How Moving to Another State Can Boost Your Savings

The question of whether it’s worth it to move to a different state to save on taxes is a significant one. With taxes being one of the highest expenses incurred by individuals, it’s essential to consider the tax implications before making a move.

In this article, we’ll explore the two types of taxes that people should consider before moving to a different state: property tax and state income tax.

Property Tax

Across the nation, different states and regions have varying property tax rates. For instance, New Jersey and Illinois have some of the highest effective property tax rates in the country, while Alabama and Hawaii have some of the lowest.

However, it’s not just the rates that matter; the median home prices in these areas should also be considered when calculating the expected property tax payment.

State	Effective Property Tax Rate	Median Home Price	Annual Property Tax Payment
New Jersey	2.42%	$344,800	$8,200
Illinois	2.21%	$209,100	$4,600
Alabama	0.43%	$154,000	$660
Hawaii	0.27%	$638,000	$1,700

It’s crucial to look at the rates and median home prices in the area or state you’re interested in before making a move, as it will impact how much you pay in property taxes each year.

State Income Tax

State income tax is another significant factor to consider when moving to a different state. States like Florida and Texas have zero state income tax, which means that residents only have to pay federal taxes.

However, states like California and New York have some of the highest state income tax rates in the nation, with California’s highest rate being 13.3% and New York’s being 10.9%.

It’s essential to consider these rates when deciding which state to move to, as they can significantly impact your budget.

Fairness of the Tax System

The issue of tax fairness has been a topic of discussion, with President Biden proposing a 25% minimum tax on people who have $100 million or more in assets.

This proposal has gained support from almost 70% of Americans in swing states. However, the details of this tax, such as whether it will tax unrealized gains or income, are still being developed.

Conclusion

Moving to a different state can significantly impact your tax burden, and it’s essential to consider the property tax and state income tax rates before making a move.

With the ongoing discussions about tax fairness, it’s clear that the tax system is a significant concern for many Americans.

As you consider your options, ask yourself: how can we ensure that the tax system is fair and equitable for all?