Sweet Spot, Living Where Low Taxes

[GravitySucks]

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.

Certainly not defending NY taxes, but SS is not taxed, After 59.5 the first $20k IRA withdrawals aren't taxed, and school tax part of property taxes drop fairly dramatically after 65. As always, everyone's situation is unique, or YMMV.
Surprised NH taxes are so low on this table. My NH co-workers constantly complained about their taxes going up.

 

[griffithee]

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.

I would love to live in Alaska. Spent two weeks there this summer and it was amazing. But the cold. We did the 40 below experience at one of our stops and I thought I would die. I couldn't handle the cold after a bit. Nor could I deal with the darkness in the Winter. But man the country is so beautiful and the air is so freaking clean!!!!

 

[SteveNU]

Certainly not defending NY taxes, but SS is not taxed, After 59.5 the first $20k IRA withdrawals aren't taxed, and school tax part of property taxes drop fairly dramatically after 65. As always, everyone's situation is unique, or YMMV.
Surprised NH taxes are so low on this table. My NH co-workers constantly complained about their taxes going up.

We're in Connecticut and always thought we would move to NH when we retired as my wife's family all lives there. But when we looked at the tax savings from where we live in Connecticut in one of the lowest taxed towns in the state and compared it to NH the difference wasn't significant. NH has the third highest property taxes in the nation so the savings of no income taxes and sales taxes are partially eaten up with higher property taxes. For a few thousand a year in tax savings it's not worth moving just to save on taxes if that's your only motivation to move.

So we're putting money into our home here and staying close to the kids and grandkids for now.

 

[Lukeee]

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.

I have a 5 ton 10 seer unit and live in TX. AC is literally on 18-20 hours in summer. Bill is under $300. I suspect he might have a larger home (Texas McMansion) with 2 AC units and/or has freezer(s) in the garage. Fall and spring electric bills are sub $100. Property tax here is a killer. 2.5-3.1% where I am depending on the city.

 

[Dtail]

Nope. High property and sales taxes.

I think you want to keep it less crowded based on other posts.
(Not a bad comment)

 

[Just_Steve]

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.

Indeed.

 

[Brat]

Wyoming and Alaska tax resource extraction. With demand for coal and the price of crude dropping their low tax status may be at risk long term.

It isn't as cold in Alaska as many believe. The ocean moderates temperatures. Often Alaskans spend a couple months a year in HI.

Anchorage has decent health care but if you live in Jackson, Wy not so much.

I live in Portland an have to agree that Clark County WA retirees can have the best of both worlds. The metro area has excellent health care and VA facilities. As someone mentioned WA has no income tax, OR has no sales tax. There is a reason why IKA is located near I-205 just south of the Columbia River. Likewise Costco's largest volume store. PDX, the airport, is great. The I-5 bridge over the Columbia can have beastly traffic but the I-205 bridge is rarely an issue. There are a couple of park&ride spots where a WA resident can catch the MAX, our light rail system.

 

[Midpack]

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.

And don’t forget

• city and county income taxes where applicable,
• personal property taxes on boats-cars-RV’s also where applicable,
• as mentioned sales tax varies from state to state, city to city and even by business type in some areas (e.g. sales tax is higher in restauarants than most other businesses in Chicago),
• gas tax can vary by city within a state (e.g. IL), and
• how SS or pensions can vary by state.

States that don’t have income tax usually make up the difference somewhere, looking at state income tax alone is very misleading.

 

[tfudtuckerpucker]

And snakes and fireants...

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

I'm in Texas, and a couple of years ago my daughter found a coral snake hiding under her bed. Now, bites from coral snakes are rare, but the only snake in the world with a more powerful venom is the black mamba. I have no idea how it got into the house. Stuff of nightmares.

Texas has no income tax, but of the 7 states (plus Tennessee in 2021) with no income tax, Texas's property tax rate is around double.

 

[RE2Boys]

This chart can be very misleading for retirees. While PA is ranked #15 highest and has moderately high property taxes, PA doesn't tax SS or normal distributions from pensions or IRAs. My taxable income, for PA purposes, is a fraction of my federal taxable income....basically the state only taxes my interest, dividends, and cap gain income.....at a flat 3.07%

 

[Fedup]

I have a 5 ton 10 seer unit and live in TX. AC is literally on 18-20 hours in summer. Bill is under $300. I suspect he might have a larger home (Texas McMansion) with 2 AC units and/or has freezer(s) in the garage. Fall and spring electric bills are sub $100. Property tax here is a killer. 2.5-3.1% where I am depending on the city.

He doesn’t have a large home, definitely not McMansion. Maybe less than 2000 sqft. But I take your words for it. His house was in Houston, if I recall correctly.

 

[imoldernu]

While Illinois is rated #5, (high taxes) we cannot complain.
Nothing to brag about, but we don't have to pay Illinois or Federal Taxes, due to our age and financial income/outgo balance. We do file both returns.
Our house taxes are less 1/2 that of the state average, because we have a county senior homestead exemption plus a county tax freeze which we received when buying here in our CCRC in2004.

From a recent Chicago Tribune article:

Of the 41 states that impose an income tax, Illinois is one of only three that exempt all pension income and one of 27 that exclude all federally taxable Social Security income, according to the Civic Federation, a nonpartisan budget watchdog. In all, just 12 states, including Illinois, do not tax retirement income.

and... as to electricity rates, a little higher than the commercial rates shown below, but very low, because we receive hydro from our own dam on the Illinois River.

This average (commercial) electricity rate in Peru is 10.26% less than the Illinois average rate of 7.99¢/kWh. The average (commercial) electricity rate in Peru is 28.94% less than the national average rate of 10.09¢/kWh. Commercial rates in the U.S. range from 6.86¢/kWh to 34.88¢/kWh.

Home owners insurance on our $180K home is $670, (that part of the comprehensive.)

 

[travelover]

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.

I live in the north Portland suburbs, aka Washington, and everything is 8% cheaper just across the river. It is not worth it for small items but for big items it pays off. For a retiree, traffic isn't bad if you don't cross at rush hours.

 

[Lewis Clark]

In addition to everything that previous posters have mentioned, I would recommend considering the complete cost of living in the places you are considering moving to. This would include taxes of course, but also housing prices, food prices, and so on. There might not be much benefit in reducing the tax burden if other aspects of the cost-of-living are unusually high.

 

[aja8888]

Yeah, Texas is not the place to be. We have fire ants, snakes, cowboys and a few rednecks (not too many though). Please move to California where real estate ownership is a dream job and the weather is great. Every one is getting rich there!! And retirees are treated respectfully.

When I lived north of L.A., there was a saying......"The weather is here...wish you were beautiful"..or something like that.

 

[ncbill]

This chart can be very misleading for retirees. While PA is ranked #15 highest and has moderately high property taxes, PA doesn't tax SS or normal distributions from pensions or IRAs. My taxable income, for PA purposes, is a fraction of my federal taxable income....basically the state only taxes my interest, dividends, and cap gain income.....at a flat 3.07%

My state is #20 and I'd have to agree given sales (~7%) & income (flat 5.5%) taxes even though property taxes here are only ~2% (combined city/county)

East TN appeals to me...

 

[copyright1997reloaded]

They get their money one way or another.

I see this posted whenever/where ever there is a discussion on state taxes. But it is not true. Different states have differing amounts of social programs, state employees per capital, and so on. As someone who lives in NY we are bad in most of the categories, e.g. high income taxes, high sales taxes, high property taxes, lots of fees/taxes on things like gasoline, bridges, toll roads.

For example, my same house that I pay close to $10K in property taxes on here in NY would cost under $2K in Tennessee. That 10K/year doesn't get me water (I have a well), sewage (I have septic) or even garbage pickup (I have to pay for that separately). In terms of taxes, I would have no state income taxes as compared to a 6.65% marginal rate here. Yes, the sales tax rate would be slightly higher (around 9 or 9.5% vs 8% here), but all in all I would take it in a second.

 

[king smoothie]

If we talk state taxes on retirees, I like this site. https://www.kiplinger.com/tool/reti...by-state-guide-to-taxes-on-retirees/index.php

 

[COcheesehead]

I see this posted whenever/where ever there is a discussion on state taxes. But it is not true. Different states have differing amounts of social programs, state employees per capital, and so on. As someone who lives in NY we are bad in most of the categories, e.g. high income taxes, high sales taxes, high property taxes, lots of fees/taxes on things like gasoline, bridges, toll roads.

For example, my same house that I pay close to $10K in property taxes on here in NY would cost under $2K in Tennessee. That 10K/year doesn't get me water (I have a well), sewage (I have septic) or even garbage pickup (I have to pay for that separately). In terms of taxes, I would have no state income taxes as compared to a 6.65% marginal rate here. Yes, the sales tax rate would be slightly higher (around 9 or 9.5% vs 8% here), but all in all I would take it in a second.

My point is there are different revenue streams for states. Some charge property tax on vehicles, some don't. Some charge for a library card, some don't. How they mix and match those streams is different, but they still end up getting the money they need and not all of it comes from property or sales tax.

 

[Dash man]

This chart can be very misleading for retirees. While PA is ranked #15 highest and has moderately high property taxes, PA doesn't tax SS or normal distributions from pensions or IRAs. My taxable income, for PA purposes, is a fraction of my federal taxable income....basically the state only taxes my interest, dividends, and cap gain income.....at a flat 3.07%

We do have a very low threshold Inheritance Tax in PA though.
From the montcopa.org website:
“The tax rate for Pennsylvania Inheritance Tax is 4.5% for transfers to direct descendants (lineal heirs), 12% for transfers to siblings, and 15% for transfers to other heirs (except charitable organizations, exempt institutions, and government entities that are exempt from tax).”

Of course, the only people who care are the heirs.

 

[Beer-man]

My point is there are different revenue streams for states. Some charge property tax on vehicles, some don't. Some charge for a library card, some don't. How they mix and match those streams is different, but they still end up getting the money they need and not all of it comes from property or sales tax.

Yes but not all have states need the same revenue. Many northern states tax so heavily because of unionized state government that drives crazy high state worker wages and pensions.
Illinois, NJ, NY, just a few that max out all possible revenue streams but still can’t balance a budget or adequately fund pensions.

 

[Lukeee]

He doesn’t have a large home, definitely not McMansion. Maybe less than 2000 sqft. But I take your words for it. His house was in Houston, if I recall correctly.

Oh wow .... I would definitely do a home audit energy and / or shop around energy rates. Houston is 6-10 cents per kilowatt hour.

 

[Brat]

Need I add that electricity rates are low in the PNW thanks to power generating dams.

That said if you live in a large poorly insulated home with electric strip heaters there is no free lunch.

 

[griffithee]

Oh wow .... I would definitely do a home audit energy and / or shop around energy rates. Houston is 6-10 cents per kilowatt hour.

Truth. I just signed up for five cents a KW today. 12 month contract for over 1000KW per month. I like being able to shop around for electric here in Houston.

 

[audreyh1]

Truth. I just signed up for five cents a KW today. 12 month contract for over 1000KW per month. I like being able to shop around for electric here in Houston.

Wow that’s interesting. Rates seem to be a bit higher at our end of the coast.