[chopchop0]

Originally Posted by tankhead

I've seen a lot of posters here tout Florida's lack of an income tax as an advantage, but.....

Is Florida's lack of a state income tax really an advantage when state income taxes can be deducted from federal income taxes?

Imagine deducting thousands of dollars vs NOT paying those thousands of dollars in the first place. you're going to get a small reduction in your taxes vs never paying them in the first place.

The only way it would really be meaningful is if you could take your state income taxes as a CREDIT against your total federal tax bill. Won't happen though

[french paris]

Originally Posted by MadManofBethesda

The deductibility of state income taxes only comes into play if you itemize deductions on your federal return. The majority of taxpayers take the standard deduction, so most people don't benefit from being able to deduct state taxes. Moreover, even for those of us who do itemize, the deduction doesn't come close to offsetting the taxes. For example, when I lived in Maryland, I paid over $12,000 in state and local income taxes. The deductibility of those taxes saved me about 1/3 or $4,000 in federal taxes. Consequently, it still cost me $8,000 that I now don't have to pay since I moved to Nevada & Florida.

I've read that there are tons of exemptions in the blue states of Northeast .

[macrodome2]

Originally Posted by french paris

I've read that there are tons of exemptions in the blue states of Northeast .

From a Northeast Blue Stater- don't believe everything you read. It's simply not true. 1. NJ does not allow as many exemptions as the Federal govt does. 2. Capital gains are taxed at your current income rate. 3. If you sell your house and give an out of state address as the forwarding address, NJ withholds a significant percentage to make sure you pay any capital gains- if you are due money from the closing you can wait until you file your income tax. 4. NJ has the worst estate deduction of any state in the nation. Only the first $675,000 is exempt.

So tell me what "tons of exemptions" you get in the blue states?

[beachmouse]

These days if you itemize you can take a deduction for sales tax paid, either additionally itemizing if you did something big ticket like purchasing a car in the past year or by taking a deduction off a chart that very roughly estimates how much someone with your income usually in your state pays in sales tax for a year.

One nice thing about the sales tax for residents is that tourists directly pay something like 14% of it, lessening the tax burden on people who actually live here.

[CSRSJim]

Originally Posted by tankhead

Is Florida's lack of a state income tax really an advantage when state income taxes can be deducted from federal income taxes?

It depends.
If you have low income and/or lots of govt hand-outs, then income tax doesn't matter.
If you earn a moderate or higher income and don't get special benefits, then no income tax is a big help to offset the other punishments the government(s) stick you with.

For example, if you pay less then about 7% in FEDERAL income tax, you are getting more services than you are paying for. If you are single, no children, educated, worked up to a $75k or more job than both federal and state income taxes you pay are benefiting those paying less.

But in a broader view, the sales tax in a tourist economy instead of an income tax helps even the lower income service workers. They actually have jobs and get basic govt services from the sales taxes paid by out of state tourists. And this helps the local economy so both more and better jobs can be found, if you qualify.

[Fredesch]

Real estate tax rates are much higher in Florida than in my local area. Real estate taxes and higher sales taxes are how Florida and her counties get their money. Whereas other areas mix in a income tax. It is a matter of how you want to pay. Sales tax on groceries hit low income and retired folks harder than high income folks. So it gets down to who do you want to pay most of the taxes? Or maybe it is who do the politicians get most of their money from?

[d4g4m]

Florida does not have a sales tax on groceries or medical supplies. FL sales tax is 6% plus an optional local 1%
Is it an advantage to not have an income tax? Let's compare. If you live in New York City, you pay-
NY state income tax
NY City income tax
8.75% sales tax
$7.50 to use a bridge or tunnel [one way]
125 red light cameras generating $millions$ [who knew they had so many dangerous intersections]