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...And yes... those with low/no income taxes WILL make that up with other sources and methods.
The arguments over whether state X is better than state Y because of a marginally lower tax burden
pales in comparison to the OTHER reasons to live in one place or another (or not to)...
and to understand just what you might be getting in exchange for those tax dollars.
It's not all on the income side. One of the ways states/localities can differ is they spend less - rather than more. Which means that the total tax burden on people in the state will be less.
And - although I agree that I wouldn't live in state X instead of state Y to save $300/year - when we were looking to move from Miami - I didn't find any "income tax" state that made financial sense for us at all.
FWIW - if I were a lower income person planning to live in a relatively modest dwelling - I wouldn't rule out "high tax states". I'd see if those high taxes applied to me - and what services/benefits I might get in a "high tax" state that I perhaps couldn't get in a "low tax state". Sounds counter-intuitive at first blush - but - just taking a quick look - that 7% top bracket in SC kicks in at an income level that is less than half the income level where it kicks in in California (and slightly more than half the income level where it kicks in in New York). IMO - it perhaps doesn't make sense to be the "poor kid" in a "poor neighborhood" - but it may well make sense to be the "poor kid" in a "rich neighborhood".
After living in the SE for 40+ years - there is one thing I can say about most of the states here. They have historically been poor. And those that have income taxes tend to have pretty regressive income taxes. Lousy services too. Robyn
OK - how do you do it? According to the web site I linked - a couple over 65 (I'm assuming you're over 65) gets $30k in "senior/retirement" exemptions - and then you get hit with state tax (top bracket is 7% and kicks in at $13k or so). So say you earn $130k - minus $30k senior stuff - plus maybe some other deductions - state AGI of $90k. On which you'd probably pay $5k plus. (Note that Grandma now in Florida would pay more - since she apparently doesn't have a spouse and only gets $15k in senior exemptions.)
Also - for seniors - property in excess of $50k has property tax of 4% (yikes). So if my house is worth $200k - that's $6k/year in property taxes. Note that in Florida - we have homestead exemptions that apply to everyone - basically $50k - the exact rules are complicated. Property taxes in Florida also vary a lot depending on what county you live in. We pay a touch more than 1% on assessed value.
Perhaps this website has it wrong. If so - you can set us straight. Robyn
We've talked to a realtor about Sun City Hilton Head and a 2000 SF house has property taxes of about $1600. Across the county line it's $4000.
We've talked to a realtor about Sun City Hilton Head and a 2000 SF house has property taxes of about $1600. Across the county line it's $4000.
Be wary of blanket assumptions.
Could the difference be accounted to the fact that Sun City (SC) is a retirement community and doesn't pay school taxes? I know this is true in some retirement communities in Phoenix, Arizona. Just trying to make sense of this ... I'm not very knowledgeable on taxation issues to begin with.
Last edited by smpliving; 04-23-2013 at 05:36 PM..
Could the difference be accounted to the face that Sun City (SC) is a retirement community and doesn't pay school taxes? I know this is true in some retirement communities in Phoenix, Arizona. Just trying to make sense of this ... I'm not very knowledgeable on taxation issues to begin with.
No iagal. It does give seniors a discount but not necessarily for school taxes. They do just charge less per SF. Here is a couple of site that can help you.
Could the difference be accounted to the face that Sun City (SC) is a retirement community and doesn't pay school taxes? I know this is true in some retirement communities in Phoenix, Arizona. Just trying to make sense of this ... I'm not very knowledgeable on taxation issues to begin with.
Curious. We drove to Charleston SC for a short vacation last year - and - if it's the place I recall - we actually passed by Sun City (SC) driving back from Charleston to NE Florida. The probable reason it has low property taxes is it's an absolutely nothing place in the absolute middle of nowhere (unless you count being close to some I-95 gas stations as being something). I'd probably rather shoot myself in the head (or live in a 300 sf section 8 housing apartment in Boston) - than live in a place like that.
FWIW - I just looked at a map - and I'm sure that's the place I'm thinking about (we were driving south from Beaufort to I-95). Robyn
We've talked to a realtor about Sun City Hilton Head and a 2000 SF house has property taxes of about $1600. Across the county line it's $4000.
Be wary of blanket assumptions.
There's a good reason for those property tax differences. If you spend 10 minutes driving in that area (which I apparently did last year) - you'll know why. This place you mentioned is in the total middle of nowhere - even by SE standards. Note that I don't object to people "getting away from it all". It's a personal life-style decision IMO. But - in this neck of the woods - that is normally done by people who care to live a rural lifestyle. Robyn
I've been living in CA all my life (except for 4 years in the military), now we're retiring to TN. We will be there by May 15th! I'm so happy. We'll be outside Knoxville in a primarily retired community w/ golf and on a lake. Definitely could never afford something like that in CA. TN is definitely lower in cost of living than where we are now. No state income tax (except dividends/capital gains), property tax is about a fourth of CA's, utilities about half, vehicle taxes about half (important to us as we have 7), real estate about 2/3 of what we pay here, most other stuff costs about the same. Curious to see what our insurance costs do...
No iagal. It does give seniors a discount but not necessarily for school taxes. They do just charge less per SF. Here is a couple of site that can help you.
Thank you for the links. I've looked at them before and I understand property taxes (and perks from some states for being 65+), but the different state income tax percentages have always confused me. However from reading all the above comments and the links, I think I'm finally beginning to make some sense of them.
I have one question (I know this is very elementary for you guys), but I'll go ahead and show my ignorance:
Iowa: Low tax rate = 0.36%, high = 8.96%; Low income bracket = $1146, high = $66,105.
From the above, I conclude a person (not retired) in SC would pay slightly more in state taxes than Iowa, but an Iowan gets hit very hard by taxes once they reach closer to $60,000.
If I am making about $32,000/yr gross at retirement from social security and income from a regular IRA, I am guessing I would not be drastically affected by state taxes (in both SC and IA) due to a lower income (and deductions from being 65) ... except that some states add more perks for being over 65, and Iowa is not one of them. Am I on track here with my state tax conclusions? Thanks for your time
Last edited by smpliving; 04-23-2013 at 07:03 PM..
As a life long, born and raised NYer, I look at our income taxes, property taxes, sales taxes, gas taxes, highway and bridge tolls and I've narrowed the short list of states down to 49.
In reality Maine is at the top of the list, and even though I frequently see them listed in the top 15 worst states for taxes, compared to what I'm used to, it will seem like a bargain. And ultimately the quality of life is what will decide it for us.
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