Was moving from a no income tax state to an income tax state really that bad?

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JackoC
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Re: Was moving from a no income tax state to an income tax state really that bad?

Post by JackoC »

smooth_rough wrote: Sat Dec 31, 2022 9:37 am
Nyc10036 wrote: Sat Dec 17, 2022 3:09 pm
Hebell wrote: Sat Dec 17, 2022 2:47 pm Property taxes don't matter to my husband and me any more, as we plan to rent. After doing the starter home, large downtown luxury home, and Florida condominium, we only want a VERY nice apartment, or independent or assisted living when the time comes. We can get by with 750 sq ft. Easily. (Caring for two failing parents with too much stuff, and all the grief that ensued, had us radically downsizing in 2015. What a having little stuff has been)

But even with wonderful lookup tables from Kiplingers and Kitces, I think this tax season I will buy several different state add-ons to TurboTax. So I can change my home address and perturb the TurboTax state returns so I can evaluate a wide variation of what-if scenarios. (And add sales tax on top of the result based on my anticipated discretionary income)

Thanks to the previous writers who pointed out all sorts of arcane state taxes that just don't show up in the magazine articles.
You may rent, but your landlord has to pay taxes.
He has to make a profit.
If his taxes go up, your rent is following.
Not always true. Landlord vacancy rate has more impact on rent increases than anything else.
Nothing is 'always' true but long run it would be odd to assume that municipalities can lower/raise the return on capital in the rental business by raising and lowering prop taxes, which is what we'd be assuming to say that prop taxes don't eventually flow into rents. It doesn't mean other things don't *also* affect rents.

The base assumption is that return on capital tends to seek its own level across assets risk for risk, over time, and increased/reduced costs of business, of which prop tax to a landlord is one, tend to get passed through to consumers, the renter in this case. If a state increased its income tax to provide more support to municipalities or expand a property tax deduction/rebate, rents would fall all else equal even if overall tax take was constant. IOW in a state with very high prop taxes like NJ (though the income and sales taxes are pretty high here also) that's part of the explanation for high rents. It doesn't mean every squiggle up and down in rents is explained by a change in property tax, of course not.
JackoC
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Re: Was moving from a no income tax state to an income tax state really that bad?

Post by JackoC »

OrangeKiwi wrote: Fri Dec 30, 2022 10:00 pm
DoubleComma wrote: Thu Dec 15, 2022 1:19 pm All states need to generate tax revenue in someway, no income tax states rely on other sources you will be paying into. IMO there is no free rides.
Certain governments have far more debt than other governments, so it is not clear to me that all jurisdictions average out to the same. I would not worry about optimizing between a standard deviation plus or minus, but there are some places that have debt burdens multiple standard deviations from the mean.
And certain state/local governments also do more than others, or attempt to. We shouldn't have to get into a value judgement debate about that to the see the fallacy in 'all states need to generate tax revenue' as if the *same amount per capita*. It's far from that. Some state governments are just smaller/larger in terms of how they intervene with support and subsidies for various people on top of federal ones. Some are considerably more generous than others to public employees, or at least have made those employees bigger future promises (the issue of whether a state like NJ can fulfill current promises at current tax levels). From an apolitical individual financial planning POV 'it all evens out' can be a ridiculous assumption in case of high income/asset people choosing between states on much different parts of the tax/spend spectrum. In other cases, middle income people comparing states close on the tax/spend spectrum, it might indeed all even out.
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Re: Was moving from a no income tax state to an income tax state really that bad?

Post by spammagnet »

The OP's question was: "... for those folks that actually make the move from no-tax to tax; what your real life experience has been as far as how much the cost impacted your finances?"

This thread has devolved into vaguely political debates about taxation and government spending. That doesn't help the OP.
smooth_rough
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Re: Was moving from a no income tax state to an income tax state really that bad?

Post by smooth_rough »

JackoC wrote: Sat Dec 31, 2022 2:06 pm
smooth_rough wrote: Sat Dec 31, 2022 9:37 am
Nyc10036 wrote: Sat Dec 17, 2022 3:09 pm
Hebell wrote: Sat Dec 17, 2022 2:47 pm Property taxes don't matter to my husband and me any more, as we plan to rent. After doing the starter home, large downtown luxury home, and Florida condominium, we only want a VERY nice apartment, or independent or assisted living when the time comes. We can get by with 750 sq ft. Easily. (Caring for two failing parents with too much stuff, and all the grief that ensued, had us radically downsizing in 2015. What a having little stuff has been)

But even with wonderful lookup tables from Kiplingers and Kitces, I think this tax season I will buy several different state add-ons to TurboTax. So I can change my home address and perturb the TurboTax state returns so I can evaluate a wide variation of what-if scenarios. (And add sales tax on top of the result based on my anticipated discretionary income)

Thanks to the previous writers who pointed out all sorts of arcane state taxes that just don't show up in the magazine articles.
You may rent, but your landlord has to pay taxes.
He has to make a profit.
If his taxes go up, your rent is following.
Not always true. Landlord vacancy rate has more impact on rent increases than anything else.
Nothing is 'always' true but long run it would be odd to assume that municipalities can lower/raise the return on capital in the rental business by raising and lowering prop taxes, which is what we'd be assuming to say that prop taxes don't eventually flow into rents. It doesn't mean other things don't *also* affect rents.

The base assumption is that return on capital tends to seek its own level across assets risk for risk, over time, and increased/reduced costs of business, of which prop tax to a landlord is one, tend to get passed through to consumers, the renter in this case. If a state increased its income tax to provide more support to municipalities or expand a property tax deduction/rebate, rents would fall all else equal even if overall tax take was constant. IOW in a state with very high prop taxes like NJ (though the income and sales taxes are pretty high here also) that's part of the explanation for high rents. It doesn't mean every squiggle up and down in rents is explained by a change in property tax, of course not.
Landlords will pass through tax increases to tenants in the form or rent increase if possible. But I was just saying that there are times when landlords have to eat it, such as if the landlord is struggling to rent vacant units and is forced to cut rent and accept lower ROI. Maybe getting off subject.
guyfromct
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Re: Was moving from a no income tax state to an income tax state really that bad?

Post by guyfromct »

The reality is state income taxes are only a part of the total tax burden as sales and property tax can exceed the cost of income tax easily. It’s also the structure of the tax, flat or progressive, the brackets, standard deduction and the like that play a role. If the public schools in your community are awful and there’s no charter or magnet option private schools are effectively a tax. Poor infrastructure is a time tax. A physician living in the hinterlands of Upstate NY with a low COL may do better than one living in Miami Beach with a high COL.

It’s just like cost of living estimators, it’s incredibly personal and seldom do rules of thumb offer more than a general sense.
Northern Flicker
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Re: Was moving from a no income tax state to an income tax state really that bad?

Post by Northern Flicker »

For retirees, only 11 states tax SS benefits. A state with high income tax and low/no sales and property tax may impose a lower tax load on retirees than a state without income tax.

https://www.investopedia.com/which-stat ... ty-5211649
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Re: Was moving from a no income tax state to an income tax state really that bad?

Post by Fat-Tailed Contagion »

IMO if it's allowed, it's not just the high state income taxation policy that hurts, it's all of the other policies that tend to accompany high tax and regulation policy states.

My experience is the quality of life is much lower in these states.
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Northern Flicker
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Re: Was moving from a no income tax state to an income tax state really that bad?

Post by Northern Flicker »

Presumably, the OP would not be asking about the tax implications of a move to a state where the OP disfavored the quality of life.
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Re: Was moving from a no income tax state to an income tax state really that bad?

Post by oldcomputerguy »

While government spending certainly has an impact on a state's tax picture, that's not what the OP was asking about. Let's please keep the discussion focused on helping to answer the asked question: how to evaluate whether moving from a no-income-tax state to an income-tax state would be a good idea for them. Thanks.
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core4portfolio
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Re: Was moving from a no income tax state to an income tax state really that bad?

Post by core4portfolio »

Journeyman510 wrote: Thu Dec 15, 2022 1:08 pm Depends on the state and your situation. I'm sitting at 13.3% in California. We came from WA. So yeah, it's bad.
Iam in similar situation. Moving from WA to Bay Area.
What are things that spiked higher ?
Car insurance, gas price income tax and anything else ????
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MrNarwhal
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Re: Was moving from a no income tax state to an income tax state really that bad?

Post by MrNarwhal »

I look at this as a case where earning "enough" makes it not worth relocating for substantial but not life-changing financial benefit. Compared with where I live in Minnesota, neighboring South Dakota offers no income tax and a lower overall tax burden. Sioux Falls is a nice small city and we could have a comparable lifestyle there compared with the Twin Cities, at lower cost. But, it would be 4 hours farther from all of our family and friends.

It shouldn't be a terribly hard exercise to calculate the potential tax savings or cost based on your income, spending, and real estate in your target location. Then you can decide whether it is worth it to you.
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Re: Was moving from a no income tax state to an income tax state really that bad?

Post by michaeljc70 »

This doesn't answer your question directly, but I live in a state with moderate income taxes that I think are higher than they should be. After retiring, since IRA withdrawals, Roth conversions, SS, pensions are not taxable in my state it is kind of a game changer. At least one state taxes just interest/dividends only so it isn't as friendly to retirees (depending if your money is in taxable vs. retirement accounts).
JackoC
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Re: Was moving from a no income tax state to an income tax state really that bad?

Post by JackoC »

spammagnet wrote: Sat Dec 31, 2022 2:41 pm The OP's question was: "... for those folks that actually make the move from no-tax to tax; what your real life experience has been as far as how much the cost impacted your finances?"

This thread has devolved into vaguely political debates about taxation and government spending. That doesn't help the OP.
But the two things are tied together if you really believe it's accurate to generalize that higher taxes will come back to *you* in the form of govt services that improve *your* financial situation or even your life *directly*. I don't think that's a valid generalization, though in some particular cases it could true.

Therefore I believe the practical question in general is how the overall tax burden varies, since 'what you get' isn't closely tied to it. But if you're a middle income person moving between averagish tax burden states then it might indeed make little net difference. This tax is higher, that one is lower, lots of other moving parts in the decision, state/local tax not a big factor overall. Whereas if you're a well off retiree in FL say moving to NJ, you're going to get slammed in the face with a 2x4 by taxes. That's really not going to 'even out'. :happy Especially considering the intersection of 'tax' and 'COL' (where a house is more expensive *and* prop tax is a higher % of the higher price). All depends who you are and which pair of states you're comparing.
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Re: Was moving from a no income tax state to an income tax state really that bad?

Post by nydoc »

There are multiple reasons why people reside in an area vs other. I trained in NYC and developed relationships here-both personal and professional. I dream about moving to a no income tax state every month but those connections are hard to come by. Almost every hospital here has good connections for me who know my abilities well which translates into better career growth trajectory. BTW I did get a lot back in those fables benefits of NY state. So no complaints here.
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Re: Was moving from a no income tax state to an income tax state really that bad?

Post by WestCoastPhan »

So far this year, I haven't once considered moving to a lower tax state.
JackoC
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Re: Was moving from a no income tax state to an income tax state really that bad?

Post by JackoC »

nydoc wrote: Sun Jan 01, 2023 11:52 am There are multiple reasons why people reside in an area vs other. I trained in NYC and developed relationships here-both personal and professional. I dream about moving to a no income tax state every month but those connections are hard to come by. Almost every hospital here has good connections for me who know my abilities well which translates into better career growth trajectory. BTW I did get a lot back in those fables benefits of NY state. So no complaints here.
But you do think anybody is really saying state/local tax is the *only* factor in deciding where to live? Somebody might have that narrow a view but I wouldn't assume it about any post that focuses on tax, when tax was the question asked. For example, apropo to my previous post, I'm getting whacked continuously in the face with a 2x4 by NJ taxes. That would absolutely not 'even out' if we were to move to any number of states, the difference would be a large number (I'm not going to quote) including all financial factors: purely tax, mixed tax/COL (our eye watering property tax bill is product of a high % rate and house price way more than we'd have in some other places) and purely non-tax COL (part of which is again house, the capital tied up in it just providing owner imputed rent much of which could be deployed getting a full return elsewhere). Obviously that's not the only consideration or I'd be irrational not to have moved already. But one of the original reasons for me also was NY area job market, and retired that no longer holds. Other reasons do hold, for the time being.
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Re: Was moving from a no income tax state to an income tax state really that bad?

Post by spammagnet »

JackoC wrote: Sun Jan 01, 2023 11:35 am
spammagnet wrote: Sat Dec 31, 2022 2:41 pm The OP's question was: "... for those folks that actually make the move from no-tax to tax; what your real life experience has been as far as how much the cost impacted your finances?"

This thread has devolved into vaguely political debates about taxation and government spending. That doesn't help the OP.
But the two things are tied together if you really believe it's accurate to generalize that higher taxes will come back to *you* ...
The OP didn't ask for generalized theory/opinion. They requested real-life experience from those who actually made such a move.
JackoC
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Re: Was moving from a no income tax state to an income tax state really that bad?

Post by JackoC »

spammagnet wrote: Sun Jan 01, 2023 1:38 pm
JackoC wrote: Sun Jan 01, 2023 11:35 am
spammagnet wrote: Sat Dec 31, 2022 2:41 pm The OP's question was: "... for those folks that actually make the move from no-tax to tax; what your real life experience has been as far as how much the cost impacted your finances?"

This thread has devolved into vaguely political debates about taxation and government spending. That doesn't help the OP.
But the two things are tied together if you really believe it's accurate to generalize that higher taxes will come back to *you* ...
The OP didn't ask for generalized theory/opinion. They requested real-life experience from those who actually made such a move.
It's not a 'theory or opinion' how taxes differ in various places. To the extent it's important it's an objective fact you can look up. To the extent it's some subtle thing you need 'real life experience' to evaluate, those are the cases where it's not that important a difference.
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Re: Was moving from a no income tax state to an income tax state really that bad?

Post by Northern Flicker »

nydoc wrote: Sun Jan 01, 2023 11:52 am ... which translates into better career growth trajectory. BTW I did get a lot back in those fabled benefits of NY state. So no complaints here.
You have no complaints because you wisely focus on your after-tax net instead of on the state (and local if any) income tax rate.

State income tax has the property that we see it aggregated as one number in a box on a tax form every spring, which can distract us from what matters.
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Re: Was moving from a no income tax state to an income tax state really that bad?

Post by cowbman »

Northern Flicker wrote: Sat Dec 31, 2022 11:29 pm For retirees, only 11 states tax SS benefits. A state with high income tax and low/no sales and property tax may impose a lower tax load on retirees than a state without income tax.

https://www.investopedia.com/which-stat ... ty-5211649
1st one sounds like Delaware.
Later sounds like Texas
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Re: Was moving from a no income tax state to an income tax state really that bad?

Post by cowbman »

Northern Flicker wrote: Sat Dec 31, 2022 11:29 pm For retirees, only 11 states tax SS benefits. A state with high income tax and low/no sales and property tax may impose a lower tax load on retirees than a state without income tax.

https://www.investopedia.com/which-stat ... ty-5211649
I thought NM eliminated their tax on Social Security.
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Re: Was moving from a no income tax state to an income tax state really that bad?

Post by quantAndHold »

core4portfolio wrote: Sun Jan 01, 2023 8:02 am
Journeyman510 wrote: Thu Dec 15, 2022 1:08 pm Depends on the state and your situation. I'm sitting at 13.3% in California. We came from WA. So yeah, it's bad.
Iam in similar situation. Moving from WA to Bay Area.
What are things that spiked higher ?
Car insurance, gas price income tax and anything else ????
My costs went down when I moved from WA to CA. It’s all individual.

I saw no difference in car or homeowners insurance. Sales tax is less. Property taxes are less, and only increase by 2% per year.

There isn’t a 13.3% tax bracket. Marginal tax rates top out at 12.3% for income over $1.3M (MFJ) or $677k (single).
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Re: Was moving from a no income tax state to an income tax state really that bad?

Post by beyou »

Within the state you live, people select one house or town over another due to quality of life issues.
You might spend more for a better school district or shorter commute, or waterfront proximity etc.
You might spend less and give up those things if that is what you can afford or have different values.

I see no difference between choosing states or locations within a state.
Pick what you can afford.
If you want to live in NYC or CA coastal city, you are going to not only pay more income tax, more for your house and everything else.
Either you are willing to spend the $ or you do not value such locations and can spend less.

For me I like living near the ocean, near beautiful public parks, having decent cultural access and top medical care.
If I need to live in a higher income tax state to get those things, that is just part of the price. Either pay it or live without these things.
I have lived in 3 states and spent time with relatives living in other states. My favorite places to live have been the higher income tax states.
If I couldn't afford it, I would move out of necessity.
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Re: Was moving from a no income tax state to an income tax state really that bad?

Post by Random Poster »

cowbman wrote: Mon Jun 05, 2023 2:41 pm
Northern Flicker wrote: Sat Dec 31, 2022 11:29 pm For retirees, only 11 states tax SS benefits. A state with high income tax and low/no sales and property tax may impose a lower tax load on retirees than a state without income tax.

https://www.investopedia.com/which-stat ... ty-5211649
I thought NM eliminated their tax on Social Security.
Depends on your income.

See here: https://www.tax.newmexico.gov/social-se ... exemption/
Beginning with tax year 2022, most seniors will be exempt from paying taxes on their Social Security benefits when they file their New Mexico Personal Income Tax returns. Tax relief from the new Social Security exemption is expected to total $84.1 million in the first year. The exemption is available to single taxpayers with less than $100,000 in income, to married couples filing jointly, surviving spouses and heads of household with under $150,000 in income, and to married couples filing separately with under $75,000 in income.
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Re: Was moving from a no income tax state to an income tax state really that bad?

Post by cowbman »

beyou wrote: Mon Jun 05, 2023 5:08 pm Within the state you live, people select one house or town over another due to quality of life issues.
You might spend more for a better school district or shorter commute, or waterfront proximity etc.
You might spend less and give up those things if that is what you can afford or have different values.

I see no difference between choosing states or locations within a state.
Pick what you can afford.
If you want to live in NYC or CA coastal city, you are going to not only pay more income tax, more for your house and everything else.
Either you are willing to spend the $ or you do not value such locations and can spend less.

For me I like living near the ocean, near beautiful public parks, having decent cultural access and top medical care.
If I need to live in a higher income tax state to get those things, that is just part of the price. Either pay it or live without these things.
I have lived in 3 states and spent time with relatives living in other states. My favorite places to live have been the higher income tax states.
If I couldn't afford it, I would move out of necessity.
It's more complicated than this now with remote work and those of us that are actually paid more in these "less desirable " locations.
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Re: Was moving from a no income tax state to an income tax state really that bad?

Post by muffins14 »

smooth_rough wrote: Sat Dec 31, 2022 9:32 am Depends on your tax bracket, and the state you are moving to. If you are in top tax bracket and moving to CA, you will get killed on income tax.
Ah yes, this thread again.

I imagine you will not literally be murdered by the tax. You get some positive things from where you live, you get some negative things.

You may move to a scary “high tax” state for a job that doubles your income. You come out ahead.

Many states where people in this thread assume you are killed by taxes are on-par with others that people perceive to be tax-free, because taxes and fees and benefits are all different.

Places with high income tax may have low relative property tax.

Places with high tax on income may have laws that prevent your property tax from increasing much at all. They may have laws that imply in retirement, your tax is very low. They have many services that may be attractive as well.

This is a personal decision that goes way beyond the simple single number reported by the highest marginal bracket in a state
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Re: Was moving from a no income tax state to an income tax state really that bad?

Post by beyou »

cowbman wrote: Tue Jun 06, 2023 6:56 am
beyou wrote: Mon Jun 05, 2023 5:08 pm Within the state you live, people select one house or town over another due to quality of life issues.
You might spend more for a better school district or shorter commute, or waterfront proximity etc.
You might spend less and give up those things if that is what you can afford or have different values.

I see no difference between choosing states or locations within a state.
Pick what you can afford.
If you want to live in NYC or CA coastal city, you are going to not only pay more income tax, more for your house and everything else.
Either you are willing to spend the $ or you do not value such locations and can spend less.

For me I like living near the ocean, near beautiful public parks, having decent cultural access and top medical care.
If I need to live in a higher income tax state to get those things, that is just part of the price. Either pay it or live without these things.
I have lived in 3 states and spent time with relatives living in other states. My favorite places to live have been the higher income tax states.
If I couldn't afford it, I would move out of necessity.
It's more complicated than this now with remote work and those of us that are actually paid more in these "less desirable " locations.
The point was, live where you want to live unless you simply can’t afford to do so. This is more true than ever before with remote work. Taxes should not be the main reason to live in a state. Now also work may not be a reason you must live in a particular state (for some types of jobs).

This used to be a retiree decision (move somewhere there are low taxes without consideration of work). Now it is equally applicable to consider for those who can remote work. Just because you CAN move to a low tax state does not mean you should.
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Re: Was moving from a no income tax state to an income tax state really that bad?

Post by sperry8 »

smitcat wrote: Thu Dec 15, 2022 12:51 pm
MikeZ wrote: Thu Dec 15, 2022 12:22 pm Some background:

Married, no kids.

About $220k combined gross income.

Currently living in a no income tax state. We have been living way below our means as far as car and house these past few years so not a lot of baseline as far as property taxes. Thinking about moving to AZ (Tucson) or NM (Las Cruces). Thinking $400-$500k for a home.

We have done the cost estimates and all on the tax costs (~$6-9K/yr) but I was was wondering for those folks that actually make the move from no-tax to tax; what your real life experience has been as far as how much the cost impacted your finances?
Your baseline comparison needs to include all of the relevant costs which may or may not change when you make a move. Some of those will include:
- real estate taxes
- home insurance
- utilities (all)
- car insurance
- local user fees and taxes
- groceries and leisure
Add healthcare monthly payments too... i've found different States charge sig different monthly rates if you buy your healthcare from an exchange or direct
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Re: Was moving from a no income tax state to an income tax state really that bad?

Post by smitcat »

sperry8 wrote: Tue Jun 06, 2023 7:48 am
smitcat wrote: Thu Dec 15, 2022 12:51 pm
MikeZ wrote: Thu Dec 15, 2022 12:22 pm Some background:

Married, no kids.

About $220k combined gross income.

Currently living in a no income tax state. We have been living way below our means as far as car and house these past few years so not a lot of baseline as far as property taxes. Thinking about moving to AZ (Tucson) or NM (Las Cruces). Thinking $400-$500k for a home.

We have done the cost estimates and all on the tax costs (~$6-9K/yr) but I was was wondering for those folks that actually make the move from no-tax to tax; what your real life experience has been as far as how much the cost impacted your finances?
Your baseline comparison needs to include all of the relevant costs which may or may not change when you make a move. Some of those will include:
- real estate taxes
- home insurance
- utilities (all)
- car insurance
- local user fees and taxes
- groceries and leisure
Add healthcare monthly payments too... i've found different States charge sig different monthly rates if you buy your healthcare from an exchange or direct
Interesting - we have not found that case.
But I can add that a number of the costs above vary greatly by zip code and not just the state. Many states have widely varying costs within the state and are based on exact location. Real estate taxes, car insurance, home insurance, local fees and taxes can vary by 2X or more within the same state - choose wisely.
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Re: Was moving from a no income tax state to an income tax state really that bad?

Post by smitcat »

beyou wrote: Tue Jun 06, 2023 7:28 am
cowbman wrote: Tue Jun 06, 2023 6:56 am
beyou wrote: Mon Jun 05, 2023 5:08 pm Within the state you live, people select one house or town over another due to quality of life issues.
You might spend more for a better school district or shorter commute, or waterfront proximity etc.
You might spend less and give up those things if that is what you can afford or have different values.

I see no difference between choosing states or locations within a state.
Pick what you can afford.
If you want to live in NYC or CA coastal city, you are going to not only pay more income tax, more for your house and everything else.
Either you are willing to spend the $ or you do not value such locations and can spend less.

For me I like living near the ocean, near beautiful public parks, having decent cultural access and top medical care.
If I need to live in a higher income tax state to get those things, that is just part of the price. Either pay it or live without these things.
I have lived in 3 states and spent time with relatives living in other states. My favorite places to live have been the higher income tax states.
If I couldn't afford it, I would move out of necessity.
It's more complicated than this now with remote work and those of us that are actually paid more in these "less desirable " locations.
The point was, live where you want to live unless you simply can’t afford to do so. This is more true than ever before with remote work. Taxes should not be the main reason to live in a state. Now also work may not be a reason you must live in a particular state (for some types of jobs).

This used to be a retiree decision (move somewhere there are low taxes without consideration of work). Now it is equally applicable to consider for those who can remote work. Just because you CAN move to a low tax state does not mean you should.
"The point was, live where you want to live unless you simply can’t afford to do so."
You can live on more than one place - but selecting your 'residence' can easily affect the costs.
Additionally, I can add that a number of the costs above vary greatly by zip code and not just the state. Many states have widely varying costs within the state and are based on exact location. Real estate taxes, car insurance, home insurance, local fees and taxes can vary by 2X or more within the same state - choose wisely.
cowbman
Posts: 638
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Re: Was moving from a no income tax state to an income tax state really that bad?

Post by cowbman »

muffins14 wrote: Tue Jun 06, 2023 7:21 am
smooth_rough wrote: Sat Dec 31, 2022 9:32 am Depends on your tax bracket, and the state you are moving to. If you are in top tax bracket and moving to CA, you will get killed on income tax.
Ah yes, this thread again.

I imagine you will not literally be murdered by the tax. You get some positive things from where you live, you get some negative things.

You may move to a scary “high tax” state for a job that doubles your income. You come out ahead.

Many states where people in this thread assume you are killed by taxes are on-par with others that people perceive to be tax-free, because taxes and fees and benefits are all different.

Places with high income tax may have low relative property tax.

Places with high tax on income may have laws that prevent your property tax from increasing much at all. They may have laws that imply in retirement, your tax is very low. They have many services that may be attractive as well.

This is a personal decision that goes way beyond the simple single number reported by the highest marginal bracket in a state
Except for Tennessee and Arizona.
Nowizard
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Re: Was moving from a no income tax state to an income tax state really that bad?

Post by Nowizard »

We live in a no tax state that has substantial issues with problems related to income on the surface but more to politics beneath that. Sales tax is at top of all states, property taxes are higher in the city and county, both of which tax. In other words, there are taxes, and there are reasons for those taxes. We have moved to a suburb of the large city, though can access the city for specific things such as pro basketball, very nice restaurants (Haven't lately due to Covid), larger stores, etc. The suburb which is in the same county as the large city is middle/upper middle income, lower taxes (Pay county taxes which include the large city and taxes of the 60,000 residents suburb, not the higher ones of the large city), hardly any crime, streets well-paved, great park system, typical Lowe's, HD, chain restaurants, banks, etc. In short, we found a LCOL area with HCOL amenities and services adjacent to a metropolitan area often in the news for negative reasons. It has worked for us, and a no income tax state resulted in additional savings during working years.

Tim
cowbman
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Re: Was moving from a no income tax state to an income tax state really that bad?

Post by cowbman »

Nowizard wrote: Tue Jun 06, 2023 8:41 am We live in a no tax state that has substantial issues with problems related to income on the surface but more to politics beneath that. Sales tax is at top of all states, property taxes are higher in the city and county, both of which tax. In other words, there are taxes, and there are reasons for those taxes. We have moved to a suburb of the large city, though can access the city for specific things such as pro basketball, very nice restaurants (Haven't lately due to Covid), larger stores, etc. The suburb which is in the same county as the large city is middle/upper middle income, lower taxes (Pay county taxes which include the large city and taxes of the 60,000 residents suburb, not the higher ones of the large city), hardly any crime, streets well-paved, great park system, typical Lowe's, HD, chain restaurants, banks, etc. In short, we found a LCOL area with HCOL amenities and services adjacent to a metropolitan area often in the news for negative reasons. It has worked for us, and a no income tax state resulted in additional savings during working years.

Tim
Nice! Where is that?
VoiceOfReason
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Re: Was moving from a no income tax state to an income tax state really that bad?

Post by VoiceOfReason »

beyou wrote: Mon Jun 05, 2023 5:08 pm Within the state you live, people select one house or town over another due to quality of life issues.
You might spend more for a better school district or shorter commute, or waterfront proximity etc.
You might spend less and give up those things if that is what you can afford or have different values.

I see no difference between choosing states or locations within a state.
This is an apples/oranges comparison.

When choosing a school district or location within a state, (presumably when you buy real estate) there is inherent value in that location. That value is paid for in the price of real estate which you get to keep. That value will grow and you will recoup that $$ and more.

State income taxes are just gone after you pay them.

I generally find that people like to justify their own life choices/situations and no where is that more clear here than threads about state income taxes. So much discussion here about taking actions in various aspects of life to save small amounts of $, yet so many on this thread overlook the 10’s of thousands of dollars paid annually in state income taxes that over the course of a lifetime the oppty cost is easily north of $1MM.
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beyou
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Re: Was moving from a no income tax state to an income tax state really that bad?

Post by beyou »

VoiceOfReason wrote: Tue Jun 06, 2023 9:17 am
beyou wrote: Mon Jun 05, 2023 5:08 pm Within the state you live, people select one house or town over another due to quality of life issues.
You might spend more for a better school district or shorter commute, or waterfront proximity etc.
You might spend less and give up those things if that is what you can afford or have different values.

I see no difference between choosing states or locations within a state.
This is an apples/oranges comparison.

When choosing a school district or location within a state, (presumably when you buy real estate) there is inherent value in that location. That value is paid for in the price of real estate which you get to keep. That value will grow and you will recoup that $$ and more.

State income taxes are just gone after you pay them.

I generally find that people like to justify their own life choices/situations and no where is that more clear here than threads about state income taxes. So much discussion here about taking actions in various aspects of life to save small amounts of $, yet so many on this thread overlook the 10’s of thousands of dollars paid annually in state income taxes that over the course of a lifetime the oppty cost is easily north of $1MM.
While I do not spend excessive time to worry about saving a couple of bucks on a commodity, a commodity by it’s nature is exactly the same no matter what you pay, so why pay more ? InsuranceCo’s SP500 index fund cannot be better than Vanguard’s but why not buy the lower priced Vanguard 500 ? But picking a place to live is absolutely NOT a commodity, and the price of that choice is the taxes and other locally priced costs. I live in a high tax state, and we have amazing state parks, parkways, and quality state universities where your kids can attend very cheaply if you live in this state. We have laws I mostly agree with, unlike some other low tax states. Price of being where I want to be, is partly the income and property taxes.
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beyou
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Re: Was moving from a no income tax state to an income tax state really that bad?

Post by beyou »

smitcat wrote: Tue Jun 06, 2023 8:00 am
beyou wrote: Tue Jun 06, 2023 7:28 am
cowbman wrote: Tue Jun 06, 2023 6:56 am
beyou wrote: Mon Jun 05, 2023 5:08 pm Within the state you live, people select one house or town over another due to quality of life issues.
You might spend more for a better school district or shorter commute, or waterfront proximity etc.
You might spend less and give up those things if that is what you can afford or have different values.

I see no difference between choosing states or locations within a state.
Pick what you can afford.
If you want to live in NYC or CA coastal city, you are going to not only pay more income tax, more for your house and everything else.
Either you are willing to spend the $ or you do not value such locations and can spend less.

For me I like living near the ocean, near beautiful public parks, having decent cultural access and top medical care.
If I need to live in a higher income tax state to get those things, that is just part of the price. Either pay it or live without these things.
I have lived in 3 states and spent time with relatives living in other states. My favorite places to live have been the higher income tax states.
If I couldn't afford it, I would move out of necessity.
It's more complicated than this now with remote work and those of us that are actually paid more in these "less desirable " locations.
The point was, live where you want to live unless you simply can’t afford to do so. This is more true than ever before with remote work. Taxes should not be the main reason to live in a state. Now also work may not be a reason you must live in a particular state (for some types of jobs).

This used to be a retiree decision (move somewhere there are low taxes without consideration of work). Now it is equally applicable to consider for those who can remote work. Just because you CAN move to a low tax state does not mean you should.
"The point was, live where you want to live unless you simply can’t afford to do so."
You can live on more than one place - but selecting your 'residence' can easily affect the costs.
Additionally, I can add that a number of the costs above vary greatly by zip code and not just the state. Many states have widely varying costs within the state and are based on exact location. Real estate taxes, car insurance, home insurance, local fees and taxes can vary by 2X or more within the same state - choose wisely.
If you can afford and want to maintain 2 residences, that is a whole different discussion. Personally maintaining one home is more than enough of a hassle to me.
smitcat
Posts: 13227
Joined: Mon Nov 07, 2016 9:51 am

Re: Was moving from a no income tax state to an income tax state really that bad?

Post by smitcat »

beyou wrote: Tue Jun 06, 2023 9:35 am
VoiceOfReason wrote: Tue Jun 06, 2023 9:17 am
beyou wrote: Mon Jun 05, 2023 5:08 pm Within the state you live, people select one house or town over another due to quality of life issues.
You might spend more for a better school district or shorter commute, or waterfront proximity etc.
You might spend less and give up those things if that is what you can afford or have different values.

I see no difference between choosing states or locations within a state.
This is an apples/oranges comparison.

When choosing a school district or location within a state, (presumably when you buy real estate) there is inherent value in that location. That value is paid for in the price of real estate which you get to keep. That value will grow and you will recoup that $$ and more.

State income taxes are just gone after you pay them.

I generally find that people like to justify their own life choices/situations and no where is that more clear here than threads about state income taxes. So much discussion here about taking actions in various aspects of life to save small amounts of $, yet so many on this thread overlook the 10’s of thousands of dollars paid annually in state income taxes that over the course of a lifetime the oppty cost is easily north of $1MM.
While I do not spend excessive time to worry about saving a couple of bucks on a commodity, a commodity by it’s nature is exactly the same no matter what you pay, so why pay more ? InsuranceCo’s SP500 index fund cannot be better than Vanguard’s but why not buy the lower priced Vanguard 500 ? But picking a place to live is absolutely NOT a commodity, and the price of that choice is the taxes and other locally priced costs. I live in a high tax state, and we have amazing state parks, parkways, and quality state universities where your kids can attend very cheaply if you live in this state. We have laws I mostly agree with, unlike some other low tax states. Price of being where I want to be, is partly the income and property taxes.
Is this in NY? Which state parks do you mostly visit? Which Universities have you utilized?
I find the expenses vary by zip code as much as by the overall state.
smitcat
Posts: 13227
Joined: Mon Nov 07, 2016 9:51 am

Re: Was moving from a no income tax state to an income tax state really that bad?

Post by smitcat »

beyou wrote: Tue Jun 06, 2023 10:07 am
smitcat wrote: Tue Jun 06, 2023 8:00 am
beyou wrote: Tue Jun 06, 2023 7:28 am
cowbman wrote: Tue Jun 06, 2023 6:56 am
beyou wrote: Mon Jun 05, 2023 5:08 pm Within the state you live, people select one house or town over another due to quality of life issues.
You might spend more for a better school district or shorter commute, or waterfront proximity etc.
You might spend less and give up those things if that is what you can afford or have different values.

I see no difference between choosing states or locations within a state.
Pick what you can afford.
If you want to live in NYC or CA coastal city, you are going to not only pay more income tax, more for your house and everything else.
Either you are willing to spend the $ or you do not value such locations and can spend less.

For me I like living near the ocean, near beautiful public parks, having decent cultural access and top medical care.
If I need to live in a higher income tax state to get those things, that is just part of the price. Either pay it or live without these things.
I have lived in 3 states and spent time with relatives living in other states. My favorite places to live have been the higher income tax states.
If I couldn't afford it, I would move out of necessity.
It's more complicated than this now with remote work and those of us that are actually paid more in these "less desirable " locations.
The point was, live where you want to live unless you simply can’t afford to do so. This is more true than ever before with remote work. Taxes should not be the main reason to live in a state. Now also work may not be a reason you must live in a particular state (for some types of jobs).

This used to be a retiree decision (move somewhere there are low taxes without consideration of work). Now it is equally applicable to consider for those who can remote work. Just because you CAN move to a low tax state does not mean you should.
"The point was, live where you want to live unless you simply can’t afford to do so."
You can live on more than one place - but selecting your 'residence' can easily affect the costs.
Additionally, I can add that a number of the costs above vary greatly by zip code and not just the state. Many states have widely varying costs within the state and are based on exact location. Real estate taxes, car insurance, home insurance, local fees and taxes can vary by 2X or more within the same state - choose wisely.
If you can afford and want to maintain 2 residences, that is a whole different discussion. Personally maintaining one home is more than enough of a hassle to me.
The main point was the zip code varying expenses within each state. With more than one home (but only one residence) you can always rent one or more out at times.
Jags4186
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Re: Was moving from a no income tax state to an income tax state really that bad?

Post by Jags4186 »

It’s my opinion that whether you live in a high tax state or a low tax state you’re going to be hit up for $$$ one way or another. You may save some but it’s often not just dollar for dollar.

Lots of folks move from NY/NJ to Florida and claim they save on income taxes and/or property taxes. Then I read an article that people have to pay $10k+/yr to insure their homes in Florida. Meanwhile I pay $900/yr. So look holistically to see what your real costs will be. It may not be that much of a difference.
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beyou
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Re: Was moving from a no income tax state to an income tax state really that bad?

Post by beyou »

smitcat wrote: Tue Jun 06, 2023 10:29 am
beyou wrote: Tue Jun 06, 2023 9:35 am
VoiceOfReason wrote: Tue Jun 06, 2023 9:17 am
beyou wrote: Mon Jun 05, 2023 5:08 pm Within the state you live, people select one house or town over another due to quality of life issues.
You might spend more for a better school district or shorter commute, or waterfront proximity etc.
You might spend less and give up those things if that is what you can afford or have different values.

I see no difference between choosing states or locations within a state.
This is an apples/oranges comparison.

When choosing a school district or location within a state, (presumably when you buy real estate) there is inherent value in that location. That value is paid for in the price of real estate which you get to keep. That value will grow and you will recoup that $$ and more.

State income taxes are just gone after you pay them.

I generally find that people like to justify their own life choices/situations and no where is that more clear here than threads about state income taxes. So much discussion here about taking actions in various aspects of life to save small amounts of $, yet so many on this thread overlook the 10’s of thousands of dollars paid annually in state income taxes that over the course of a lifetime the oppty cost is easily north of $1MM.
While I do not spend excessive time to worry about saving a couple of bucks on a commodity, a commodity by it’s nature is exactly the same no matter what you pay, so why pay more ? InsuranceCo’s SP500 index fund cannot be better than Vanguard’s but why not buy the lower priced Vanguard 500 ? But picking a place to live is absolutely NOT a commodity, and the price of that choice is the taxes and other locally priced costs. I live in a high tax state, and we have amazing state parks, parkways, and quality state universities where your kids can attend very cheaply if you live in this state. We have laws I mostly agree with, unlike some other low tax states. Price of being where I want to be, is partly the income and property taxes.
Is this in NY? Which state parks do you mostly visit? Which Universities have you utilized?
I find the expenses vary by zip code as much as by the overall state.
But this thread is about moving between states.
You are hijacking the thread with an unrelated point.

And yes I have visited MANY state parks in multiple parts of the state, of course some more than others based on distance.

And one kid saved $ due to being in state.
Spouse went to state u.
Brother went to state u.
Not me personally, I went to 2 other states for college.
First a low cost state, where the college was great but hated living in that state. Then transferred to a college in a high cost state, where I thought it a great place to live.
smitcat
Posts: 13227
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Re: Was moving from a no income tax state to an income tax state really that bad?

Post by smitcat »

beyou wrote: Tue Jun 06, 2023 10:49 am
smitcat wrote: Tue Jun 06, 2023 10:29 am
beyou wrote: Tue Jun 06, 2023 9:35 am
VoiceOfReason wrote: Tue Jun 06, 2023 9:17 am
beyou wrote: Mon Jun 05, 2023 5:08 pm Within the state you live, people select one house or town over another due to quality of life issues.
You might spend more for a better school district or shorter commute, or waterfront proximity etc.
You might spend less and give up those things if that is what you can afford or have different values.

I see no difference between choosing states or locations within a state.
This is an apples/oranges comparison.

When choosing a school district or location within a state, (presumably when you buy real estate) there is inherent value in that location. That value is paid for in the price of real estate which you get to keep. That value will grow and you will recoup that $$ and more.

State income taxes are just gone after you pay them.

I generally find that people like to justify their own life choices/situations and no where is that more clear here than threads about state income taxes. So much discussion here about taking actions in various aspects of life to save small amounts of $, yet so many on this thread overlook the 10’s of thousands of dollars paid annually in state income taxes that over the course of a lifetime the oppty cost is easily north of $1MM.
While I do not spend excessive time to worry about saving a couple of bucks on a commodity, a commodity by it’s nature is exactly the same no matter what you pay, so why pay more ? InsuranceCo’s SP500 index fund cannot be better than Vanguard’s but why not buy the lower priced Vanguard 500 ? But picking a place to live is absolutely NOT a commodity, and the price of that choice is the taxes and other locally priced costs. I live in a high tax state, and we have amazing state parks, parkways, and quality state universities where your kids can attend very cheaply if you live in this state. We have laws I mostly agree with, unlike some other low tax states. Price of being where I want to be, is partly the income and property taxes.
Is this in NY? Which state parks do you mostly visit? Which Universities have you utilized?
I find the expenses vary by zip code as much as by the overall state.
But this thread is about moving between states.
You are hijacking the thread with an unrelated point.
If you say so - I have been to many NY state parks numerous times and have also been at 3 NYS Universities over the years.
Moving from a state with no income tax to an income tax state was the thread topic.
Costs vary a large amount by zip code not just the state.
Have you lived in a no income tax state and moved to a state with income taxes?
muffins14
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Location: New York

Re: Was moving from a no income tax state to an income tax state really that bad?

Post by muffins14 »

smooth_rough wrote: Sat Dec 31, 2022 6:00 pm
Landlords will pass through tax increases to tenants in the form or rent increase if possible. But I was just saying that there are times when landlords have to eat it, such as if the landlord is struggling to rent vacant units and is forced to cut rent and accept lower ROI. Maybe getting off subject.
Right, and sure landlords want a profit, but they may be charging 2023 rent while holding a mortgage from a purchase at 2003 prices and refinanced to 3% interest.

There’s a reason not everyone owns, and it’s not just due to lack of down payment. Often owning is more expensive on an ongoing basis relative to what you can get by renting
Crom laughs at your Four Winds
VoiceOfReason
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Re: Was moving from a no income tax state to an income tax state really that bad?

Post by VoiceOfReason »

Jags4186 wrote: Tue Jun 06, 2023 10:40 am It’s my opinion that whether you live in a high tax state or a low tax state you’re going to be hit up for $$$ one way or another. You may save some but it’s often not just dollar for dollar.

Lots of folks move from NY/NJ to Florida and claim they save on income taxes and/or property taxes. Then I read an article that people have to pay $10k+/yr to insure their homes in Florida. Meanwhile I pay $900/yr. So look holistically to see what your real costs will be. It may not be that much of a difference.
Your home insurance example is misleading at best. Are there houses that have to pay $10K+ to insure? Yes. If u have a $10MM house directly on the ocean or water. The comparable house in Florida to your $900 insurance cost is likely in the $3-4K range for insurance. Yes that is more. But any dual income earning house making $500k+ is saving 10x that additional home insurance cost on state income taxes.

To your other point on getting hit up one way or another by a state. I think there is some truth to that. But there’s two considerations. 1) Its all relative to your situation. Moving from the northeast with high property taxes, high state income taxes and high sales taxes is going to feel like a huge savings when u go to Florida that has similar property and sales tax rates (which are high on a national scale) but no state income tax 2) State income tax systems are setup to hurt highest earners the most. The more u make, the more u pay for the same benefits of living in that state. A low wage earner pays a fraction of the taxes and gets the same or more benefits of living in that state. It’s just like high earners with social security. You’re putting more in and getting a significantly reduced return on your money than others. It’s a bad deal.
smitcat
Posts: 13227
Joined: Mon Nov 07, 2016 9:51 am

Re: Was moving from a no income tax state to an income tax state really that bad?

Post by smitcat »

beyou wrote: Tue Jun 06, 2023 10:49 am
smitcat wrote: Tue Jun 06, 2023 10:29 am
beyou wrote: Tue Jun 06, 2023 9:35 am
VoiceOfReason wrote: Tue Jun 06, 2023 9:17 am
beyou wrote: Mon Jun 05, 2023 5:08 pm Within the state you live, people select one house or town over another due to quality of life issues.
You might spend more for a better school district or shorter commute, or waterfront proximity etc.
You might spend less and give up those things if that is what you can afford or have different values.

I see no difference between choosing states or locations within a state.
This is an apples/oranges comparison.

When choosing a school district or location within a state, (presumably when you buy real estate) there is inherent value in that location. That value is paid for in the price of real estate which you get to keep. That value will grow and you will recoup that $$ and more.

State income taxes are just gone after you pay them.

I generally find that people like to justify their own life choices/situations and no where is that more clear here than threads about state income taxes. So much discussion here about taking actions in various aspects of life to save small amounts of $, yet so many on this thread overlook the 10’s of thousands of dollars paid annually in state income taxes that over the course of a lifetime the oppty cost is easily north of $1MM.
While I do not spend excessive time to worry about saving a couple of bucks on a commodity, a commodity by it’s nature is exactly the same no matter what you pay, so why pay more ? InsuranceCo’s SP500 index fund cannot be better than Vanguard’s but why not buy the lower priced Vanguard 500 ? But picking a place to live is absolutely NOT a commodity, and the price of that choice is the taxes and other locally priced costs. I live in a high tax state, and we have amazing state parks, parkways, and quality state universities where your kids can attend very cheaply if you live in this state. We have laws I mostly agree with, unlike some other low tax states. Price of being where I want to be, is partly the income and property taxes.
Is this in NY? Which state parks do you mostly visit? Which Universities have you utilized?
I find the expenses vary by zip code as much as by the overall state.
But this thread is about moving between states.
You are hijacking the thread with an unrelated point.

And yes I have visited MANY state parks in multiple parts of the state, of course some more than others based on distance.

And one kid saved $ due to being in state.
Spouse went to state u.
Brother went to state u.
Not me personally, I went to 2 other states for college.
First a low cost state, where the college was great but hated living in that state. Then transferred to a college in a high cost state, where I thought it a great place to live.
You have edited your post so I will put this again here....
"If you say so - I have been to many NY state parks numerous times and have also been at 3 NYS Universities over the years.
Moving from a state with no income tax to an income tax state was the thread topic.
Costs vary a large amount by zip code not just the state.
Have you lived in a no income tax state and moved to a state with income taxes?"
smitcat
Posts: 13227
Joined: Mon Nov 07, 2016 9:51 am

Re: Was moving from a no income tax state to an income tax state really that bad?

Post by smitcat »

Jags4186 wrote: Tue Jun 06, 2023 10:40 am It’s my opinion that whether you live in a high tax state or a low tax state you’re going to be hit up for $$$ one way or another. You may save some but it’s often not just dollar for dollar.

Lots of folks move from NY/NJ to Florida and claim they save on income taxes and/or property taxes. Then I read an article that people have to pay $10k+/yr to insure their homes in Florida. Meanwhile I pay $900/yr. So look holistically to see what your real costs will be. It may not be that much of a difference.
We have had homes in 2 states for a while, each home being about equivalent. (NY and Fl)
The total costs are very different with Florida having the edge by a long shot.
One of the keys to the costs is that the expenses vary by zip code not just the home state, so choose wisely when selecting a home.

"Then I read an article that people have to pay $10k+/yr to insure their homes in Florida"
Not an article but real data our home insurance in Florida is about 10% more than in NY.
FWIW - our overall expenses are about $30K less in Florida.
smitcat
Posts: 13227
Joined: Mon Nov 07, 2016 9:51 am

Re: Was moving from a no income tax state to an income tax state really that bad?

Post by smitcat »

VoiceOfReason wrote: Tue Jun 06, 2023 11:05 am
Jags4186 wrote: Tue Jun 06, 2023 10:40 am It’s my opinion that whether you live in a high tax state or a low tax state you’re going to be hit up for $$$ one way or another. You may save some but it’s often not just dollar for dollar.

Lots of folks move from NY/NJ to Florida and claim they save on income taxes and/or property taxes. Then I read an article that people have to pay $10k+/yr to insure their homes in Florida. Meanwhile I pay $900/yr. So look holistically to see what your real costs will be. It may not be that much of a difference.
Your home insurance example is misleading at best. Are there houses that have to pay $10K+ to insure? Yes. If u have a $10MM house directly on the ocean or water. The comparable house in Florida to your $900 insurance cost is likely in the $3-4K range for insurance. Yes that is more. But any dual income earning house making $500k+ is saving 10x that additional home insurance cost on state income taxes.

To your other point on getting hit up one way or another by a state. I think there is some truth to that. But there’s two considerations. 1) Its all relative to your situation. Moving from the northeast with high property taxes, high state income taxes and high sales taxes is going to feel like a huge savings when u go to Florida that has similar property and sales tax rates (which are high on a national scale) but no state income tax 2) State income tax systems are setup to hurt highest earners the most. The more u make, the more u pay for the same benefits of living in that state. A low wage earner pays a fraction of the taxes and gets the same or more benefits of living in that state. It’s just like high earners with social security. You’re putting more in and getting a significantly reduced return on your money than others. It’s a bad deal.
"The comparable house in Florida to your $900 insurance cost is likely in the $3-4K range for insurance"
We have found the difference to be way less than that - maybe about 10-15% ....but it is greatly affected by both zip code and the exact construction of the homes in each state.
anonenigma
Posts: 1133
Joined: Thu Apr 21, 2011 11:58 pm

Re: Was moving from a no income tax state to an income tax state really that bad?

Post by anonenigma »

Journeyman510 wrote: Thu Dec 15, 2022 1:08 pm Depends on the state and your situation. I'm sitting at 13.3% in California. We came from WA. So yeah, it's bad.
People cite the 13.3% rate, but that's only on income above $1,000,000 (single) or $2,000,000 (married filing jointly). Here are the actual tax brackets so that people won't focus on what the tiniest fraction of taxpayers pay:

California Tax Brackets for Single Taxpayers
Taxable Income Rate
$0 – $8,809 1.00%
$8,809 – $20,883 2.00%
$20,883 – $32,960 4.00%
$32,960 – $45,753 6.00%
$45,753 – $57,824 8.00%
$57,824 – $295,373 9.30%
$295,373 – $354,445 10.30%
$354,445 – $590,742 11.30%
$590,742 – $999,999 12.30%
$1,000,000+ 13.30%

California Tax Brackets for Married/Registered Domestic Partner (RDP) Filing Jointly Taxpayers (and Qualifying Widowers)
Taxable Income Rate
$0 – $17,618 1.00%
$17,618 – $41,766 2.00%
$41,766 – $65,920 4.00%
$65,920 – $91,506 6.00%
$91,506 – $115,648 8.00%
$115,648 – $590,746 9.30%
$590,746 – $708,890 10.30%
$708,890 – $1,181,484 11.30%
$1,181,484 – $1,999,999 12.30%
$2,000,000+ 13.30%
jhawktx
Posts: 441
Joined: Thu May 19, 2011 8:15 am

Re: Was moving from a no income tax state to an income tax state really that bad?

Post by jhawktx »

billaster wrote: Fri Dec 16, 2022 2:05 pm Sorry, Mel, but anecdotes are no substitute for data:

https://taxfoundation.org/state-local-tax-collections/

Florida collects about 35% from sales taxes, 38% from property taxes and 24% from other taxes. Property taxes are the single largest source of tax revenue in Florida.
This is misleading. If a state has no income tax then of course the PERCENT of total revenue will be higher for the other forms of taxes. Extreme example: Let's say a state has no income tax, no sales tax, no gas tax. That state would probably show 75%+ of their overall revenue comes from property tax!
davemcin
Posts: 5
Joined: Tue Oct 06, 2020 11:45 am

Re: Was moving from a no income tax state to an income tax state really that bad?

Post by davemcin »

Look at the numbers. Appearances may be deceiving.
https://wallethub.com/edu/states-with-h ... rden/20494
Jags4186
Posts: 8198
Joined: Wed Jun 18, 2014 7:12 pm

Re: Was moving from a no income tax state to an income tax state really that bad?

Post by Jags4186 »

VoiceOfReason wrote: Tue Jun 06, 2023 11:05 am
Jags4186 wrote: Tue Jun 06, 2023 10:40 am It’s my opinion that whether you live in a high tax state or a low tax state you’re going to be hit up for $$$ one way or another. You may save some but it’s often not just dollar for dollar.

Lots of folks move from NY/NJ to Florida and claim they save on income taxes and/or property taxes. Then I read an article that people have to pay $10k+/yr to insure their homes in Florida. Meanwhile I pay $900/yr. So look holistically to see what your real costs will be. It may not be that much of a difference.
Your home insurance example is misleading at best. Are there houses that have to pay $10K+ to insure? Yes. If u have a $10MM house directly on the ocean or water. The comparable house in Florida to your $900 insurance cost is likely in the $3-4K range for insurance. Yes that is more. But any dual income earning house making $500k+ is saving 10x that additional home insurance cost on state income taxes.

To your other point on getting hit up one way or another by a state. I think there is some truth to that. But there’s two considerations. 1) Its all relative to your situation. Moving from the northeast with high property taxes, high state income taxes and high sales taxes is going to feel like a huge savings when u go to Florida that has similar property and sales tax rates (which are high on a national scale) but no state income tax 2) State income tax systems are setup to hurt highest earners the most. The more u make, the more u pay for the same benefits of living in that state. A low wage earner pays a fraction of the taxes and gets the same or more benefits of living in that state. It’s just like high earners with social security. You’re putting more in and getting a significantly reduced return on your money than others. It’s a bad deal.
The average home price in Florida is ~$380k and the average home owners insurance premium is ~$4200. I don't think you need a $10mm ocean front property to have $10k home owners insurance premium. Yes, the more you make the more you save by going to a low tax state. I would say still look holistically at your costs and what you're giving up by going to a low tax state. While there certainly is governmental waste, the money is going somewhere. There's certainly savings to be had, but it may not be as cut and dry as one thinks.
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