Reducing Taxes: Which State did you move to?

[MichaelB]

Weather terrorists?

 

[Scuba]

We think about moving, or at least trying out other areas. Things that keep us in our So CA beach city are our beach condo with a magnificent view, our friendships we’ve built over the last 30 years, and access to a huge array of options whether for healthcare, the arts, dining, etc.

What makes us think about moving are the political climate and propensity to continue increasing already high taxes, the weather (for us, we love July-November but the rest of the year is cooler than we like), no access to warm water beaches/SCUBA, and generally high COL. We can afford the taxes and COL, but if we could find a place where we could be in the water/on the sand daily that had a fairly high standard of living, we might make the jump.

 

[travelover]

Both states have an estate tax... Suggest you make that calculation and include it on your list of things to consider.

ETA: Here is Oregon's chart. https://pnwprobate.com/portland-estate-planning-blog/2018/1/18/2018-oregon-estate-tax-rates

And Washington's, which is a bit more generous. https://dor.wa.gov/find-taxes-rates/other-taxes/estate-tax-tables

Good point, but that will be someone else's problem. I plan to be dead when it is due.

 

[audreyh1]

Weather terrorists?

Mother Earth I suppose.

 

[Spock]

Weather terrorists?

More like over-hype'd we gotta make the weather interesting drama queens.
Named winter storms?
"Bomb cyclones"?
"Lets find a ditch to stand in so the water is up to the on scene newscasters chest"



And yet the news only gets reported nationally when it hits Colorado (5-10 inches predicted this time) and then again when it reaches east of the Mississippi River. Mean while the northern plains are expecting 2ft of snow and 50+mph winds. Last month flooding in Nebraska has already killed hundreds of thousands of livestock and a good chunk of last years stored grain crop (a lot of the grain losses were uninsured) with barely any news coverage.

 

[kcowan]

We're moving from a low COL state (109.4 vs 100 US avg) to a moderate COL state (122.5). Costs are important, but not everything - we're looking forward to a better climate, closer to the coast, more amenities, a nicer house and we just need a change (we've been in the same place for WAY too long). And COL numbers are largely driven by housing costs, and it's not hard to downsize a little to avoid some of the hit.

And you have to look at ALL taxes and fees to really know how a move will affect you. No income taxes usually means higher property taxes, personal property taxes, sales tax, gasoline taxes, impact fees and/or other taxes and fees. My Dad lived in TX with no state income taxes, but property taxes and sales taxes were relatively high...

What I would like to see is how much these proposed moves are driven out of necessity? If you have enough and are happy, why try to sub-optimize? I know friends who have moved for COL and are moving back for lifestyle. It was costly but proved to them that there is no free lunch.

 

[Qs Laptop]

Weather terrorists?

Mother Earth I suppose.

No. Weather forecasters.

The weather forecasters here in Mpls/St. Paul revel with glee in bringing us dire warnings of the upcoming snow-pocalypse or other weather events. Usually it starts four to five days before "The Event." It builds and builds until some people are downright spooked. School districts have closed based on weather forecasts, not actual weather events. People leave work early or don't come in at all based on the frightening scenarios foretold by the weather terrorists. C'mon, people, it's Minnesota. We get snow here.

I probably sound like a curmudgeon but when I was a kid there was ONE school closing because of snow. Fourteen inches. Now they routinely shut down school for six inches of snow.

That said, they were pretty accurate this past winter in predicting the snow, 39 inches in February alone, and the cold, several days where the lows were -28F and the highs were only -10F.

 

[Qs Laptop]

More like over-hype'd we gotta make the weather interesting drama queens.
Named winter storms?
"Bomb cyclones"?
"Lets find a ditch to stand in so the water is up to the on scene newscasters chest"

Yes, you've nailed it.

I was dumbfounded when I was flipping through the channels last November and I learned we were suffering from Winter Storm "Chase" (or whatever it was named). We got four inches of snow. >Yawn<

 

[Qs Laptop]

more like over-hype'd we gotta make the weather interesting drama queens.

"lets find a ditch to stand in so the water is up to the on scene newscasters chest"

 

[Qs Laptop]

To get back on-topic. Some resources:

https://taxfoundation.org/publications/state-local-tax-burden-rankings/

https://smartasset.com/taxes/property-taxes

 

[Teacher Terry]

KCO,we have known people to move for the same reason and be sorry and return.

 

[haha]

Foolishly they bought a 2 story house so they cannot age in place and are in their 60’s.

Overall if I were planning to move, I would very likely avoid a 4th floor walkup. But these issues are not always absolute, and walking up the stairs will contribute to the average person's fitness.

My condo is on the second floor, and there is one guy my age on the 3rd floor. To play the odds, if I were choosing again I would take an elevator building because I don't want to be on the 1st floor, for security reasons, and an elevator makes a higher floor age-safe. I did handle the stairs here when I had a seriously non-functional hip joint and had to wait 8 months for my surgery date. Two arms, one good iron railing, and one good leg. Not easy though, and would not work for many conditions. For one leg, it would be a piece of cake if condo would let me install a railing on the other wall if I ever needed it.

My GF wants to move into my building, I think to be closer to me, which I would like, but she is only 2 1/2 miles away now, and in a much better place with a quality elevator, great view, and much classier neighborhood. She would pocket some money but does not really need it. And a house round trip is absurdly expensive. I am trying to discourage her idea without appearing to be avoiding her, which I am not. I am just mindful of her well-being.

Ha

 

[haha]

Winter weather and estate taxes is what keeps us from leaping over to the Pacific Northwest.

You probably know this, but Oregon and Washington west of the Cascades are cool and wet in winter, but almost never cold. I have a down jacket from years ago, but rarely wear it in the city.

Ha

 

[Offgrid Organic Farmer]

I moved to Maine.

My pension is not taxed here and the property taxes are extremely low.

We enjoy the climate also.

 

[Another Reader]

You must be kidding!

Forty or fifty years ago that made perfect sense. Everything was new and there weren't a lot of people to support. My mother was horrified at the cost of living and what people put up with in poor infrastructure and services in Westchester County NY in 1952. She couldn't understand why anyone would put up with that. Why didn't they move to California?

And then they all moved to California and the COL here near SF now competes with the COL in Westchester County.

 

[foxfirev5]

The tax advantage would have to be very substantial and certainly not the only reason I would move. Lifestyle choices trump all other factors as long as I can afford the option. I am just finishing up my third Key West stay for the winter. Great to be here but there's no way I would move here. Anyway the zero income tax rate would only save me a few hotel nights $$ or barely touch housing costs. The beauty of FIRE is going where you want when you want.
The ultimate factor is that DW would not leave the GK's for any long period. Period. End of discussion. And I secretly feel the same.

 

[jimandthom]

Our retirement income seems to be nowhere near as robust as many here, but in Michigan income taxes for us don't seem to bad. SS is exempt, as is military and RR pensions.

Using what I estimate our income will be when I start taking SS and start a small pension, our tax load of 4.25% is about $2000 per year.

Until about 8 years ago there was no tax on pension income. The present Gov claims that she wants to change the tax law back.

We like it here so it really doesn't matter. Besides someday when water is scarce-- us northern great lakes states are gonna own the country.

 

[dtbach]

The tax advantage would have to be very substantial and certainly not the only reason I would move. Lifestyle choices trump all other factors as long as I can afford the option. I am just finishing up my third Key West stay for the winter. Great to be here but there's no way I would move here. Anyway the zero income tax rate would only save me a few hotel nights $$ or barely touch housing costs. The beauty of FIRE is going where you want when you want.
The ultimate factor is that DW would not leave the GK's for any long period. Period. End of discussion. And I secretly feel the same.

+1 on this. Wisconsin doesn't tax my military pension and has gotten less tax onerous the last 10 years or so. Live in a University town that has tons of restaurants, education opportunities, entertainment, world class hospitals, etc. Winters suck but we go on a couple of cruises and then drive south for a month in Feb. We just wouldn't want to leave all of our friends and children. What is a few thousand dollars in tax savings compared to that

 

[youbet]

I know friends who have moved for COL and are moving back for lifestyle. It was costly but proved to them that there is no free lunch.

Yes indeed. I certainly believe there are situations where moving is absolutely the best course of action. But, we've also seen friends and relatives either move back here or make an expensive second hop after they realized that the bux saved at their new LCOL location did not compensate them for the loss of features treasured in their original location.

Truly understanding what is important to you is key. Realizing after the move that you miss kids/grand kids or four seasons or urban amenities or whatever much more than you anticipated is bad timing.

 

[Teacher Terry]

Dy, Madison is a great place. I grew up in Kenosha. I like Milwaukee too.

 

[EarlyBirdly]

Here's a useful tool:


https://www.kiplinger.com/tool/reti...by-state-guide-to-taxes-on-retirees/index.php

 

[youbet]

Our retirement income seems to be nowhere near as robust as many here, but in Michigan income taxes for us don't seem to bad. SS is exempt, as is military and RR pensions.

Using what I estimate our income will be when I start taking SS and start a small pension, our tax load of 4.25% is about $2000 per year.

Until about 8 years ago there was no tax on pension income. The present Gov claims that she wants to change the tax law back.

We like it here so it really doesn't matter. Besides someday when water is scarce-- us northern great lakes states are gonna own the country.

+1

Despite all the bad press (and most well deserved IMHO) Illinois gets these days, the state income tax for retirees living primarily on SS, Pensions and RMD's is pretty attractive. I just finished my Illinois taxes and our effective tax rate was about 1.2% since only our realized investment income is taxed.

(Please, no need to start repeating all the negatives about Illinois. There are already many threads going on that subject. Go comment there. Just saying that, for now, state income taxes won't be the reason we leave, if we do leave.)

 

[W2R]

I think that moving to reduce taxes is the stupidest thing ever.

OK, bear with me....

I'd think of moving to reduce overall cost of living, but not just one part of it (taxes). To me, that's the way to go. I think that moving just to reduce taxes is allowing the emotional, anti-authoritarian tail to wag the dog.

To me, the decision should be based on:

1.) What happiness/satisfaction would I receive from living in that location?
2.) What is the overall cost of living in that location?

Deciding on a retirement location is sort of like buying a car. Figure out what you can afford (without diminishing your desired lifestyle), and from those locations figure out which will make you happiest.

 

[ownyourfuture]

More like over-hype'd we gotta make the weather interesting drama queens.
Named winter storms?
"Bomb cyclones"?
"Lets find a ditch to stand in so the water is up to the on scene newscasters chest"

Exactly. I'm sure you remember this:

 

[phil1ben]

In 2007 we moved 12 miles to cross the border from NJ to Pennsylvania. State Income tax went from 9% in New Jersey to 4.1% in Pennsylvania (3.1% State-1% local) flat rate. Best move we ever made. I retired in 2017.

Also got an added bonus because my two boys decided on their own to go to Penn State. Saved another $150,000.00 representing the difference between in state and out of state tuition.