7.40% state income tax? Really? (Sun Valley: sales, 2015, vehicle registration)

[InchingWest]

Idaho seems like a really nice place to live, I got to drive through it last week on my way from Big Sky down into Wyoming, and then down into Utah. I've been to Sun Valley previously, and drove the I-90 stretch through the northern panhandle on yet another trip. You truly have some natural treasures.

One problem though: the state income tax rate is 7.40% (max) after $10,904 for a single filer, which means that virtually anyone who works a real job will be hit with that rate (modified for income earned in "lesser" brackets, which is negligibly less), which is pretty bad considering how much the federal government taxes all of us.

That seems crazy, especially for a state known to be among the most conservative. Where I currently live (Maryland, which isn't known for it's tax friendliness) the state income tax is 4.75% on income earned between 3k and 100k (which obviously encompasses the majority of people), and only 5.75% tops anyway. Not great, but not horrendous for a coastal state.

How the heck does a state like Idaho compete on taxation, especially when it borders THREE states that have no state income tax at all (Washington, Nevada, Wyoming)?

Should I continue to research Idaho? I'm not even sure I want to look at the sales taxes (especially when Oregon has none) or property taxes. And should I worry about the tax climate getting even worse considering that Californians seem to be moving in? Maybe I'll continue my search elsewhere....

[Zyngawf]

To just look at one or two taxes is very short sighted. I do understand that how they get it will impact everybody different, but any state will get what is needed to run a state Gov.

I would say Idaho is way below average. Look at how much Idaho gets when compared with states close to the same population. Like Hawaii, Neb, West Vir. Look at North Dakota, It has half the pop of Idaho.

Alabama Tax Revenue: $9,052,880,000
Alaska Tax Revenue: $7,049,398,000
Arizona Tax Revenue: $12,973,265,000
Arkansas Tax Revenue: $8,287,744,000
California Tax Revenue: $112,372,263,000
Colorado Tax Revenue: $10,250,628,000
Connecticut Tax Revenue: $15,419,556,000
Delaware Tax Revenue: $3,360,235,000
Florida Tax Revenue: $32,997,012,000
Georgia Tax Revenue: $16,576,903,000
Hawaii Tax Revenue: $5,516,146,000
Idaho Tax Revenue: $3,374,304,000
Illinois Tax Revenue: $36,437,803,000
Indiana Tax Revenue: $15,704,680,000
Iowa Tax Revenue: $7,832,388,000
Kansas Tax Revenue: $7,418,341,000
Kentucky Tax Revenue: $10,472,861,000
Louisiana Tax Revenue: $8,994,053,000
Maine Tax Revenue: $3,777,130,000
Maryland Tax Revenue: $17,064,468,000
Massachusetts Tax Revenue: $22,805,644,000
Michigan Tax Revenue: $23,968,760,000
Minnesota Tax Revenue: $20,560,540,000
Mississippi Tax Revenue: $6,953,362,000
Missouri Tax Revenue: $10,800,741,000
Montana Tax Revenue: $2,459,324,000
Nebraska Tax Revenue: $4,358,328,000
Nevada Tax Revenue: $6,775,112,000
New Hampshire Tax Revenue: $2,206,329,000
New Jersey Tax Revenue: $27,456,175,000
New Mexico Tax Revenue: $5,088,335,000
New York Tax Revenue: $71,545,745,000
North Carolina Tax Revenue: $22,713,357,000
North Dakota Tax Revenue: $5,620,036,000
Ohio Tax Revenue: $25,924,024,000
Oklahoma Tax Revenue: $8,826,132,000
Oregon Tax Revenue: $8,699,626,000
Pennsylvania Tax Revenue: $32,949,917,000
Rhode Island Tax Revenue: $2,805,287,000
South Carolina Tax Revenue: $8,036,482,000
South Dakota Tax Revenue: $1,521,477,000
Tennessee Tax Revenue: $11,982,345,000
Texas Tax Revenue: $48,596,548,000
Utah Tax Revenue: $5,809,953,000
Vermont Tax Revenue: $2,757,370,000
Virginia Tax Revenue: $18,137,586,000
Washington Tax Revenue: $17,624,715,000
West Virginia Tax Revenue: $5,355,809,000
Wisconsin Tax Revenue: $14,747,971,000
Wyoming Tax Revenue: $2,550,991,000
Source: U.S. Census Bureau

[Cnynrat]

I agree you need to look at the total tax burden, and that it will hit different people in different ways depending on your income, value of real property owned, etc. There are many resources for this sort of research, but the Tax Foundation is one useful source.

Idaho is not a low tax state, rather it's more or less middle of the road. The income tax structure is oriented around incomes that are lower than average, so higher income folks do get hit relatively hard. The sales tax rate isn't bad (6%), but it does apply to groceries, something most states exempt from sales taxes. I find property taxes are relatively low, but that's coming from someone who moved here from California.

On the positive side the state seems to be run fairly well from a fiscal perspective. While our effective income tax rate here in ID will be similar to what we used to pay in CA, at least here they don't have huge unfunded liabilities like they are in CA. CA taxes will need to be much higher than the are to pay the bills that will come due in the future.

Dave

[Sandpointian]

Originally Posted by InchingWest

Idaho seems like a really nice place to live, I got to drive through it last week on my way from Big Sky down into Wyoming, and then down into Utah. I've been to Sun Valley previously, and drove the I-90 stretch through the northern panhandle on yet another trip. You truly have some natural treasures.

One problem though: the state income tax rate is 7.40% (max) after $10,904 for a single filer, which means that virtually anyone who works a real job will be hit with that rate (modified for income earned in "lesser" brackets, which is negligibly less), which is pretty bad considering how much the federal government taxes all of us.

That seems crazy, especially for a state known to be among the most conservative. Where I currently live (Maryland, which isn't known for it's tax friendliness) the state income tax is 4.75% on income earned between 3k and 100k (which obviously encompasses the majority of people), and only 5.75% tops anyway. Not great, but not horrendous for a coastal state.

How the heck does a state like Idaho compete on taxation, especially when it borders THREE states that have no state income tax at all (Washington, Nevada, Wyoming)?

Should I continue to research Idaho? I'm not even sure I want to look at the sales taxes (especially when Oregon has none) or property taxes. And should I worry about the tax climate getting even worse considering that Californians seem to be moving in? Maybe I'll continue my search elsewhere....

The rate is not so much the issue as the low brackets. Those are set way too low. That said, sales tax is modest. Property taxes for modest to moderate homes is decent. So the higher income taxes are not so crazy. However, if ID becomes more like South Carolina and starts trying to land bigger corporate fish, then the low brackets and high mill rates on properties will start to pinch.

But for now, it works OK.

S.

[CAHntr]

I understand what the OP is saying about the differences in state income tax rates and had similar thoughts initially. I compared different states for a possible retirement move and thought that a state with no income tax sounded great. To get a more accurate idea about state costs, I also considered housing purchase costs, house payments, vehicle registration, utilities, property tax, fuel costs and food costs.

When I added up all of these costs, I found that several states were fairly close in financial cost. In looking at your 3 states with no income tax, I calculated that living in Idaho would cost about a $1,000 more than living in Washington or Nevada and about $4500 more than living in Wyoming. If you break that down into a monthly difference, it's pretty minimal for Washington and Nevada and not that big for Wyoming.

These calculations don't include having to travel further to shop in different states or many other costs that can vary from state to state and the many other different costs depending on your lifestyle. The calculations also don't include differences in wages for jobs.

[oregonwoodsmoke]

OP, if you don't want to pay 7.4% income tax, move to Washington, instead. There are areas in Washington that are just as gorgeous.

[banjomike]

Wyoming is no slouch when it comes to scenery, either, but the winters are colder there than here.

The upside is there's so much natural gas under Wyoming the depletion taxes will cover at least 2-3 more generations with ease. And if you want a life in a place where everyone knows your name, Wyoming is it.

[jdhpa]

I see the Idaho income tax rate has actually been going down:

2018: 6.925%
2017: 7.400%
2011: 7.800%

https://tax.idaho.gov/i-1110.cfm


Is something driving this? Is it going to continue?

[Tall Traveler]

Originally Posted by InchingWest

Idaho seems like a really nice place to live, I got to drive through it last week on my way from Big Sky down into Wyoming, and then down into Utah. I've been to Sun Valley previously, and drove the I-90 stretch through the northern panhandle on yet another trip. You truly have some natural treasures.

One problem though: the state income tax rate is 7.40% (max) after $10,904 for a single filer, which means that virtually anyone who works a real job will be hit with that rate (modified for income earned in "lesser" brackets, which is negligibly less), which is pretty bad considering how much the federal government taxes all of us.

That seems crazy, especially for a state known to be among the most conservative. Where I currently live (Maryland, which isn't known for it's tax friendliness) the state income tax is 4.75% on income earned between 3k and 100k (which obviously encompasses the majority of people), and only 5.75% tops anyway. Not great, but not horrendous for a coastal state.

How the heck does a state like Idaho compete on taxation, especially when it borders THREE states that have no state income tax at all (Washington, Nevada, Wyoming)?

Should I continue to research Idaho? I'm not even sure I want to look at the sales taxes (especially when Oregon has none) or property taxes. And should I worry about the tax climate getting even worse considering that Californians seem to be moving in? Maybe I'll continue my search elsewhere....

You really have to look at every part of taxes by state for your anticipated situation.

I have lived in Washington state for over 20 years and have been high income during this time period so I was never interested in leaving to a state which had a high state income tax such as Oregon or Idaho. Now that I'm retiring at the end of the year, my situation changes and income drops so I calculated the total taxes I would estimate to pay in Washington, Idaho, Montana and Arizona in retirement using current rates. I had to estimate what property taxes would be for example so this is a kind of rough calculation...and I came up with in order lowest state tax to highest (for my anticipated situation) was Arizona, Idaho, Washington, Montana but the differential was not enough to use that as a decision basis.

[volosong]

@InchingWest, setting aside the fact that Idaho is "closed" to new immigration, the Tax Foundation web site that Dave mentions is a good one. And as others have mentioned, you need to look at the whole picture. Not only taxes, but also factors in other areas of your life.

For example, even though I fell in love with Wyoming through geological work assignments, and really wanted to retire there, nobody is the whole state plays tennis. No surprise there as WY is "cowboy/rodeo country". One can hit against a ball machine for so long before they want a little bit of competition. And, I may be wrong, but I found the cost of housing, at least the type of housing where I would want to live, to be very expensive for the price. No matter how low the overall tax burden is, if I couldn't find a house to suit me, well, I needed to look elsewhere.

I next looked at Montana. Sure, there is no sales tax, but just how much is a retiree gong to be buying? All the other taxes in Montana make up for the lack of a sales tax, and I found the overall tax burden to not be 'retiree friendly'.

Idaho is the best match for me. The overall tax burden is manageable, and there is so much more here, (environment and activities), that I can't imagine living anywhere else, (well, southern France and central Italy would be an exciting adventure). I can't imagine heaven having anything on Idaho.