5 State RETIREMENT Tax Considerations You're Likely Not Considering... (State Taxes Explained)
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- เผยแพร่เมื่อ 18 พ.ค. 2024
- Do you have a tax-efficient retirement plan that minimizes taxes at both the federal and state level? If not, you are leaving wealth on the table... You can schedule an appointment with one of our Retirement Experts to look at your situation and help you plan for your future. Call us at (920) 544-0576 or go to www.safeguardinvest.com/contact.
In today's video we take a make comprehensive look at the state taxes you may owe in retirement and how to find the most tax-friendly state for YOUR retirement.
Timestamps:
0:00 It's Not Just About State Income Taxes...
1:49 State Tax Consideration #1
3:02 State Tax Consideration #2
5:12 State Tax Consideration #3
6:14 State Tax Consideration #4
8:29 State Tax Consideration #5
10:21 Choosing Your Ideal Retirement Location
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This is such an important topic. I have family in FL and TX and I tell people all the time not to fall for the no income tax narrative. Both of these states have no income tax and my relatives always complain about their absurdly high property tax, sales tax and other various fees. You have to look at the total tax (and fee) picture, not just income tax.
FL, TX property taxes are most likely no where near some or many of NY counties, similarly NJ too. This is why many from NY migrate to FL and TX everyday.
Property taxes need to largely be capped at the time of purchase. Just because an area becomes desirable the homeowners should not be forced to move because their home is worth more. California's prop 13 does this and limit's increases in the property tax bill to 1-2%/year depending on county. After all, your house being worth more does nothing to increase your income, especially if you are retired. And you should not be forced to move from the neighborhood you love because of increasing property taxes.
Property Taxes in TX vary based on school district
@@jonnynash364 That's the case in just about every state.
@@flywall3216 You hit the nail on the head. Just because the house appreciates, it does not mean your income goes up to cover prop tax increases, especially hard for retired. They basically force you to move to places like FL, TX or many other places that tax far less than in NY, NJ, many north east states.
Huge lesson we learned in FL. Look at the whole picture. Car insurance, homeowners insurance, property tax and skyrocketing utilities may cancel out the tax advantage.
heath care which is extremely important for retirees. Many people I know, have come back to NY, because FL Health is no where near what you get in NY, and the older you get the more expensive it will become and the more you'll be using the services.
@@colombiantom yes, and in FL you're likely to need one or more cars; in NYC, you're not. An enormous savings.
@@DonLicuala If you rent an apartment or own a condo or co-op, you don't do any shoveling. Older homeowners can hire a local service if they're not up to it. In FL 70 year olds need to worry about heat exhaustion and hurricane recovery.
@@DonLicuala No crime in FL? We have local radio jockeys joking about the level of crime aimed at seniors and students.
@@emichaelny336 Living in NYC has to be one of the most expensive places to live on the east coast.
You can get a decent used car for $15-20K, and operating costs are not that great. If you don't like (or can't) drive that's one thing, but a car is not a make or break thing.
We live in Alaska where there is no state income tax, no state sales tax. The first $200,000 of property tax assessed is waived for seniors over 65 years old. Plus an annual Permanent Fund Dividend check from state oil investments for every state resident regardless of age.
Who would want to retire in AL, polar bears? 😂
The extreme cold, darkness and ice not good for seniors.
@@riverrock335 Cross country skiing is great exercise for seniors.
@@rainacherienne1010 Fishing and Hunting Paradise!
You are going to have to learn to speak Russian soon though.
One tax I never see anyone discuss is “personal property tax” which can be a surprise when licensing vehicles and campers and/boats
VA is one of them.
So is NC
And MO
it’s a “fee” not a tax is the ruse
CA hits you here, plus gas taxes, tires, batteries...
Seems like a spreadsheet could be made that allows one to enter all forms of income, real estate, and spending then ranks the states highest to lowest in total taxes.
That's a very good idea but the government wouldn't allow that because it would expose loop holes which would be taken advantage of, which probably mean they won't be loop holes for long but if you do enough research yourself you can find the best one but they're all getting pretty pretty high in tax percentage on the income made
There is not a way any government would be able to prevent such a spreadsheet from being made. After all, it is JUST information - PUBLIC information too. If it available to CPAs, then it cannot be hidden by the Government. And certainly everyone has the right to see what taxes they will pay, the money cannot just be taken from you without your knowledge. @@Joseph96752
I did that back in 2015 when my wife and I were first authorized to work from home. We had 35 target metros in about 20 states where I put together 75 factors that mattered to us with color coded grading scheme and all forms of taxes were included based on our income, expected spending, desired house characteristics (to apply a median house price).
@@path4061how did that work out?
@@cxkelley Ended up moving from our selected location in a little more than 1 year. This was mainly due to family reasons (on my wife's side). However, the house we selected and built brand new doubled in value over the course of 7 years (basically 10% CAGR) and served us *okay* as a rental property up until we sold it.
I laughed out loud when you described work as a "suboptimal hobby". That's exactly right! Thanks for helping me reframe the next few years of the grind.
It depends on what you do for work, doesn't it? Some people actually enjoy what they do, so there is that to consider in financial planning 😊
in addition to STATE taxes, dont forget the LOCAL taxes, many COUNTIES/LOCAL GOVERNMENTS also add on top of state tax... sometimes adding 50% above the state tax
WOW! As usual you did a lot of research . Thanks for all you do!
Some things get even more complicated. For example, KY did not change their sales tax rate, but about 2 years ago they expanded it so that now services are subject to sales tax--so things like getting your hair cut or lawn mowed are now taxed.
and still has a big income Tax
KY also has a Income Tax
@@dknowles60 They used to exempt %40K of retirement income, and decreases that to $31K.
Excellent video with so much information! I have been googling the topic and got bits and pieces but your video has a lot more. Thank you!
Thank you. 👍👍 This video is a great public service and should be watched by anyone thinking about retiring elsewhere.
Bravo. You are the first person to correctly analyze tax burden.
We retired to Texas because everyone said it was the best place for money. We lasted 5 years. We realized unless you were born in Texas or in the South, the social dynamics didn't match us at all. The amount of property taxes we were paying were really high and they kept going up. The schools and healthcare were not too great either. The weather is what ultimately made us move to California. Nobody talks about the heat, humidity, pollen, and bugs. It was just too much for us.
We returned home to California and live very happily in Napa. Sure, it is more expensive, but not that much more expensive than Texas, and the return for what we get is incredible. The weather is fantastic, excellent schools and healthcare, so much to do here. There is something to the people here, so diverse and always trying to get better. When we were in Texas I swear it felt like everyone wanted to live like it was 1985. I just didn't get it.
If you can afford a place, then I would move to where you are most happy. For us, it was California.
This was a well done video. Thanks for the info!
Moving to Tennessee from Minnesota dropped state income tax by 7.5%, property tax 90%, for a .5% Increase in sales tax.
Does where you want to live come into the decision? Seems like looking at costs alone will lead to some poor decisions for some who do not consider the community and culture of the place that may be financially attractive on paper 😊
@@mike-uw6wt with the summers that is a fair con, but I do enjoy the black bears
@mj8495 my in laws live down here. First time we've had a baby sitter.
@@mike-uw6wtretired to TN. Great state to live in. One of the reasons so many people are moving here. Here are a few reasons:
1. One of the lowest overall tax burden states in the nation
2. Low cost of living
3. Low cost of real estate
4. Lots of beautiful places to live. Not many places where you can get a nice house on the river for around $300k
5. Good health care.
6. Free first two years of college - including for people who are older
7. Much less traffic and better roads than so many places
8. People are very friendly and will help each other all the time. The other thing I have found is that the kids are overall very polite and respectful (of course not all but the majority)
9. Cities such as Chattanooga, Knoxville and Nashville that vibrant, great music, great food, and easy to get in and out of. Also lots of places to get outdoors- Chattanooga River walk is so great
10. The climate is excellent- can be hot in the summer but overall mild winters and wonderful spring and fall
That is to name just a few.
@@BoomMC_Inc sounds like a win, congrats
When I retired, we moved from South Florida to central New Hampshire. Everything is cheaper in NH. That includes taxes, insurance, utilities and groceries.
Something to note is that property taxes vary greatly within most states depending on the county and city. In NH I could be paying 3 times as much within the state.
In Maryland, you need to add about 3% local county income tax to the state income tax.
You have to look at property tax by jurisdiction, not by state. Texas may have low property taxes overall, but the city of Austin is very high. So you have to look at the exact place you want to live. Same goes for Maryland. Property tax rates in Chevy Chase are very low, but Germantown is much higher-same county, but different jurisdiction.
So true. The comparison in the video of a $250k home in SC vs TX needs more context. A $250k home just about anywhere in SC is going to be a much bigger, nicer home than a $250k home in Austin.
Thank you. When factoring your considerations into my pending move to a low tax state (TX). I found I'll be paying more taxes than I thought I would, but it's also not as bleak as the example.
Great info and some of the analysis depends on what your retirement income is, and how expensive the home is where you decide to live in
State and local sales taxes are also dependent upon what some of your shopping choices are.
We live in MN and for us, the high income and property taxes are no fun.
It will be even worse if we die in MN.
There are a few reasons why we remain but someday soon we may move to SD, TN, TX, or FL.
We may also try a year or two in each.
Enjoyed your vid. As my econ prof said decades ago, "no such thing as a free lunch so you better look at the back of the menu". Thx
Another thing to look at is the price you will pay for homeowners insurace. Property taxes can be misleading also because many municipalities add on city and school taxes. Because of this you don't get a clear picture of what you will actually pay when looking at some of these sites that give you the average property taxes for a state.
Literally this. Between homeowners insurance, county, local (township/municipality) and school property taxes (which I'm in one that's in lower half of the millage rates compared to the rest of the county), that amounts to more than my annual mortgage payment..even with a homestead credit.
This is in one of the "Most affordable cities" in the country (because the articles and websites flat out ignore the property taxes, especially schools in Pennsylvania)
During my research, they tend to get you one way or another. If it's not income tax, it's vehicle registration and if it's not that, it's property tax. The differences aren't as big as they might seem, not to mention cost of living, median home costs, etc.
Tennessee has no income tax, but 10% sales tax (as an example of what you're saying).
@@teekay_1 Yeah, Texas has no income tax, decent sales tax, very low vehicle registration fees but the property tax is where they get you. Pick your poison.
Unless you live in Alaska. No state income tax. No state sales tax. Property tax exemption on over $220K after age 65. Property taxes went down overall by over 8% this year. Alaska pays every resident an annual dividend since 1982 of over $1200 a year. Car tags convert to "Z TAGS" (Permanant Registration) after car is 8 years old or older. Insurance costs are lower. I pay $2400 a year to insure 3 cars, homeowners and umbrella policy. Utilities have not gone up in the last 5 years. Inflation is low overall as some things have gone up but other things have gone down.
Im 50 and retired 4 years ago. I have no intention of leaving Alaska. I also own property where there are no taxes at all. Alaska is the only state where there are areas where there is no property tax at all.
@@ALCAN52 Well, yeah, but then you have to live in Alaska. Some might love it, but it's not for everyone. I want to be somewhere that stays well above freezing.
@@ALCAN52 currently that is the case. But as cars switch to EVs the Alaska oil money that allows those low taxes will dry up. My guess is in the next decade or so Alaska will be looking at a state income tax and/or sales tax.
Very helpful and interesting, thanks for sharing!
Thanks for the information!
A good video for rich people. Most retirees have less than 50K/yr income. Most states ignore low income retirees in taxation. Live someplace beautiful, where family, friends, and you look forward to the day.
Just an update to your map. Washington’s capital gains tax has been stuck down as unconstitutional by a superior court. It is currently being appealed to the State Supreme Court who have schedule to hear it this month.
Super helpful. Thank you!
Well researched and explained! Would like to see a full summary table with all states and tax types
California's income taxe rates are a bit deceiving because everyone likes to focus on the top rate of 13%.
But the lower and middle tax brackets are actually quite reasonable. I made $82,000 last year in California and my effective state income tax rate was around 5%.
Oregon has the worst income tax, because you hit 9% before you get to $5k. And yeah we don't have a sales tax, but have a horrible property tax. I'd rather pay 9% on what I spend than on what I earn.
I don't know what you mean by 'effective' tax rate, but the CA marginal rate on $82k is 6% for married, and 9.3% for single filers.
@@captsorghum Effective tax rate is the total taxes paid divided by gross income. Its more representative of your actual tax burden.
I'm not saying 5% is low but it's comparable to many other states.
And Ca still has Prop 13 which limits property taxes, they also don't tax social security or pensions. So if your not make much money in retirement CA is not bad, but no one can ever retire because they screw you so bad when your working. So people just work and die.
@@scotttild Make no mistake, CA has massive downsides and is not a good place to live right now. I just figured it was appropriate to dispel this widespread notion that everyone in CA pays ultra-high income taxes. It's just not the case. I just tell it like it is.
An important topic, thanks!
Many get so focused on specific taxes, car registration prices etc. Services and infrastructure cost money everywhere, that money has to come from somewhere, if it's not one tax it's another.
I moved to PA which has no income tax on retirement income, food and clothing are sales tax exempt, and live in an area where the property taxes are low. The gas tax is high but now that we are retired we don't drive much at all. We live in a town and are within 3 blocks of everything except grocery stores and shopping malls. It has an inheritance tax but spouses are exempt and children and grandchildren have a reduced rate. We are very happy with our decision to move here.
To benefit from Florida's no income tax, you must be a high income earner. If you make $60k to $200k, the reduction in income tax and cheaper real estate prices vs CA are not enough to justify the move. In FL, your property tax is reassessed to market every year and the average tax rate is 2.5x of Ca. Example, if you bought a 500k house in CA 3yrs ago and it's now worth 750k, your tax rate is still roughly 1.25% of the 500k purchase price (6k yr in property tax). Whereas in FL, you're paying 2.5% of the new assessed value of 750k (19k yr in prop tax). Also, you can insure a house in CA for $1000yr. Earthquake is anther $150yr. Insurance in Florida for a single family home is about 5x of CA. Tax and insurance costs in FL combined with the above scenario is an extra $18k a year. Just to break even with no state income tax you have to make about 180k a year. Forget saving money, just to break even.
And Florida also weather issues like Hurricanes and the associated insurance cost or lack of available insurance as more and more insurance companies leave the state.
Nice video. Great to see someone talk about all of the little things that eat at your retirement budget. I might add the cost of maintenance, insurance, and utilities of a home or condo. Things like paying for snow cleanup, hurricane insurance, etc. should be factored into an annual budget.
Yes! Where I live, many condos have frightful HOA fees over $1k/month! And unlike property taxes which are subject to the 2 1/2% rule in the absence of an override, there’s no ceiling on how high they could go!
So true in most cases. My Dad moved to Michigan from Massachusetts to retire because Michigan has cheaper housing and rent then most areas in Massachusetts but he's moving back after 6 years because after all considered he's paying more in things like car insurance and food prices and not having the same options as in Massachusetts especially being close by to neighboring states for competition on certain goods and services. Sure Massachusetts can be Taxachusetts but can also be similar to most other states when considering a lot of factors and what you actually pay for and have like employment opportunities, rate of salaries, access to quality Healthcare and education, transportation opportunities, infrastructure, crime rate, climate, income inequality gap, substance abuse and impact, competition from close by states or are you confined to just that state and it's way of business rather then having other states that may or may not be competitive in goods and services while being a short drive away. Always do your own research then relying on just one aspect or hyped version of what could be rather then what actually is ✌🏽❤
Yes! Long-time Massachusetts snow-loving resident here. Our cost of housing here is through the roof, but there’s a high return on investment in exactly the aspects you detail. Even within the state, the numbers can look very different due to property taxes (mostly due to public schools) and local add-ons. Every now and then, I re-examine the costs, relative to other states, but always decide my quality of life couldn’t be better anywhere else. From HMart to Wegman’s to local farm stands to zipping up route 3 to NH’s Market Baskets, from live world-class music to the best health care in the nation, from very messy town meetings to access to the Atlantic ocean, we seem to have it all. But surely at a price. I do hope your dad didn’t take too much of a financial hit moving back, housing wise.
@@FR-tb7xh thanks for the acknowledgement. My Dad hasn't moved yet but is in a few months, needs to sell his condo first. He already knows what to expect as he's from RI and lived in MA for over 20 years and has his family as well as me to update him on living here. I ponder like you often on retiring in another drier state but can't see the point when all things are considered. No wonder why MA and neighboring states get high marks for best states to live in the country.
So Wise , Thank You
Thank you, great video.
Not mentioned is that various taxes in many states differ depending on your city/county. For example, most of the counties in CA have added sales tax and property tax.
Yep, some Bay Area cities are 10%+/-
One strategy might be to live in a state that is has zero income tax, but live in a border town, where you go to another state to make purchases. For example if you live in Tennessee, shop in Georgia, where state sales tax is only 2% to 6%. I think the sales tax in Tennessee is 9%.
The problem with that idea is that then you will have to live in said town and border towns may not be desirable places to live. Then there is the cost in time and cost in gas where you may be spending far more in gas than what you are saving in sales taxes. Say you have a pickup truck that costs you say $.20 a mile in gas but you might save less than a dollar in sales tax. Is it really worth all the bother to drive say a two hour round trip to the next town that is cross the state line just to save a dollar or two in sales tax?
@@Donkeyearsa TN is an absolute hellscape. I can't wait to leave.
@@Donkeyearsa Conversely consider Washington State with 8 to 10 percent. You can drive 2 hour over the border with OR, which has no sales tax. On a $3500 item, say big screen TV, you save $350 in sales taxes. Other items such as farm equipmemt or shop equipmemt can garner sVings in the thousands of dollars. So, in some cases with high ticket items not requiring registrations., it IS well worth it.
That's EXACTLY what I did! Live in Johnson county Tennessee. 30 minute drive to N. C or VA.
Every state with sales tax also has use tax, which means you couldn’t technically bring back and use the item you bought in the border state unless you declared and paid the use tax to your own state, thus defeating the purpose. Granted, it may not be enforced unless you’re purchasing large items and the state has some reason to look into it, but it’s something to be aware of.
Really eye-opening video on state retirement tax considerations. Made a complex topic easy to understand. A must-watch for future planning.
excellent , informative video, thx.
Additionally, there are special situations that you may fall into. If you were in the military in the 80s and receive a retirement check--NC does not tax that income (Bailey Decision).
Other part is that Counties also can ADD taxes to the state rate. Especially closer to metro areas.
Thanks for telling the whole story people always brag about zero state tax they just dont tell the whole story..
Same thing happens with comparing countries...
I would love to see your comparison of total costs between Minnesota and South Dakota. Thank you so much for this helpful information!
He seems to suggest (#3) is one might shift from one state to another, depending on the financial situation. That is a very expensive endeavor for those with middle-class wealth, especially with the dramatic rise in housing prices seen in many states.
Thank you for this great informative information, I am new here in Alabama
One of the things with property taxes is whether you are paying against assessed value or market value.
Assessed value is the state's opinion of what market value is. You might be thinking of taxable value.
@@FreedomTalkMedia No, assessed value is the correct term, at least in some places. In California, where I live, my assessed value (what I actually pay tax on) is much lower than the market value of my house, because the state imposes a limit on how fast the assessed value can increase (it can increase by no more than 2% per year). So if you've owned your house for a long time (which is the case for many retirees), you're paying much lower than market-rate property tax.
@@DaveBroTube So they are just using a different terms in different states.
Great point. I live in WA and while there is no state tax (for now but my gut tells me that might change), everything else is extremely expense from home prices/rents, food, gas, high sales tax and depending upon the county, you will pay very high automobile registration. Because real estate has increased to insane levels, so has property taxes gone up in counties that use to be more affordable so yeah, I won't be paying any state taxes on my SS or my 401K withdrawals, but I am paying dearly in other areas.
Do you mean Washington DC? Washington has a 6.50 percent state sales rate, a max local sales tax rate of 4.10 percent, and an average combined state and local sales tax rate of 8.86 percent
@@RetrieverTrainingAloneobviously not, no one calls DC "WA", and Washington state is well known for not having personal income tax
@@Datamining101 We live in Alaska where there is no state income tax, no state sales tax. The first $200,000 of property tax assessed is waived for seniors over 65 years old. Plus an annual Permanent Fund Dividend check from state oil investments for every state resident regardless of age.
Florida is more expensive than people realize. A huge expense is your property insurance due to hurricanes. Also, having your home hit, damaged by a hurricane is very emotionally taxing leading to health issues related to high stress such as heart attacks, strokes and worsening of many health issues. Texas has a very expensive economy especially DFW and other big cities. Property taxes in Tx are high. And the weather in Tx in summer is extremely hot, temps over 100 degrees for weeks, months, making it uncomfortable to impossible to enjoy outdoor activities. There are other things about different areas to take into consideration besides taxes.
This was a great video. We get so many people bitching about living in one state vs another. I always tell them that if a state wants your money they will find a way to get it.
I would think that there would be another tax situation that could be added to this conversation. There are states where people still pay tangible personal property and/or durable assets taxes.
Yes. While living in Arlington VA in 2014-2018 we payed personal property taxes on our vehicles. Had three cars, with children still at home, Arlington County personal property tax on the vehicles was over $4,000 one year. You do get a sticker for each car.
Since there exist an infinite variety of types and amounts of income, expenses and assets and since each state imposes its unique complex tax regime, a full and proper analysis is beyond human comprehension. Even the most advanced computer analysis couldn't included how far one would be willing to travel to purchase goods free of sales tax or gasoline across a state line.
I think the best one can do is to identify some likely choices and then work out a pro forma tax computation for each one.
Everyone has preconceived opinions about certain regions and certain states regarding weather, culture, taxes, etc. I have been happily and economically retired for years in a town that I discovered accidentally in a state that neither I nor any "expert" would have thought to consider. The house I sold to move here afterward appreciated enough to outweigh any tax considerations. So life is a bewildering mixture of rational action and pure chance.
California property tax can be ridiculously low if you bought your house a long time ago. The property tax is based on purchase price
You also need to look at available services, not just taxes. So if you need, say, open heart surgery, or brain surgery for a stroke, you need to know what states offer in terms of medical facilities. And available doctors (i.e., how many physicians are available in your area, especially if you have medical needs).
Yes that is why I moved to Delaware, low taxes and insurance along with a good healthcare system.
@@Johnbaker-pt8rn I was thinking about deleware. How do you feel about it after the fact? Would you still do it? Where are the places in delftware you would recommend and why? If you don't mind.
a few years ago I was contemplating an Arizona move from California. When I ran the numbers the real savings was only in gas. I figured not really worth it considering in retirement won't be driving too much.
Would the HVAC costs be high? Arizona summers are brutal. 🥵
Great video!
Other considerations: age at retirement, vehicle registration/license fees, and potential excise taxes! We would be moving from a state with no sales tax to a state with no state income tax… big difference in what we’d pay just for our vehicles between South Dakota, Wyoming, Texas, and Tennessee! So much to think about!!
South Carolina drastically reduces your property taxes once you reach retirement age (65 I believe). Further, even if you aren't retirement age, if your home is your primary residence, you get a big tax savings over someone who doesn't live in SC full time or vs. a 2nd property.
Other states may do this as well - I don't know if this analysis takes this info into account.
Excellent info - we are deciding on this now. We live in RI and thinking about SC, TN, GA. Will do these 5 comparisons for sure. Thank you!
There are literally no services in TN - it is more expensive here than in RI.
He missed the fine print of the laws.
In Ga. the state does NOT tax retirement income (SS, 401k, pension) and at age 65, $65,000 in regular income is excluded from state income tax. Botton line I pay 0 state income tax.
My Ga property tax is less than 1% of my home's actual value and at age 70, the school portion of property tax is eliminated (you have to apply for this) so 75% of my property tax bill is eliminated also. Sales tax is 8% and there is no ad valorem tax. Car insurance $550 per vehicle and home insurance 0.5% of homes actual value, but that varies by area
On 3:11 you compared SC vs TX, could you please breakdown or more details how you ended up with those state taxes number please?
Thank you for your video.
Missouri just changed their taxes related to Seniors in 2024. They’re giving Seniors bigger breaks. No longer taxing Social Security. In many counties they also freeze your property taxes so that tax won’t go up.
I have moved from south carolina to wyoming and I love it. Great state.
A non-tax input I put on my list a few years back is the prevalence of medical bankruptcy in a state. Turns out it concentrates in certain states, which I suspect says something about what you get for your money in that state.
Ok, what states have highest medical bankruptcies?
Looking back at my notes - it wasn't medical bankruptcies directly, it was unpaid medical bills and bills in collections. I had donated some money to RIP Medical Debt, and was considering whether to give some more. I found myself concerned that a lot of their forgiveness was concentrated in certain geographical areas. But then when I tried to find numbers on where medical debt and medical debt in collections was highest, it was in the same geographical areas. The highest numbers are in the south, the lowest are in the northeast and west - though in each area there are outliers. AFAICT, part of this starts at the coverage end (whether the state's approach to healthcare is expansion or minimization), but part of it is also at the protection end (how lack of ability to pay is handled). My concern is the resulting culture, as I've had a few intensive interactions with the healthcare system in my life, and sometimes the problem isn't whether something is possible, it's that they simply ignore you while things unravel.
Anyhow, low tax rates isn't a huge advantage if it also risks poorly-addressed health conditions.
@@ScottHess thanks so much for a well thought out reply. It’s refreshing to see that kind of info being shared here.
I wouldn't use the max tax rate for each state as that can be deceiving since it typically impacts a small % of residents. Ex. NJ top rate is 10.75% but that is for income OVER $5 mil per year. 99% of all NJ residents will pay no more than 6.37% (up to $500K) for a married couple..
Thanks for the video and pointing out that we need to input our own personal numbers and look at more than just tax rates to estimate what our expenses might be living in any particular locaation. I live in a City in Ga and I pay No State Income Tax on SSA and Pension, and my City/County Property Tax on a Studio Condo is $33/mo after Homestead Exemption. There is roughly a 4% tax on Food and Sales Tax is 9%, but can be as low as 5% depending on County. (I can shop in the next County 4miles away and pay 6%). Food prices here are a bit below National Average, if you shop sales. Gasoline is at the National Average and there is a one time lumpsum 8% State Tax on any vehicle you bring or buy, that can be hefty for a late model car or truck.
The only lower tax situation for me that I have found is to live in Vancouver,Wa (no income Tax) and shopping just across the river in Portland, Or, (no Sales Tax.) but I would Rent an Apartment there which would put my costs higher for lodging.
Each state has its own income tax rates, and these rates can vary widely. Some states, like Florida, Texas, Nevada, and Washington, have no state income tax, which can be advantageous for retirees. Other states have progressive income tax rates that may increase as your income grows. It's important to consider how state income taxes will affect your retirement income and choose a state with favorable tax rates>>>
Colorado Property Tax really depends on if you are lucky enough to find a home that is not in a newer HOA. The newer HOAs have special taxing authority to pay for the neighborhoods infrastructure. We were paying close to 1% property tax on a house that was close to the median value for Denver area.
Tennessee likes to present itself as a "no income tax" state, but you have to read the fine print to get the honest story. Tennessee DOES tax income derived from investments - ie - dividends.
In Georgia, we do not pay property tax to the state, only to city and/or county governments.
Don’t forget about annual personal property tax which can be very significant in some states
There are plenty of articles every year that list “total tax burden” - that’s what you have to consider. Also tax “rate” can be misleading. Use absolute dollars for property taxes. California has a 1% tax rate but applied to the highest RE values in the country, property taxes can be staggering on higher priced properties.
Regardless of your state of residence, if you own property or an online bank account in one of the states which has an inheritance tax, your heirs will be in for a rude surprise when they learn that a remote state suddenly wants a cut of their inheritance (and is legally entitled to same)!
I like seeing you in person talking! I know your not like an AI algorithm. Thanks Man!🤙🤙🤙🤙🤙
One thing to mention, even though California has the highest marginal tax bracket in the country, the 13.3% is the bracket for couple's making over $1.25 million annually. If you look at the bracket sizes, you'll find that the effective rate is fairly modest for an average income. Some states have a flat tax and many states who have tax brackets automatically push average earners into the highest bracket fairly quickly. For example, my household income in 2021 was about 160K. Even though I was in the 9.3% tax bracket, my effective California state income tax rate was 3% after deductions. In fact, I cross checked my state income tax rate with all 49 other states and amazingly I would pay more in state income tax in about 35 other states compared to California.
As a long time California resident I have often argued this same point. The narrative that California was business unfriendly is a lie promoted by the right to inveigle people to their state. The plain fact is that taxes are not crazy in CA. The wealthy get a high tax on their capital gains but then they are making so much it still doesn't matter to them. Their mansions in Malibu are getting taxed at a fraction of homes in other states and even then get startling exemptions. Businesses have a lot of loopholes to avoid a step up in the very low property taxes when they buy property so even these guys are making out like bandits.
The truth is that housing is expensive because everyone in the world wants to live in California. Demand equals expense. Pure economics
@@Indy_at_the_beach Its not a lie on the business unfriendliness. Elon Musk said it best on why he build his new factory in Texas rather then CA. "It takes more time to get through the permits in CA then it does to build the factory in Texas". He build his entire new factory in less then two years in Texas and it would take a year in a half in CA just to get the permits. Not only is CA business unfriendly it especially towards small business. The amount of tax and permits makes it undoable. Why do you think a majority of small and big business are leaving CA. Chevron, McKesson, Just took over 10,000 jobs out and moved their headquarters to Tx, and that's just two big ones that left SF. And its not just those two. Over the last 10 year CA has a net loss of incoming or new business. SO to say that CA is a business friendly state is just a flat out lie. Its not.
@@scotttild The whole permit argument is VERY jurisdiction specific. If you want to build in Alameda County the permit process sucks! If you want to build in Turlock it is much less obnoxious. In general Counties are worse than cities. Exceptions are towns like Palo Alto. OMG never try to build there.
Every state has to get income to meet its needs and having lived in FL and now TX, I fully understand how higher property taxes in these states make up for no income tax. However, when we were searching for homes in TX, I was amazed how the property taxes varied by county. We ended up choosing a home in Hood county (outside of Ft Worth) where property taxes were 30% cheaper than neighboring counties. Being over 65, we also have the benefit of our property taxes being frozen for as long as we remain in our home.
Thank you for the information! We are going to retire to Virginia from Maryland.
The graphic is great but the colors are all so close it makes it hard to tell if eyesight is not so great....lol!
interesting video, thanks. I find myself wondering how to better display the sales tax rate, the average just doesn't paint the right picture. In some of the states I've lived in, the actual tax rate you pay can be less than 50% of what is listed on the video. this applies mostly for 'big purchases' like cars and delivered items. would shoing a range be better and then dividing the calculation into some proportion based on brick and morter and online purchases? I submitted a case to amazon because I noticed they didn't calculate the taxes correctly and I got $400+ back.
need a spread sheet with all these figures for all states as there are other considerations besides taxes when choosing were to live.
Any chance we can get a copy of those charts / lists? I'd like to run some scenarios with them. Thank you.
By the way, food is subject to sales tax in South Dakota. And Tennessee as I just discovered when searching for their sales tax rate (7% plus local; food is 4% + local).
Political and social climate is also important. Choosing where to live should not be decide solely on financial considerations alone. But, I like this video. A nice video reminding us to consider everything before making a decision.
As for states with a sales tax, it's important to note that prescription drug sales are exempt in all of them and that essentials like groceries are either exempt or taxed at a lower rate in a lot of them. Some even exempt over-the-counter medicine and clothing. The more you spend on essentials in those states, the less relevant sales tax becomes.
We retired to FL from NJ in 2015. As much as we enjoy living in FL, at some point we decided not to stay. And that’s ok. The nice thing about retirement is you can pack up and leave when/where you want. In 2025 we’ll be moving to PA. Close enough to family and friends in NJ but not having to worry about all the crazy taxes there. And we’ll also be close enough to DE where they have no sales tax. So living in FL will have been like one long vacation for us and now it’s time to go back home. The good thing is that we’ve made such great friendships that we’ll always have different places to stay in FL.
South Dakota is one of the best states to move to... if you can take the very cold winters.
Glad to have landed in Michigan 25 years ago. And now my pension tax is going away too. I live in Mexico during the cold weather BTW. :)
How about establish domicile in a zero income tax and zero inheritance tax state and become an expat.
The sales tax in California is brutal. Just because it says 7.25% on the map doesn’t mean that’s what Hall California in Pere. Quite the opposite in fact, where I live sales tax is 10.25% which is a huge amount to add every purchase.
Colorado is not low on property taxes if you are in a metro district as property taxes goes up to 1.25% in many cases
We chose Kentucky over Tennessee for several reasons: the county we're in offers homeowners exemption for 65+ seniors on property/houses, they do not tax SS funds & only pension fund income over 30k+, sales tax in our county is mostly the flat rate of 6% ---- yes, property tax on vehicles (its vehicle registration in CA where we came from) and some other items but cost of living, fuel prices are better than Tennessee. We did become texas residents for full time rv traveling which worked for us at the time, but to settle down permanently there was too expensive in many areas. So we chose Kentucky instead.
Some of these expenses are a choice ie how expensive a home do you have and what is your lifestyle. Also; there are areas even in high property tax states that will have low or no property tax. You have to do the research after you decide the variability and size of your income vs expenses you can or can't control.
My wife and I live in Massachusetts and our Federal Government pensions are not taxed by the state. Massachusetts state and local government pensions and Social Security benefits are also not taxed by Massachusetts. Since there are many people who receive Federal pensions, you should have mentioned this.
Fabulous video. Thank you. That said, I wish each slide showed data references, so that we could research updates going forward. Also, and I know it would be asking the nearly impossible, it would be helpful to see a few scenarios and the decision process leading them to a best-state financial fit.
I’d like to underscore why your point #5, “State and LOCAL Sales Tax,” matters. While my Boston Metrowest town has amazing and brand new schools and municipal infrastructure, we residents pay dearly for it all in the form of scorching property taxes. On too of that, my town recently inflicted a 4% tax on sellers of residential real estate. This is a major hit to both anyone thinking of moving and any real estate that is sold before a deceased homeowner’s estate is settled. All told, the costs of living and dying in my town eclipses any state tax numbers.
So taking into account state income tax, sales tax, property tax, homeowners insurance and price of houses which states are least expensive?
I just found your channel this is a very good video I plan on exploring your channel more. I moved out of Ohio to Western Illinois a little over a year ago. I didn't want to leave the Midwest so I started looking at property tax and home cost I found that a comparable house to the one I purchase in other Midwestern states would cost at least $70,000 more and in most Midwestern states a lot more, I could pay a lot of property tax with what I saved. One of the other things I found that in Illinois is the property tax exemptions that all homeowners qualify for and for me that's $11,000 off the Assessment and the Assessment is 1/3 of the value of the home. The license plate sticker is $151.00 a year but with what I save in car insurance it pays for the sticker and I still can put a money back in my pocket. 27 states have a property tax on your car Illinois doesn't. Sales tax is high here but I live very close to two states with lower sales tax. And one of the things that drew me to Illinois was Illinois doesn't tax any retirement income and the estate tax tax starts at $4,000,000. It really comes down to what you spend money on so research it well a lot of states don't volunteer to tell you what they tax. I can remember talking to people that move to Ohio and told me they thought the income tax was pretty good until they found out the also have to pay income tax not only to the state but the city they work in and the city they live in. Now in Illinois it cost a lot more to live in the northern part of the state so where you live in a state makes a big difference. And no matter where I live Ohio will always be home.
Ohio does not tax pensions, and SS is taxed only if your income exceeds $40,000.
Unlike all other taxes you have a great deal of control over property taxes. Instead of buying that multi-million dollar estate where you will never use three quarters of the house buy a modest meddle class house. Or maybe just get a two bedroom modest condo for your retirment if you are planing on doing a lot of traveling.
I live in Texas and yes the property taxes are high but I own a 950 sf house in a upper lower class neighborhood. I have space in my driveway for my car and my cargo van motorhome. Where I could have bought a lot larger house in a more expensive neighborhood.
The value for your $ is a big consideration. How good are medical services, education, transportation, convenience, parks and recreation, community, safety…..
I wish you had shown a map at the end that showed the best states to retire to after allowing for all the different (tax) factors.
This is similar to the pre retirement analysis I did. What I discovered is that property tax is a big part of the equation and is the one component charged in every state. In some states (e.g. TN) your property tax can vary county to county by a factor of 3x! (Whereas in CA it is about 1.25% statewide). This means that the exact county and the exact price of your property can have an enormous influence where that states tax, for your personal scenario, ranks across all states. In the end, the bottom 15 are probably definitely worse, and the top 15 states are probably significantly better, but for all the states in the middle of the pack, where overall tax burden are much closer, the exact county+city tax rate (+hoa?) and the exact value of your property can easily move that state up or down 15 spots on your list. IMHO If you can find a state and place you like in the top 10 rank, go for it; if not, then find a moderate tax rank place/state you really like and enjoy your retirement!
When I lived there it was 1% of the home value (prop 13) at the time of purchase and that never changed. Great for people who want to live in the same home but no so go for people that move around.
Ca is a fixed rate but they add user fees, Mello Roos fees and the house price is almost triple the cost of a house in TN.
Mello Roos is only in certain counties. Most CA counties do not have it.
Which states have stable property tax rates and which do not? California has Prop 13, which appears stable on the surface but I am finding out that the fixed percentage increase, which is guaranteed and is based on the previous year, meaning it is progressive, is like the boiling frog theory. Voters in California also tend to approve school bonds, park bonds and the like. Therefore, property tax is not simply that 1.2 percent on the initial purchase.
Nice lie I live in Tn 50 miles south of Nashville and only pay Property Taxes of 960 a year on a 200k home
Listening to this video, I can't help but wonder why any country would allow the system to waste so much manpower just to figure out how much tax to pay to the government every year, even after death!
It's a tax on top of the tax. Ridiculous indeed...
@@_-Karl-_ 😥
The US is mired in 18th century political philosophy is why. Federalism was great two hundred years ago but it's basically insanity today.
@@_-Karl-_ I alone spend that much time !! And its getting harder and harder, with so many rules. Notice that IRS does not have tax preparation software of their own.
USA is a big country that has huge differences between states in environment thus huge variance in industry that formed. Each state was like its own country. USA is like all of Europe with each state a country of its own. Does all of Europe have the same tax? What is needed in one state as far as infrastructure isn't the same for another. Roads are more expensive where mountains and obstacles exist in comparison to flat states. Building in Florida is a challenge with sinkholes a fun factor. We have everything from mountains to desert. Swamps to forests. So yes each state has a different tax strategy as each state has different topography, industry, infrastructure and needs.
I’m ready to retire and looking at taxes since I’m from California. It’s nice that you give more of a reason to think about taxes and not to make a decision on taxes only. Most other videos just tell you about the state taxes. Shouldn’t Federal taxes be considered too or are they the same across all states?