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Old 12-17-2018, 11:00 AM
 
Location: Austin, TX
12,226 posts, read 28,032,826 times
Reputation: 5849

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Quote:
Originally Posted by m1a1mg View Post
Doesn't the state income tax eat up some of that difference? We'll be going back to my home state of SC, and the state income tax eats a big part of the property tax savings.
I have decided that Texas is a great place for a two-income family with children in a 'modest' house - you are only taxed once by the state (on the home, not both incomes and ignoring sales tax, etc) and most places you can get a pretty dang good public education, especially relative to some of the 'cheap' states to live in. Even with the high tax rates and high home value, our property tax equals out to about a 3% income tax (actually a little less right now). Looking at a list of state income taxes (https://www.money-zine.com/financial...ome-tax-rates/), there are few places that have an income tax that is that low (excluding the no income tax states like Texas). In many, we would be at the max income tax and in none of them would we be at the lowest income tax rate. A concise summary from the link:

Quote:
There are currently seven states that do not collect any income taxes:
Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming.

There are two states that only collect taxes on dividends and interest income:
New Hampshire and Tennessee.

California has the highest incremental state tax rate: 13.3%.

Eight states have only one income tax bracket, charging its residents the same rate on all income, which is called a flat rate:
Colorado (4.63%), Illinois (3.75%), Indiana (3.23%), Massachusetts (5.10%), Michigan (4.25%), North Carolina (5.499%), Pennsylvania (3.07%) and Utah (5.0%).

Hawaii now has the largest number of tax brackets (12), ranging from 1.4 to 11.0%.
Of course, most states have SOME property tax to go along with that income tax.

When we retire, though, our income will drop precipitously and the low property tax/with income tax states might make more financial sense.

 
Old 12-17-2018, 11:14 AM
 
Location: Austin, TX
12,226 posts, read 28,032,826 times
Reputation: 5849
Of the states with no income tax, the average property tax bills are:
Alaska ($3,225)
Florida ($2,936)
Nevada ($1,873)
South Dakota ($2,701)
Texas ($4,660)
Washington ($3,592)
Wyoming ($1,691)

States with dividend taxes only:
Tennessee ($981)
New Hampshire ($5,935)

I put the average tax bill, not the percent, as the percent is not indicative of actual costs. A ball park estimate of taxes might be to ratio your actual current tax bill to the Texas average ($4,660), and then use that ratio to scale up/down a different state's tax bill. I.e., if yo are paying $9,300 in property taxes here (2X the average), then you would likely pay around $5,900 in property taxes in Florida (2 x $2,936).

This is a year or so old:
https://www.usatoday.com/story/money...-dc/100314754/
 
Old 12-17-2018, 11:26 AM
 
Location: Austin, TX
12,226 posts, read 28,032,826 times
Reputation: 5849
Sales tax will, presumably, become a more significant portion of taxes paid once you retire due to lower income and/or minimized/frozen property taxes. Of course, those are partially based on the cost of items in an area - the local sales tax in Alaska averages only 1.8%, but if an item costs twice as much, you aren't saving anything. That said, Wyoming and S. Dakota have both a low sales tax rate (5.5 and 6.4) while also having a low cost of living. Florida is 6.8% with an average cost of living.

Nevada and Texas are 8.1% and 8.2% with COL a few percent below the national average.

Washington is 9.2% with a notably higher COL

Tennessee and Louisianan are 9.5% and 10% with very low COLs.

It may be significant that COL takes into account housing cost, which is generally not taxes by a sales tax, so places with very low COLs (TN and LA) may have unrealistically low COLs and others exaggeratedly high COLs.


https://www.usatoday.com/story/money...xes/452512002/
 
Old 12-17-2018, 12:10 PM
 
Location: Downtown Austin
6,027 posts, read 15,048,237 times
Reputation: 4944
Quote:
Originally Posted by ATX Wahine View Post
This thread makes me laugh.

I’ve spent close to eleven years here reading some of you maligning transplants to Austin, lamenting how they’ve “ruined” Austin. And now, for the past few years, I’ve read reports from those of you who moved away, or are thinking of moving away, never approaching the subject of how your move amounts to you creating the same problem for other people somewhere else.

People are funny. And also a little oblivious.
The "same problem" is actually limited to just some metero areas. In reading about Apple's announcement to expand in Austin, an interesting tidbit of data was that over 50% of tech sector job growth has happened in just 10 US cities, Austin being one of the 10. And it ain't gonna slow down here, because, to most of the other 9 cities areas, we seem cheap in comparison.

So, me or others going to a non-tech-boom smaller city, we will not be creating "the same problem", especially if we involve ourselves in the community and give back, rather than treating it list Disneyland.
 
Old 12-17-2018, 12:42 PM
 
Location: Central Texas
20,048 posts, read 36,807,683 times
Reputation: 21804
Quote:
Originally Posted by m1a1mg View Post
Doesn't the state income tax eat up some of that difference? We'll be going back to my home state of SC, and the state income tax eats a big part of the property tax savings.




That person is in a constant state of butthurt, while constantly going on about HIS last place.

Not if you're retired and no longer paying income tax anyway.
 
Old 12-17-2018, 12:56 PM
 
Location: Murrica
2,482 posts, read 1,499,493 times
Reputation: 1282
Quote:
Originally Posted by TexasHorseLady View Post
Not if you're retired and no longer paying income tax anyway.
Most people will have some form of income still. Knowing the threshold to not pay anything is important.
 
Old 12-17-2018, 01:09 PM
 
Location: Austin, TX
9,604 posts, read 8,663,878 times
Reputation: 5499
Quote:
Originally Posted by Trainwreck20 View Post
Sales tax will, presumably, become a more significant portion of taxes paid once you retire due to lower income and/or minimized/frozen property taxes. Of course, those are partially based on the cost of items in an area - the local sales tax in Alaska averages only 1.8%, but if an item costs twice as much, you aren't saving anything. That said, Wyoming and S. Dakota have both a low sales tax rate (5.5 and 6.4) while also having a low cost of living. Florida is 6.8% with an average cost of living.

Nevada and Texas are 8.1% and 8.2% with COL a few percent below the national average.

Washington is 9.2% with a notably higher COL

Tennessee and Louisianan are 9.5% and 10% with very low COLs.

It may be significant that COL takes into account housing cost, which is generally not taxes by a sales tax, so places with very low COLs (TN and LA) may have unrealistically low COLs and others exaggeratedly high COLs.


https://www.usatoday.com/story/money...xes/452512002/
Louisiana has a very low COL. My mom researched retiring in Texas and couldn't get over the property tax bill. Since income is low in retirement and so are sales taxes (most major purchases are done with), having a regressive high sales tax, high income tax, but low property taxes like Louisiana is the best.

Texas is great for a new couple starting out that is renting and has high income. Once you get towards retirement age, there really isn't anything in the state to keep retirees from a tax perspective.

One way you can reduce property taxes is by living in a cheaper area of Texas. West Texas comes to mind, but then you're in the middle of nowhere.
 
Old 12-17-2018, 01:29 PM
 
Location: Austin, TX
12,226 posts, read 28,032,826 times
Reputation: 5849
Quote:
Originally Posted by TexasHorseLady View Post
Not if you're retired and no longer paying income tax anyway.
Do states with income tax exempt retirees?* Or are there other exemptions for seniors? For example, several people have mentioned Fayetteville, Arkansas, but it looks like you will pay the top tax bracket (6.9%) if your income is over $35,000 (tiered, ofc). I could easily see people pulling that much out of their 401(k) and/or investment income. If you 'earned' $50k per year, then that would be $2,534 in state income tax. If you earned $75k per year, then it would be $4,300 in income tax (tiers accounted for).

Washington County has an average 'effective' property tax (takes deductions into consideration) of 0.71%. The median list price is $295,000. That results in a property tax bill of about $2,085. So, about $6,400 for property and income tax for a home currently on-sale for the median price.

In Austin, the median list price is currently around $383,000 and the 'effective' property tax rate is 1.9%, yielding annual taxes of $7,277.

Sales tax is 9.4% instead of 8.25% if you include local as well as state (a 14% increase); in addition, AR taxes groceries at 2%. You currently can deduct two state taxes from your federal taxes - AR has three taxes vs two in Texas, so either sales or property would not be deducted in AR, most likely.

In any case, the savings from low property tax could be eaten up by income tax and sales tax increases.

*just looked it up, the state exempts $6,000 from state income taxes and all the SS benefits are exempt. I am too lazy to redo the math, but that could be very significant .
 
Old 12-17-2018, 01:32 PM
 
Location: Austin, TX
12,226 posts, read 28,032,826 times
Reputation: 5849
Quote:
Originally Posted by cBach View Post
Louisiana has a very low COL. My mom researched retiring in Texas and couldn't get over the property tax bill. Since income is low in retirement and so are sales taxes (most major purchases are done with), having a regressive high sales tax, high income tax, but low property taxes like Louisiana is the best.
I have just never found a place in LA that I wanted to live .

What area would you retire to there? Are there some prime areas? I am not as familiar with northern LA, but nothing in the south peaked my interest.
 
Old 12-17-2018, 01:40 PM
Status: "Baby it's warm outside..." (set 29 days ago)
 
102 posts, read 19,985 times
Reputation: 106
An area for your consideration: Blacksburg, VA.
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