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WA rapes me not on my salary, but on the investment properties I own. Not only do I pay tens of thousands a year in property taxes, I also get to pay tens of thousands in excise taxes to the tune of almost 50K when I sell them.
I'm starting to wonder if I would not be better off retiring with rentals in an income tax state IF they have lower property taxes and excise taxes. Rental income hardly shows up as anything on tax returns so I doubt I'd end up paying more. Right now I pay approx 50K in income taxes to the feds every year...
For example, South Dakota has no income tax but the property taxes are also very low. I looked up some homes in the Sioux Falls area that are about 2,000 square feet just and it looks like most of the homes had property taxes around $2,800.
Property tax rates per $100,000 are a bit higher in South Dakota but a $200,000 home in Sioux Falls is $800,000-$900,000 in Irvine.
Irvine, California on a similar sized house, the property tax would run about $10,000 for a 2,000 square foot home. They also have a 10.2% middle-class income and SDI tax in California.
I looked up similar sized 2,000 square homes in Gillette, Wyoming. Wyoming has no income taxes, but has huge state reserves and also relies on severance taxes and a similar house would have about $700 a year in property tax.
I also looked up New Hampshire which has a very, very low birth rate and a low percentage of the population utilizing public schools. Berlin, New Hampshire on a 2,000 square foot home it looks like property taxes are around $2,700 a year.
So to summarize-
Wyoming: No state income tax, lots of severance tax revenue, $700 property tax on 2,000 square foot house
South Dakota: No state income tax and very lean on public sector services, $2,700 property tax on 2,000 square foot home
New Hampshire: No state income tax, very low birth rate and lean services, $2,700 property tax on 2,000 square foot home
Irvine, California: 10.2% middle-class income tax, trillion plus in pension liability, huge percentage of population in public school system statewide, $10,000 property tax on 2,000 square foot home
California also has many, many people paying very low property tax because of proposition 13 where taxes can only go up 2% a year. Lots of people who bought homes in California in the 1960s and 1970s paying only a few hundred a year in property tax.
On the other side of coin, Texas has some of the highest public educational system needs in the country and plus many, many things are funded with property taxes so the property taxes are sky-high similar to California.
Last edited by lovecrowds; 01-25-2017 at 05:52 PM..
Irvine, California on a similar sized house, the property tax would run about $10,000 for a 2,000 square foot home. They also have a 10.2% middle-class income and SDI tax in California.
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Irvine, California: 10.2% middle-class income tax, trillion plus in pension liability, huge percentage of population in public school system statewide, $10,000 property tax on 2,000 square foot home
Just to clarify for people who aren't familiar with California, 10.2% is not middle class income tax by any stretch. In fact, for married couples, that bracket would be $526,000-$631,000/year of income after deductions. Lovecrowds, if you're that out of touch that you think an income of over half a million dollars a year makes you middle class, you need to get out of Irvine more often.
I did look up the property tax in Washington on a 2,000 square foot home in Tacoma which looks like in Tacoma the average value is around $300,000.
Looks like the property tax on a $300,000 home that is 2,000 square feet in Tacoma is about $3,200 a year. Which seems very reasonable, considering that Washington has state income tax and that has a very, very standard of public services.
Many states in the NE (New Jersey, New York) and the Midwest (Illinois) have very high taxes all across the board, but I think in most of the sunbelt it evens out. For example, Texas has no income tax but very high property tax. Alabama (and Tennessee too I believe) has very low property tax but extremely high sales, use and occupational tax. Georgia and North Carolina have pretty level tax structures all across the board (income, sales, property). Florida is the outlier because despite having no state income tax, they're able to keep property and sales tax relatively low because they tax the hell out of tourism.
"Looks like the property tax on a $300,000 home that is 2,000 square feet in Tacoma is about $3,200 a year. Which seems very reasonable, considering that Washington has state income tax and that has a very, very standard of public services."
"Looks like the property tax on a $300,000 home that is 2,000 square feet in Tacoma is about $3,200 a year. Which seems very reasonable, considering that Washington has state income tax and that has a very, very standard of public services."
No, Washington does not have a state income tax.
I apologize, I was intending to say that Washington has no income tax.
Thank you for correcting me.
Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming it looks like don't have a state
income tax.
New Hampshire and Tennessee don't tax earned income but tax dividends.
On the other side of coin, Texas has some of the highest public educational system needs in the country and plus many, many things are funded with property taxes so the property taxes are sky-high similar to California.
The difference though is that while property taxes in Texas are higher than average, the price of homes and cost of living tends to be significantly lower.
For instance, a house in Texas that would be valued at, say, $200,000 would be valued at $500,000 or more in many other states or locations. I'd personally rather pay $6000 in property taxes (3 percent of $200k) than $10k (2 percent of $500k).
I live in a mid sized city in Texas with a strong economy. Close but not too close to Dallas. My 2500 square foot home is 100 percent updated, super comfortable, and in a very pleasant, low crime neighborhood. My property taxes - at Texas rates - are about $3800 a year.
Alabama state property tax on a $200,000 home is .43% which is $820. Each county or municipality adds their own property tax to that, but it's still a low rate. Alabama also has a low state income tax (maximum marginal rate is 5%). The state sales tax is 4% for general sales, however counties and municipalities can add their own sales taxes.
For example, Huntsville Alabama has a additional sales tax of 4.5% and Madison County adds another .5% (State 4% plus 4.5% city plus .5% county total 9%). This is about average for the State.
Here's a list of what $200,000 buys in each state ("$205,000 will get you a stunning four-bedroom home with an impressive and inviting façade" in Huntsville - they rounded down):
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