The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: Murr on February 09, 2015, 06:06:09 AM
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I have always thought about moving to lower cost of living place with better weather and better access to outdoors, but never thought too deeply about tax reasons. I am reading Tony Robbins new book(which by the way is just ok, a little repetitive and basic but enteratining); and he has a section on moving for tax reasons. He lists the website howmoneywalks.com and it shows where wealth is moving to and from. PA where I am at currently is "red" while places we would entertain to move like NC/TN/SC are "green". What was most interesting though is you can plug in where you currentl live and your salary and then select where you want to move and it shows what you save in taxes. Essentially at our current salary we would save $12K per year a year by movig to TN, TX or FL! I am in sales and home based so long as I am on the east coast I could move. Biggest reason to not move is we have 2 kids in elementary school. Anyone include this(taxes) in their reasons to move out of state? Anyone move to TN? I have a ton to look at but my interest is gaining momentum.
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I know a number of people in my parents' generation for whom it figures into their retirement plans. State income taxes are a big thing, but also your local/county property taxes can be downright punitive.
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Just keep in mind that states and municipalities need to get revenue somehow. If they're not doing it through income tax, you should try to figure out if it's property or sales taxes.
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To me where you live is the #1 factor of everything in your life. How far to get to family. The weather. The social scene. The political scene.
If you are moving ONLY for money, I think Alaska wins because of the oil pipe checks.
But - let the weather be a nice bonus reason to move someplace ;) Moving from IL to IN (yes, my name is now obsolete), I saved maybe 3k / yr on property tax, and 2% on income tax.. but when I got here I found out that there is a 1.75% county income tax, which takes back a lot of the income tax savings. Bummer, glad I didn't move just for taxes ;)
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Moving for tax reasons should be part of the equation. I went from 11,000 a year in real estate taxes to $3,500 a year. I have to admit, that's definitely adds up to a better 10 year return than pulling the cable plug.
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Just keep in mind that states and municipalities need to get revenue somehow. If they're not doing it through income tax, you should try to figure out if it's property or sales taxes.
Yes, absolutely. We recently moved from MS to FL. I've also lived in GA and SC. I negotiated a higher starting salary at my new employer, and cited several reasons, one of them being cost of living. They came back with "but FL doesn't have income tax, so you'll save money on that". Well, no, I didn't pay income tax in Mississippi, and property taxes (and property prices in general) were half as much as they are in FL. Gas taxes are higher in FL (fortunately that has little effect on us). State sales taxes are actually lower in FL (6% vs. 7%), but municipal sales taxes are more common, which makes it a wash. Basically, Florida's state budget is rigged to make as much money as possible off of tourists and retirees. Neither of those groups would pay much income tax in Florida, so they find more efficient ways to get the money. So despite paying no income tax, our tax load is definitely higher here in FL.
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Different types of taxes affect people differently. If you're the type of person who has an above-average income but a lifestyle well below your means (not an unreasonable assumption here), you'd probably come out ahead in a state and area that taxes sales and property over income.