Reducing Taxes: Which State did you move to?
- Thread starter Camping
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Heck, that's the easiest question of the day. ANYWHERE!!!
(said by a former resident of Springfield VA)
Welcome to the forum!
We are looking at moving from OC, back to Reno. One main reason we are hesitant is it's too freakin' cold! It's a short winter, but it can be nasty.
Wife and kids were born there, have friends there still. Boy, has the city changed. And, housing is not cheap. Reasonable compared to HCOL places in CA, but not cheap like it was.
Koolau
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
In addition to the Paradise tax (everything costs more in HI) we were prepared to take a big hit on taxes as well. Turns out, if you are a retiree, MUCH of your income (SS and Pension and some employer plan income can be shielded.)
Also, we were pleasantly surprised that RE taxes are relatively low and, past 65, there is a nice exemption as well. State excise tax is difficult to figure (point of sale, it's a little over 4.7% on Oahu) as it's charged at various stages and "disappears" - but it's "in there."
I wouldn't call HI a tax haven state, but we love our kupuna (elderly) and it is reflected in the tax code (so far.) YMMV
Also, we were pleasantly surprised that RE taxes are relatively low and, past 65, there is a nice exemption as well. State excise tax is difficult to figure (point of sale, it's a little over 4.7% on Oahu) as it's charged at various stages and "disappears" - but it's "in there."
I wouldn't call HI a tax haven state, but we love our kupuna (elderly) and it is reflected in the tax code (so far.) YMMV
duckcalldan
Dryer sheet aficionado
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Longtime west coaster but living in southern VA the last 13 years. We’re recent empty nesters and moving to WA. No income tax, property taxes are higher but not too much, sales tax is higher (but we’re low spenders, at least after we’ve bought all the furniture we’re leaving behind), and as far as the estate tax, a combo of giving and a bypass trust should take care of that. Bottom line: WA is where we want to retire to, regardless of taxes.
Canoeboy
Recycles dryer sheets
We moved from Minnesota to the Chesapeake Bay area of Virginia last year 7 months prior to FIRE. Total tax burden (Real Estate, Income and personal property tax) in Virginia was about 40% of what we paid in Minnesota. While we have not kicked pensions and SOcial Security in yet, Virginia does not tax SS income and the first 12k of pension income is exempt from state tax. Counties in VA impose a personal property tax based on the value of registered vehicles, including campers, trailers, etc. In our county it is 2.95% of Kelly Blue Book value annually. Understand the rates are higher in some of the more affluent counties around DC. While we moved for many reasons lower taxes were part of the equation.
Jim in PA
Dryer sheet aficionado
PA to DE
I already own a condo in DE. Not far from the ocean.
PA is EXTREMELY friendly to retirement income. It’s simply not taxed. Includes pension, Soc Sec, IRA withdrawals, conversions to Roth and so on. Tax is only a flat 3.1% anyway. However, PA does have an inheritance tax of 4.5% to lineal descendants (kids). My real estate taxes are not like CA or NY, and run about $3,000, but the home is just a townhouse. Sales tax is 6%.
Ok, so tax wise, DE has no sales tax. There IS a built in 1% assessed on the merchant, so it gets built into final prices. On real estate taxes, they’re very low. The all in condo taxes are under $600. Yes, all in. Also, there’s no estate or inheritance tax. That’s the good news. Income tax is not as good. DE does not tax Soc Sec and gives a retirement income exemption of $12,500 for taxpayers over 60. Rate is 6.6% on income above $60,000.
So, if one lives in PA, get the IRAs converted to Roth before the move.
The kids are about the same driving distance from either place. Climate is nicer in DE with almost no snow and the beach is pleasant. I’m tentatively planning to move in 2020 or 2021 after those Roth conversions are complete.
I already own a condo in DE. Not far from the ocean.
PA is EXTREMELY friendly to retirement income. It’s simply not taxed. Includes pension, Soc Sec, IRA withdrawals, conversions to Roth and so on. Tax is only a flat 3.1% anyway. However, PA does have an inheritance tax of 4.5% to lineal descendants (kids). My real estate taxes are not like CA or NY, and run about $3,000, but the home is just a townhouse. Sales tax is 6%.
Ok, so tax wise, DE has no sales tax. There IS a built in 1% assessed on the merchant, so it gets built into final prices. On real estate taxes, they’re very low. The all in condo taxes are under $600. Yes, all in. Also, there’s no estate or inheritance tax. That’s the good news. Income tax is not as good. DE does not tax Soc Sec and gives a retirement income exemption of $12,500 for taxpayers over 60. Rate is 6.6% on income above $60,000.
So, if one lives in PA, get the IRAs converted to Roth before the move.
The kids are about the same driving distance from either place. Climate is nicer in DE with almost no snow and the beach is pleasant. I’m tentatively planning to move in 2020 or 2021 after those Roth conversions are complete.
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Winemaker
Thinks s/he gets paid by the post
Shhhhhhhh! you are supposed to be keeping this quiet before the politicians get a whiff of this.
Convincing the wife to move out of Illinois has been impossible for me so far.
My problem as well.
Compared to OC (or Houston, where we moved from), it can get cold in Reno, but not really that cold. There are 2-7 days with a low between 10-20 degrees that don't ever rise above freezing. Most days in winter, it usually gets up to at least the high 40/50s.
This winter has been a tough one, but not for me. Usually there are about 300 sunny days; this winter will make it below that--this year.
Housing is not cheap, compared to Houston. Skiing at Mt. Rose is cheap!
This winter has been a tough one, but not for me. Usually there are about 300 sunny days; this winter will make it below that--this year.
Housing is not cheap, compared to Houston. Skiing at Mt. Rose is cheap!
Reno (North Nevada) is not Las Vegas. We did have about 15 days over 100 last summer but that was very unusual. This might be more typical under climate change, however, in the future.
And it usually cools down in the night to the high 50s or low 60s. It ain't Houston or Austin or Dallas or Phoenix. It's a dry cold in Reno.
And it usually cools down in the night to the high 50s or low 60s. It ain't Houston or Austin or Dallas or Phoenix. It's a dry cold in Reno.
Gearhead Jim
Full time employment: Posting here.
Two years ago, some friends moved from a nice outlying suburb of Chicago (Crystal Lake), to a nice suburb of Phoenix (Gilbert). The decision had several components, like it should, but they were expecting to save about $500+ per month in overall cost of living.
Now that they've been there a while, it turns out that the overall cost of living is about the same. They spend much less on property taxes, and less on cold weather stuff like clothing, snow plowing, etc. But their car insurance went up by 25%, license & registration are more expensive, sales tax somewhat higher. The biggest issue is state income tax: in Illinois, pensions/IRAs/SS are not taxed at all. In AZ, they get only a partial break on those items.
Obviously, the situation can change quickly in either state. But that's the way it is right now and has been for quite a while.
Now that they've been there a while, it turns out that the overall cost of living is about the same. They spend much less on property taxes, and less on cold weather stuff like clothing, snow plowing, etc. But their car insurance went up by 25%, license & registration are more expensive, sales tax somewhat higher. The biggest issue is state income tax: in Illinois, pensions/IRAs/SS are not taxed at all. In AZ, they get only a partial break on those items.
Obviously, the situation can change quickly in either state. But that's the way it is right now and has been for quite a while.
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W2R
Moderator Emeritus
That can definitely happen! And even if every single thing costs less, spending still may be higher than expected given the lower COL. I am thinking of the way people sometimes really get into "retail therapy" if they are feeling a little down or at loose ends after a move.
(I used to be a Navy wife, BTDT, got the t-shirt, filed that little tidbit of info away in my mental file cabinet in the folder labeled "lessons learned".)
Rambler
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We moved back to the US/California from Japan when I retired. Last year, we moved from our home in California to Arizona. We still have the house in Cali, but put it on the market last month. So far, and once the CA house sells, we’ll save 9k per year in property tax on a similarly valued home, around 10k per year in income tax, 2k per year in home insurance, 2k per year on car insurance, but will pay about 4K more in utilities (it’s hot in the eastern ‘burbs of Phoenix...and we had solar in CA), and $2k more for RV taxes and insurance combined (cars are about the same). All of that said, I had a deferred income plan, which starts paying out this year, for 10 years. Over that 10 year period, we will save nearly $300k in state income tax on the deferred income payout. We chose AZ because of several reasons: 1) we liked how nice the town we chose is...clean, safe, no graffiti, clean and smooth freeways, 2) not to wax political, but CA is becoming a nightmare for those of my political persuasion, and 3) I have a sister living in the area, who also convinced my aging parents to move there, and 4) the tax savings.
I should add that we did try Nevada. We bought a home in the greater Reno area, and spent 3-4 days a week there for 6 months or so, until a bout with cancer that has been successfully resolved. But, it never felt like home. The house was nice, the neighborhood was nice, but we just didn’t feel like we belonged there. The new place in AZ is much better in that regard.
I should add that we did try Nevada. We bought a home in the greater Reno area, and spent 3-4 days a week there for 6 months or so, until a bout with cancer that has been successfully resolved. But, it never felt like home. The house was nice, the neighborhood was nice, but we just didn’t feel like we belonged there. The new place in AZ is much better in that regard.
Rambler
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We moved to the same town last year, but from California. The sales tax is similar for us, and the RV tax went up quite a bit, while the car insurance went way down, home insurance went way down, same with property tax, and due to a large deferred income payout over the next 10 years, state income tax will be way, way less than had we stayed in California. It goes to show you that the state you are moving from and to, plus your own personal situation, has a lot to do with whether or not you will save in the long run. Overall, we are happy there, but not for just the tax savings. It’s just overall a better place for us to be, tax situation included.
Jim in PA
Dryer sheet aficionado
But it’s not a secret
No one told me this, but I believe that PA’s favorable treatment of retirement income is so that the retired steel workers (and others) don’t abandon our section of the rust belt for snowless Florida that has no income tax. Did I mention that the climate is nicer down there??
No one told me this, but I believe that PA’s favorable treatment of retirement income is so that the retired steel workers (and others) don’t abandon our section of the rust belt for snowless Florida that has no income tax. Did I mention that the climate is nicer down there??
