Feedback on moving to no-income tax state? (Considering WY)

[miranda622]

Hello, Mustachians!

My husband and I are evaluating a potential move, and I'd love some feedback from you wonderful people.

In the last couple of years, we have been focusing on getting closer to FIRE. We run a small marketing agency, which has had employees for the last 3 years, but we are now in the process of transitioning back to a contractor-only model (not through layoffs, but as people have left, we're not replacing), which will allow us to put a lot more into solo 401ks.

We are based in Northern New England, but none of our clients are (they are mostly on the West Coast), so we can technically work from anywhere with high-speed internet.

Where we are now, we have relatively high property taxes ($6.3K per year), and high state income tax (anywhere up to $10.3K in recent years, even maxing out tax deductible accounts). In the plus section, it's a beautiful area in a great school district, we have some friends and family around, and our 2 kids love it here. We were also able to easily find a home exchange for this summer, which we'd like to continue doing.

We've been thinking about potentially making the move to an income-tax free state, and have ruled out a few (Texas, mostly for the heat and traffic). One area that seems like a potentially good option is Cheyenne, Wyoming. Looking at the possibilities there, we could get a brand new house the size we'd need for under $375K (at least $150K less than you could here), with only around $2K/year in property tax, and no state income tax -- so right away we'd be saving around $14K per year in living expenses, and would be able to have either no or a very small mortgage. It's also close enough to Denver (1.5 hrs) to get away easily, and only 45 minutes to Fort Collins. On the downside, we don't have any contacts there and know it's pretty conservative, so not sure if we'd feel really isolated. It does seem to be a great area for hiking/rock climbing, though, which we'd enjoy.

We'd obviously go for a visit before making a decision about it, and it would likely be 2-3 years off -- but does anyone have  familiarity with the region? If so, I'd love to hear your thoughts -- likewise, if you've moved elsewhere for similar reasons, I'd love to learn where you picked and how it worked out.

Thanks!

[ShoulderThingThatGoesUp]

Other options are Washington and Tennessee, right? I know that TN has bonkers sales taxes.

Some states have flat income taxes that aren't very onerous. Pennsylvania's comes to 5.07% between state, municipal, and school district, unless you locate in a particular set of municipalities like Philadelphia city, but you'd of course check on that first.

[Sarah Saverdink]

What about New Hampshire if you enjoy the New England area? Property taxes are a bit higher than WY, but not too bad in most towns.

[ohmylookatthat]

northern nevada

[miranda622]

@Sarah - yes, NH is beautiful, but property taxes are generally much higher. The other issue there is they have a business tax rate of 8%, I believe -- so no income tax is great if you work for someone else, but doesn't really apply if you own the business.

[Rubic]

Other options are Washington and Tennessee, right? I know that TN has bonkers sales taxes.

Can confirm Tennessee sales taxes, the highest in the US at an
average levy of 9.45%.  We even tax groceries, though at a slightly
reduced rate.

We also had a 6% "Hall Tax" on dividends, but that's being gradually
phased out.

If you're a high income earner, but frugal spender, these regressive
taxes work to your advantage.  I'll probably FIRE outside the US and
keep my residency in Tennessee, in part due to no state income
taxes.  Florida would be an option too.

[EXLIer]

What about New Hampshire if you enjoy the New England area? Property taxes are a bit higher than WY, but not too bad in most towns.

A "bit" higher?  More likely easily double on comparatively priced houses. 

Also, doesn't NH have a Business Profits Tax of roughly 8.5%?

OP.  I've spent a lot of time in WY.  You better like wind.  A LOT.  NH, long cold winters!  Both beautiful places but you get more winter than other seasons!

[miranda622]

Thanks for the input so far!

EXLIer, yes, winter and semi-rural environment wouldn't be too big an adjustment, we have both of those where we are. The biggest concern is probably whether being politically/socially liberal (though my husband does enjoy hunting/fishing and veers more towards libertarian in some respects) would make us too uncomfortable in that environment... But if it's more of a live and let live sort of place, I think we'd probably be fine, especially as we wouldn't be looking for jobs there -- we'd probably be able to make the most of having Fort Collins nearby too. The move would probably be a couple of years off, but all going well, we'll try to scope the area out soon.

[mustachemountain]

just a comment on political atmosphere... the mistake is to look at a blue state and think it's all blue, or a red state and think it's all red. usually, and i can't speak for Cheyenne, but usually the margin is thin, the state or the county pulls one way or the other by only a few percentage points.
generally speaking, urban areas are more "liberal" than the surrounding "conservative" countryside, but even then it's not black and white, it is emphatically grey.
your best bet is go there and check it out. if you can, as you allude to, spend a couple of months in the summer actually "living" there, not just on vacation, then that is a fabulous opportunity to see how you feel about the place.
good luck!

[Rubic]

just a comment on political atmosphere... the mistake is to look at a blue state and think it's all blue, or a red state and think it's all red. usually, and i can't speak for Cheyenne, but usually the margin is thin, the state or the county pulls one way or the other by only a few percentage points.
generally speaking, urban areas are more "liberal" than the surrounding "conservative" countryside, but even then it's not black and white, it is emphatically grey.
your best bet is go there and check it out. if you can, as you allude to, spend a couple of months in the summer actually "living" there, not just on vacation, then that is a fabulous opportunity to see how you feel about the place.
good luck!

+1

I've lived in rural Alabama and urban California. It's a mistake to judge
the entirety of an area based on simple majority skew.
 

[JoJo]

Someone mentioned Washington state...

PNW is great and I've been able to benefit from reasonable taxes in WA state in the last 10 years but they're creeping up...

For the first time ever, Gov, Sen & House are Dem controlled so many think they will find a way to pass income taxes.

Sales tax varies a little by city but is 10% in most locations.

I just bought a car and paid $3000 for lic & taxes on a 20K car.  Sounds like renewal will be in the neighborhood of $300 for tabs...much of this to pay for public transit (which is pretty bad and not practical for getting to work... 25 min vs. 1 hour 20 min each way). 

I often pay $3 for gas (was $2.25 in Minnesota at Christmas)

Property taxes are somewhat reasonable (about 1% of value) but my valuation has gone up 36% in 2018. 

Car insurance and earthquake insurance is high.

If you're running a business, look at the B&O tax - you may need to pay that.

[vodsonic]

I've been to Cheyenne a couple of times. It doesn't seem like a bad town, but it's got a flat, midwestern feel compared to more mountainous places I've lived. The proximity to Denver that you mentioned can be a bonus, but I've also driven that route and found it shockingly congested for a corridor through rural flyover country.

I did a lot of research years ago into relocation options, with a lot of the same goals you've expressed here. While no-income tax states started very high on my list, I found other tradeoffs the more I dug. If you run a retail or mail-order business, or ever plan to, there is a nice advantage to living in a state with no sales tax.

Both Idaho and Montana have an income tax, but towards the lower end of the spectrum. Montana has no sales tax. Both states have a lot of potential for lower-cost living across the board, with reasonable-to-low property taxes. Idaho has a pretty big homeowner-occupant discount on property taxes, too. Insurance rates tend to be low in both states, also.

Boise is a fun, vibrant city, and I'm sure there are some other good spots in southern Idaho. The panhandle is much greener, and an odd mix of touristy and survivalist, but I quite enjoy spending time there. You can live in Coeur d'Alene or its neighbor to the west, Post Falls, and be within 30-40 minutes of Spokane, WA for its shopping and airport.

Montana is a huge state, mountainous in the west, and more like Cheyenne out east. Things are spread out, so it helps if you like driving. The plus is that there's beautiful scenery just about everywhere you drive.

Kalispell and Missoula might be worth a look, along with the surrounding smaller towns and bedroom communities in the rural areas. Flight connections aren't stellar out of their smaller airports, but the towns are pretty happenin'. There's also a healthy, diverse mix of political viewpoints, coupled with a very strong and very neighborly live-and-let-live vibe.

I think New Mexico, particularly the Santa Fe area, usually gets overlooked in this type of discussion, but might be worth investigating.