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State Taxes and Deciding Where to Live


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    Do you factor in state tax rates when considering what state you might want to move to? Let's assume all other factors are equal and you want to move to another state.. would a state having a higher or lower or even no state taxes tip the scales one way or another for you?

    I would have never considered this at all, until I lived in a state that has state taxes, and was unpleasantly surprised to get a second tax bill at year's end, simply because I moved from Texas to North Carolina for a few years.

    I was spoiled by no state taxes in Texas. And now I live in Texas again and feel lucky not to have to worry about it. Honestly would like to move to other states in the future, but now I at least consider the added expense. California for example seems much less attractive now. It goes into my 'cost of living' thinking now.

    Similar question for those living in states with high state taxes, does it make you want to leave, for cheaper pastures?

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    It definitely tips the scales for me. Having been born and raised in Texas and growing up to understand money and adulthood, I couldn't live in a state with income taxes. Granted, I haven't lived in any other state, but I've traveled to many. Although I do enjoy other states, I still don't see myself moving for many reasons. Not to mention my state's economy is doing well, and it has a lot to offer as far as travel and entertainment goes. My wife and I used to dream of moving to California or Colorado, but I couldn't imagine what it would be like having to not only adjust to the cost of living, but state income taxes as well.
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    I would, all things being equal. Problem is that's rarely the case for anyone. I would say the only time it probably stops people is if its too expensive to live there. Its one thing to save by being in Florida vs New York on state taxes, but if you really want to live in NYC and can afford it over Orlando, I doubt that stops most people. Wouldn't stop me, but I can't afford NYC now so kinda moot.
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    WyattTown Wrote: Do you factor in state tax rates when considering what state you might want to move to? Let's assume all other factors are equal and you want to move to another state.. would a state having a higher or lower or even no state taxes tip the scales one way or another for you?

    I can honestly say I didn't once think about the Oregon state tax rate before moving here in 2012. What I did think about was the fact that I could go for a hike on a mountain and then head to the coast and swim in the ocean on the same day!

    In all seriousness, I don't see why a states tax rates play much of any role for people who *choose* to move somewhere. (I can see why they would if someone has to relocate for employment or other purposes.) But for people who choose to move somewhere, you can pretty much assume they have the income to do so.

    You spoke about Texas. Sure, Texas doesn't have a state income tax, but they do have an effective total state tax rate of 12.71% while my "high tax" state of Oregon has an effective total state tax rate of 9.05%. That's because Texas has a pretty high sales tax when Oregon has none and Texas also has pretty high real estate taxes, among other things, when Oregon does not.

    The way I look at it is states will figure out a way to get money one way or another. Would I prefer to have a modest sales tax that I pay every time I go shopping instead of a huge state income tax bill I pay quarterly? Sure. However, I will say it was pretty nice when my wife and I bought a new car a couple years ago and the price we paid was the price on the sticker.

    WyattTown Wrote: I was spoiled by no state taxes in Texas. And now I live in Texas again and feel lucky not to have to worry about it. Honestly would like to move to other states in the future, but now I at least consider the added expense. California for example seems much less attractive now. It goes into my 'cost of living' thinking now.

    It's hard to believe, but California's effective total state tax is 8.94%, which ranks it as one of the best states to live in for taxes, all things considered. I'm not suggesting someone making $20,000 a year in San Francisco is living the dream, but California is a huge state and there are plenty of reasonably priced towns, modest cities, and suburbs that are quite affordable.

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    state taxes had a huge impact on where I decided to live. I was looking at decent house in a pretty nice area where I'm at but the taxes were really high. I decided to get a much nice house 15 minutes down the road because it was technically across the boarder. Saved me a bunch in taxes.