#1
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State income tax
If wikipedia is correct, this list of states has no personal income tax:
Alaska Florida Nevada New Hampshire South Dakota Tennessee Texas Washington Wyoming Is it definitely +EV to claim residence in one of these states, or do most of them make up for the loss through relatively exorbitant property taxes and car registration taxes? |
#2
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Re: State income tax
Property taxes, sales taxes, etc...
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#3
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Re: State income tax
It depends on how you spend your money and what your tax bracket is.
1) If you consume every dollar you make, you should be biased towards paying income tax over a sales tax. You'll be able to deduct the income tax from your federal returns. Unless... 2) You make too much money (i.e. $150k+). Then you want a state with high sales tax, low property tax, and low income tax. You will be in AMT range (alternative minimum tax) and you won't be able to deduct all of your state property and income tax from your federal returns. Or if... 3) You save a significant part of your income, you'll want to pay sales taxes, not income taxes, because you only pay sales taxes on a subset of your total income, i.e. you don't pay sales taxes on your savings, your mortgage payments, your insurance payments (typically), services (typically), so it's better to pay sales tax on less than half your income, than income tax on all of your income (depending upon the rates). I used to live in Oregon. Income tax was 9% on all earnings above about 6k per year. No matter what you earn, or save, you are almost better off in any other state than Oregon. |
#4
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Re: State income tax
Sales tax is deductible again in states without income tax (I think I read that they extended this at the last minute). Pain in the rear to keep track of it if you want to deduct your exact receipts, but not so bad if you just claim the standard sales tax deduction.
Tennessee and New Hampshire do tax income from interest and dividends. And Florida has a wealth tax... don't recall the exact number but annually you are expected to tally up the sum of all your bank accounts and brokerage accounts and send them a check for 0.1% or 0.2% of it. Beats income tax for most people, but if you have a giant portfolio of non-dividend-generating stocks and little income, it'd suck. And be careful about the "claim residence" idea. You really are expected to live in the state if you want to claim residence. Doing two vacations a year to Vegas won't pass the tests. I recall reading a story in the newspaper about a famous professional senior golfer who invested in a golf course in Kansas. And he bought a house or condo in one of the communities nestled up against it. In the interview he was quoted as saying, repeatedly, "In case any Kansas tax collection people are reading this, please note... I AM NOT ESTABLISHING RESIDENCE IN KANSAS!! This is just a vacation home. I shall remain a legal resident of Nevada!" [img]/images/graemlins/smile.gif[/img] |
#5
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Re: State income tax
Thanks for the helpful replies.
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