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You can't take just one or even two factors into consideration. You have to look at the total picture. I got a good taste of this concept a few years ago when my aging parents moved to Hot Springs, AR.
AR does have a state income tax, but their housing prices (in general) and their property taxes and some other taxes are lower, so I thought "This would probably make sense financially." Long story short - it didn't. Besides the secondary issue that I didn't really WANT to live in Arkansas, which was made up for by the fact that Hot Springs is in an absolutely gorgeous area, I was surprised to find out that overall, it would cost us at least $7000 a year more to live in Arkansas than it would in metro of comparable size in Texas. WHAT????????? That was basically because various taxes added up to being thousands more a year in cost - to live in Arkansas. No thanks.
The biggest factors are going to be state and local taxes, as well as property values. People can talk smack all they want, but in the end, 1 percent tax on the value of a $500k house is still more than a 2 percent tax on the value of a $200k house. All day long. And if you make a healthy income, a state income tax can quickly wipe out any "gain" you may make by lower property values and tax rates.
Like others have said, there are many good sites out there which can help you compare costs of living in each state and city.
You need to do research when comparing two places. I moved from Indiana to California, and paid the same state income tax rate, despite making $80k more in California. California has high housing prices, but property taxes are 1% of the home value, so you don't have the issue in Texas where you $400k house has $18K in property taxes. I can see where even high earners in a no tax state are quickly washed out if you have a house whose property taxes absorb any income tax savings.
You need to do research when comparing two places. I moved from Indiana to California, and paid the same state income tax rate, despite making $80k more in California. California has high housing prices, but property taxes are 1% of the home value, so you don't have the issue in Texas where you $400k house has $18K in property taxes. I can see where even high earners in a no tax state are quickly washed out if you have a house whose property taxes absorb any income tax savings.
Texas has some of the highest property taxes, they are not as high as you state (barring some unusual locality specific assessment) . Even a simple 2% assumption (closer to the Texas median) yields an $8000 bill. I think it is high, but maybe not for someone capable of affording a $400k house. Their likely income is high enough to save more than the $4000 extra they would pay in property taxes. The other thing that must be considered is buying power. A $400k house in TX vs. CA is night and day for most metro to metro comparisons.
Coming from TX, I'd say a big "yes"; income taxes are something to be wary of. I can't stand paying them in my current state. Based on all my calculations, I'm paying more money overall where I am, compared to before and paying more with property taxes.
That doesn't mean 'stay in TX', but if looking elsewhere, I'd strongly consider another state without the nasty income tax.
Texas has some of the highest property taxes, they are not as high as you state (barring some unusual locality specific assessment) . Even a simple 2% assumption (closer to the Texas median) yields an $8000 bill. I think it is high, but maybe not for someone capable of affording a $400k house. Their likely income is high enough to save more than the $4000 extra they would pay in property taxes. The other thing that must be considered is buying power. A $400k house in TX vs. CA is night and day for most metro to metro comparisons.
Right.
I don't know, call me crazy, but isn't 2 percent of $400k the same amount as 1 percent of $800k?
In my metro area, which is a nice area near DFW in NE Texas, you can buy a very spacious, comfortable, well kept home all day long for $300k. So 2 percent of that is $6000. Take off the homestead exemption and it's even lower. We have a very nice, 2500 square foot home on a spacious lot and we pay $4800 a year in taxes.
And no state income tax.
That being said, Texas is a "young" state, and it is built around youth, making money, etc. If you want to build your career, work hard, raise a family, make good money, etc. generally speaking, Texas will work for you. But if you're retired, low income, that sort of thing, it's not as good a fit.
Everyone's situation is different but generally speaking this is true.
I'm sure the OP won't be leaving Texas unless it's in the southwest. No way is it north of the panhandle ..... This from comments thru other post and threads over the months.
Now back to Texas boosting as cheapest best state. But the OP knows all this.
Hello everyone,I know i have posted a similar thread a while back but things have changed for my oil company and money may or prolly will be an issue.I am a oilman in Midland,Texas trying to get my company off the ground and am trying to start another one in a few years.I do oil deals for extra money like drilling wells and flipping leases.I have always been intrigued with the states of Arizona and New Mexico.There is also a possiblity of Oklahoma,California, Colorado, and Arkansas.I really am worried about moving to a state that has a state tax especially if i have a high to super high income from oil and gas.
The super high income would only come if i would get overriding royalties in my business that my family member thinks I will get but I am not so sure that will come to pass.I may just stay in Texas and have property elsewhere or do VRBOs in other states.I know Texas has very high property taxes so I am thinking of just living in a smaller house or trailer to save on taxes if I have to buy into the oil wells. Also, another consideration is that oil income and speculative oil deals have more favorable tax treatment than just regular W2 wage income a worker would make.What do yall guys think about my situation.Should I stay in stay in Texas Thanks in advance.
When you go above about $250K- $300K, it starts becoming a factor to live in a no state income tax state. While it's true that states have to get their money somehow, states with no state income tax can make a real difference to high income earners and states with low or no property taxes for seniors can make a difference in retirement.
I didn't even consider the no state income tax when I moved to Washington state but I noticed the difference immediately in my checks and as my income rose, I wouldn't consider leaving unless I went to another no state income state. Now that I retired last month, my options are open.
Stay in Texas. I've seen your posts. You're a native Texan and I'm not sure California or Colorado works for you. Why leave?
Well California or Colorado are a lot less likely for me to live in than Arizona and New Mexico.I am thinking of leaving because Arizona and New Mexico have always intrigued me.
No, unless you earn several hundred thousand per year, it's a difference of $30-$50/week for the median earner, which if your grossing over $1,000/week is peanuts
Good point, I guess if I become middle class it would make living in Arizona and New Mexico or another state income tax state more likely.
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This from comments thru other post and threads over the months.
