.

 

[i-like-gin]

All I know is don't come to New York...


I hear a lot that Texas is the way to go. Unless you're willing to go to Alaska... that's probably the real winner.

 

[REWahoo]

I hear a lot that Texas is the way to go.

Nope. High property and sales taxes.

 

[Another Reader]

I find that it is often better to hack your taxes where you live or want to live rather than move for lower taxes. In California, a high tax state, Prop 13 keeps your assessed value below market and you can take that assessed value with you under some circumstances. Despite all the tax happy people that vote for bonds, parcel taxes, and fees, I'm paying around 0.5 percent of market value in total property taxes and fees on my house and a much smaller percentage on a property with a transferred 1975 base year value. Social Security is not taxable income in California. If you own rental real estate, you can set it up so your "expenses" are the same or up to $25k more than the income and pay no tax on that income in California. Be tax-aware when you consume. Buy less stuff or buy it used. All this keeps your total tax bill reasonable.

 

[Fedup]

Texas maybe great, but you pay more for electricity. One of my leads from Texas and he told me he paid something like $600 a month for A/C. At the time I was paying like $50-80 a month.

California may be high but I know enough people who own more than 3 properties in retirement. Some are not rentals even. Example is one of my ex-coworkers just bought a place in Santa Barbara, not the cheapest place in California either, but she likes to remodel houses for fun. My brother just bought his third homes as a rental. Another guy who was a director from Qualcomm, bought 6 properties before he retired so he could manage them in retirement.

People don’t like to pay high tax in California but they do like California in general.

 

[Teacher Terry]

In NV there is no state income tax. Our home is worth 400k and property taxes are 700/year. They use the age of your home when figuring your taxes. Our house was built in 1950. Sales tax is over 8%.

 

[GrayHare]

If you are near average in terms of income, real estate, etc., it might be simpler to look at per capita spending by state. The states that spend less should take less in various taxes.

 

[jazz4cash]

I know a lot of folks move to PA or DE from MD to take advantage of relatively low taxes on various items eg retirement income, sales, property, and other expenses. I don’t know how much involves sales taxes that are not reported but that seems like a trivial amount.

 

[COcheesehead]

The Tax Foundation has a nice map of state and local tax burden here https://taxfoundation.org/publications/state-local-tax-burden-rankings/

The methodology page lists 26 different taxes included in the calculation. Every one mentioned here and then some are included.

Interesting. Colorado and Florida are right next to each other at 34 and 35. I never would have thought that.

 

[GravitySucks]

Nope. High property and sales taxes.

And snakes and fireants...

Anyone on here from Wyoming?
I like the Tetons and Medicine Bow areas. How does Wyoming 'get ya'?

 

[Chuckanut]

Nope. High property and sales taxes.

Of course. Just look at the name of the state, move a few letters around and its the state of Taxes.

 

[audreyh1]

It's been hard to relocate from Texas as our tax burden would rise quite a bit in other states. We don't own expensive real property, but our taxable income is high which and a state income tax would easily overwhelm any property taxes we pay now.

Washington sounds great until you look into their estate tax.

 

[Chuckanut]

I can easily buy bonds yielding double the 3% I am getting on Penfed CD's, but there is substantial additional risk. One has to look at the risk/reward ratio.

In regards to one's home state, there is the cost-of-living/quality-of-life ratio. I could lower my taxes by moving, but then be cut off from my children and grand children. Not so good. Or pay big money each year to fly back and forth to visit them. Again, not so good.

 

[l8_apex]

Anyone on here from Wyoming?
I like the Tetons and Medicine Bow areas. How does Wyoming 'get ya'?

Not in Wyoming, but next door in Montana. Wyoming is desolate, windy, and beautiful. (excluding pockets like Jackson). If that kind of place suits somebody, go for it! Wind in the winter significantly changes things for somebody like me - taking the dogs out for a walk when it 0 degrees and windy is very different than 0 degrees and no wind. Low income areas are the bulk of the state, but any decent sized city will have a nice neighborhood.

 

[bada bing]

I've lived in Alaska for 35 years, which is the lowest taxed state by a very wide margin. It is also the only state that keeps track of your residency to exclude you. Most states seek to include people as residents to get them on their tax roles.

It is a common misconception that the overall cost of living in Alaska is high. Not really true. Groceries and gas are high, but real estate is moderate and taxes are very low. Then there is the annual Permanent fund dividend, $1600 this year, which defrays the COL even more. I would say the COL in road connected Alaska is at least as low as AZ, which is a MCOL state.