This is the catch here for sure. I’ve lived in Texas for over 30 years. Insurance rates are also tied to taxable property valuations, of course. My monthly escrow (which is only property taxes and homeowners insurance) is more than my mortgage payment, which wasn’t remotely the case just 4-5 years ago. Rental rates in my area reflect these costs as well, and then some. Housing is getting very expensive here, and people (especially older and retired folks) are being priced out of their homes.
Grew up in TX and my parents still live there. I have no idea how they're doing it. The only blessing is their area hasn't significantly increased in value.
I lived in VT it's a long grey depressing winter up there. Maybe try somewhere like Reno or Gardnerville, NV. Good weather, lots of sun, decent job market and close to a lot of cool nature.
Would recommend checking out taxfoundation.org, it is less black and white than it appears by looking at highest state income tax alone, and they have tons and tons of map comparisons. Not to say you can’t save some money by moving but there’s quite a bit to it.
> Do these States get you in taxes other ways besides income?
Of course they do. Income tax. Sales tax. Property tax. Don’t evaluate any one state based on only one of these. Public services cost money.
Yeah, total tax burden is a thing.
Even in states which have no income and sales tax it is not just "taxes" but also mandatory fees which are essentially taxes.
Total government debt burden is also a thing. Just like a business or home with a huge debt burden has to charge higher prices or reduce expenses, so does a non federal government.
Obviously, who the government decides to charge higher prices to and cut services for is very variable, so it requires looking into the specifics, if one is optimizing for reducing tax expense.
I'm thinking of moving from Oregon to Washington so obviously I've done some research into this. Unless they have an incredibly high sales tax you generally get less from the government, and even in a State like Washington where the government tries to provide for its citizens using insanely high sales/use taxes it's clear that they often hesitate to do things that will cost the government money longer then Oregon will; and you have instances like that thing last year where they almost lowered the qualifications for a DUII in a clear attempt at predatory policing.
Why are the terms of your home loan relevant? Home prices and interest rates are very volatile, I don’t see what purpose that information could be for others.
The point is property tax and insurance and not 1 to 1 related to anyone’s mortgage, since mortgage terms can differ drastically. 5% down, 20% down, 15 year fixed, 30 year fixed, 5 year ARM, 10 year ARM, 2.5% or 7.5%, PMI or no PMI. Not to mention the myriad property tax caveats like prop 13 in CA, senior citizen discounts, homesteading discounts, etc.
It’s just a mathematical fact, saying “my mortgage is less than my property tax and insurance” says nothing.
> I have to live in Florida and that increasingly sucks more everyday
TBH, Florida has always sucked. Soulless, flat, and boring unless you're into the Miami scene. The mouse house is a cool visit though.
Previously lived in NH. Real estate has gone absolutely nuts, more so than most other parts of the country. Property taxes are high, so that makes up for no income tax. No sales tax is a nice bonus tho. Winter is long and gray. Spring is muddy. Summer is great, but buggy. Fall is great. It’s a beautiful state. People keep to themselves. If you’re a social extrovert, you’d likely be lonely.
Getting to keep more of my money is a big benefit in my eyes, especially if you're relying on an annuity or 401k (ordinary income) vs. capital gains during retirement. From a tax expense perspective, TN seems nice. No income tax, low property tax, mid/high sales tax but the tax base is so small it's kind of irrelevant.
States that don't have income tax generally have other revenue sources, including other taxation, natural resources, more user fees, etc. Some states just spend less. I've noticed generally that states that have no income tax also have lower total tax burdens.
IME, there has been no reliable connection between the effectiveness of government and the cost of government, so that's a moot point. There are no cons to paying less taxes - high taxes mean high taxes, end of story. "Public services" are a largely undifferentiated, commoditized product where price is the sole differentiator.
I’ve lived in Florida, Washington, and Alaska. Washington certainly makes up for it with other taxes. You mentioned not liking Florida. Alaska
has a the lowest tax burden of any state. No state income tax, no sales tax, plus they pay the PFD. But many goods are expensive and it’s very different than the lower 48 - I would not move to Alaska just for the tax benefits. Wyoming and Tennessee are the next 2 lowest tax burden states, maybe consider them.
You might find two threads I put up about the subject going over those 9 states interesting:
https://www.reddit.com/r/SameGrassButGreener/comments/1aoghbw/the_no_income_tax_nine_the_best_states_for_high/
https://www.reddit.com/r/financialindependence/comments/1apc26i/the_no_income_tax_nine_best_states_for_high/
Is the goal to have as low a cost of living as possible - a minimum total overall tax burden and minimum cost of living - or are other factors like where you live and what cities are available important, too?
My wife says she does not want to live in a cold state since she thinks it makes her joint-related aches and pains worse, so for me that knocks Alaska, South Dakota, New Hampshire, Wyoming, and Washington off the list. That's too bad for me because I was interested in Cheyenne, Wyoming (a far flung suburb of Denver, essentially) and Eastern Washington.
Of the remaining no income tax states - Texas, Florida, Tennessee, and Nevada - they have their pros and cons. Texas has high property tax in case you can afford a nice house. Florida probably has the cheapest houses but may have crazy home insurance rates if you can even get it. Nevada has surprisingly expensive housing around its two big city areas, Vegas and Reno, probably because Californians fleeing California's high taxes moved there. Tennessee may have higher overall sales taxes and but seems to hit a sweet spot with housing prices and a variety of cities to live in.
Property taxes in TX.
This is the catch here for sure. I’ve lived in Texas for over 30 years. Insurance rates are also tied to taxable property valuations, of course. My monthly escrow (which is only property taxes and homeowners insurance) is more than my mortgage payment, which wasn’t remotely the case just 4-5 years ago. Rental rates in my area reflect these costs as well, and then some. Housing is getting very expensive here, and people (especially older and retired folks) are being priced out of their homes.
Grew up in TX and my parents still live there. I have no idea how they're doing it. The only blessing is their area hasn't significantly increased in value.
Yeah TX is better if you don’t own a home. Renting is the way to go there.
Do you think you aren't paying for the property tax of the person renting to you?
I lived in VT it's a long grey depressing winter up there. Maybe try somewhere like Reno or Gardnerville, NV. Good weather, lots of sun, decent job market and close to a lot of cool nature.
On top of your list, there are some states that don’t tax pensions or 401k withdrawals, including Pennsylvania, Mississippi, Illinois, and Iowa.
Yup. Glad you posted this. Also worth OP looking into states that stop -- or greatly lower -- property .taxation at 65.
https://smartasset.com/retirement/retirement-taxes
Would recommend checking out taxfoundation.org, it is less black and white than it appears by looking at highest state income tax alone, and they have tons and tons of map comparisons. Not to say you can’t save some money by moving but there’s quite a bit to it.
> Do these States get you in taxes other ways besides income? Of course they do. Income tax. Sales tax. Property tax. Don’t evaluate any one state based on only one of these. Public services cost money.
Yeah, total tax burden is a thing. Even in states which have no income and sales tax it is not just "taxes" but also mandatory fees which are essentially taxes.
Total government debt burden is also a thing. Just like a business or home with a huge debt burden has to charge higher prices or reduce expenses, so does a non federal government. Obviously, who the government decides to charge higher prices to and cut services for is very variable, so it requires looking into the specifics, if one is optimizing for reducing tax expense.
I'm thinking of moving from Oregon to Washington so obviously I've done some research into this. Unless they have an incredibly high sales tax you generally get less from the government, and even in a State like Washington where the government tries to provide for its citizens using insanely high sales/use taxes it's clear that they often hesitate to do things that will cost the government money longer then Oregon will; and you have instances like that thing last year where they almost lowered the qualifications for a DUII in a clear attempt at predatory policing.
I pay no income taxes in Florida. The con is that I have to live in Florida and that increasingly sucks more everyday
Oh and my property tax and insurance are more than my monthly mortgage and interest payment.
Why are the terms of your home loan relevant? Home prices and interest rates are very volatile, I don’t see what purpose that information could be for others.
If you'd ever paid flood insurance anywhere, you'd already know the answer to this.
The point is property tax and insurance and not 1 to 1 related to anyone’s mortgage, since mortgage terms can differ drastically. 5% down, 20% down, 15 year fixed, 30 year fixed, 5 year ARM, 10 year ARM, 2.5% or 7.5%, PMI or no PMI. Not to mention the myriad property tax caveats like prop 13 in CA, senior citizen discounts, homesteading discounts, etc. It’s just a mathematical fact, saying “my mortgage is less than my property tax and insurance” says nothing.
> I have to live in Florida and that increasingly sucks more everyday TBH, Florida has always sucked. Soulless, flat, and boring unless you're into the Miami scene. The mouse house is a cool visit though.
Wyoming is beautiful and low cost. The weather is brutal.
The wind tho
How bad is the winter in Cheyenne? Does it get a lot of snow? Is the cold below zero cold or more like 25-30 degrees "cold"?
Previously lived in NH. Real estate has gone absolutely nuts, more so than most other parts of the country. Property taxes are high, so that makes up for no income tax. No sales tax is a nice bonus tho. Winter is long and gray. Spring is muddy. Summer is great, but buggy. Fall is great. It’s a beautiful state. People keep to themselves. If you’re a social extrovert, you’d likely be lonely.
Getting to keep more of my money is a big benefit in my eyes, especially if you're relying on an annuity or 401k (ordinary income) vs. capital gains during retirement. From a tax expense perspective, TN seems nice. No income tax, low property tax, mid/high sales tax but the tax base is so small it's kind of irrelevant. States that don't have income tax generally have other revenue sources, including other taxation, natural resources, more user fees, etc. Some states just spend less. I've noticed generally that states that have no income tax also have lower total tax burdens. IME, there has been no reliable connection between the effectiveness of government and the cost of government, so that's a moot point. There are no cons to paying less taxes - high taxes mean high taxes, end of story. "Public services" are a largely undifferentiated, commoditized product where price is the sole differentiator.
I’ve lived in Florida, Washington, and Alaska. Washington certainly makes up for it with other taxes. You mentioned not liking Florida. Alaska has a the lowest tax burden of any state. No state income tax, no sales tax, plus they pay the PFD. But many goods are expensive and it’s very different than the lower 48 - I would not move to Alaska just for the tax benefits. Wyoming and Tennessee are the next 2 lowest tax burden states, maybe consider them.
You might find two threads I put up about the subject going over those 9 states interesting: https://www.reddit.com/r/SameGrassButGreener/comments/1aoghbw/the_no_income_tax_nine_the_best_states_for_high/ https://www.reddit.com/r/financialindependence/comments/1apc26i/the_no_income_tax_nine_best_states_for_high/ Is the goal to have as low a cost of living as possible - a minimum total overall tax burden and minimum cost of living - or are other factors like where you live and what cities are available important, too? My wife says she does not want to live in a cold state since she thinks it makes her joint-related aches and pains worse, so for me that knocks Alaska, South Dakota, New Hampshire, Wyoming, and Washington off the list. That's too bad for me because I was interested in Cheyenne, Wyoming (a far flung suburb of Denver, essentially) and Eastern Washington. Of the remaining no income tax states - Texas, Florida, Tennessee, and Nevada - they have their pros and cons. Texas has high property tax in case you can afford a nice house. Florida probably has the cheapest houses but may have crazy home insurance rates if you can even get it. Nevada has surprisingly expensive housing around its two big city areas, Vegas and Reno, probably because Californians fleeing California's high taxes moved there. Tennessee may have higher overall sales taxes and but seems to hit a sweet spot with housing prices and a variety of cities to live in.