[Vandy-bound]

(cross-posted to CT and Westchester)
I've seen many others mention this several times, and pretty much ignored it, living in CT. But we are going to need to move from the Hartford area to the Westchester (Armonk) area for the husband's job, and we could live in either NY or CT. All of a sudden the tax situation is more important to figure out.

I keep seeing posts that reference NY's higher income taxes compared to CT's (not NYC--only NY state). Is this just a general rule of thumb? When I used last year's tax return to calculate what we would have paid in NY income tax, it was actually $101 less than we paid CT.

When you factor in the sales tax difference between the states (again, only considering NY state, not NYC), CT's 6.35% is a bunch higher than NY's 4%. I don't go shopping very often, but NY doesn't tax clothing or footwear items <$110 and I am pretty sure I paid tax the last time we bought clothes for my kids (definitely items <$100 each). Even when you start to factor in the Westchester county sales tax (1.5%) and a 0.375% sales tax for the MTA, the total amount is less than the CT state tax and seems to apply to fewer things.

I'm also not seeing the yearly car taxes in NY like they are in CT, though I may just not be looking in the right place. That adds up substantially, especially when you're in a high mill rate town. If I'm missing the similar tax for Westchester county towns, please let me know.

So that brings us to property taxes. Yes, in general, Westchester county taxes are higher than FFC--but that's obviously a situation that varies by house and by town, in each location. For several of the houses we are looking at online, property taxes in Westchester county are about what we pay now for an equivalently priced house. I'm sure that there are high tax towns in both places--maybe we just aren't looking at those and so we aren't seeing the dramatic property tax difference?

Is there something that I'm missing? The way it looks right now, our tax burden is going to either stay the same or may decrease slightly.

[hvexpatinct]

Make sure the tax calculations include the school taxes.

Car insurance is substantially more expensive in NY - enough so to offset property taxes - so consider that a wash.

The mill rates in the CT towns that are commutable to Armonk tend to be in the high 20s which is a little lower than some of the Hartford area towns.

We have had to pay NY non resident income tax occasionally and usually end up owing NY when withholding at CT levels, but it isn't a huge difference.

[nep321]

Every taxpayer has different circumstances, scenarios and events that occur throughout any given year that may have tax implications, so it's hard to generalize the differences between NY and CT and apply the same tax scenario to every taxpayer. It also makes a difference sometimes, if you are a single filer vs. married filer, etc.

But from a statutory perspective (for 2016), the income tax rates are higher in NY than they are in CT. Most married filers in CT will pay a top tax income rate of 5.00%, but in NY, most married filers will pay a top rate of 6.45%. When you go to file your NY return, you will credit all of the income taxes you paid to CT and then pay the difference to NY. This is because NY and CT have a tax reciprocity agreement, as do most other states. In most cases, it's not that much of a difference. I have no idea how you paid less income tax in NY, because the rates and brackets simply don't support that claim, but like I said, I don't know your entire tax situation, special deductions, gain/loss, etc. Income tax rates and brackets by state for 2016 can be seen here: State Individual Income Tax Rates and Brackets for 2016 | Tax Foundation

As for sales tax, it is higher in every single county in NY compared to CT. The lowest total rate is 7.000% in a handful of counties, whereas in CT is it simply 6.35% everywhere. But as you mentioned, it is true that this gets very complicated, because each state has made different determinations as to which goods and services are taxable. But I can tell you that CT has a 1% sales tax rate for digital downloads and a 7% sales tax rate for luxury items, to name a few.

CT has an annual motor vehicle tax that ranges from $100 to $1,000 depending on the vehicle and the city/town in which the vehicle resides in. For most people, it will average to around $200-300. It is also deductible on your CT income tax return, but limited to $300. However, I believe that in NY, motor vehicle owners must pay an annual registration renewal fee, whereas in CT, this fee is only biennial and is usually under $100.

Since CT has no county governments, each of the 169 cities and towns have more administrative and legal authority and control compared to most other states. Each town essentially is a mini county. Cities and towns in CT have one source of tax revenue and that is property taxes. Because of this, real estate property taxes are very high compared to the rest of the nation. The average home in CT has a property tax liability of around $5,000 per year. Most of this revenue pays for public schools and is part of the reason why CT has excellent public schools. Property taxes in NY state, particularly in the Westchester County area, are also very high, but it really depends on the city, town or village that you live in.

CT also has numerous other taxes for alcohol, cigarettes, hotels, gas, utilities, etc. The list goes on. But income, property and sales taxes are the ones that people care about most.

New York state has tolls all over the place, for the Thruway and numerous bridges and other roadways. This can accumulate to $200+ per year for some people in the NYC metropolitan area. CT has no tolls whatsoever.

In the end, I can only explain so much, because I do not know the details of your tax situation, your spending habits, taxable events, etc. All I can tell you is taxation from a statutory perspective and what generally happens for most people. Overall, both NY and CT are very high taxed states, and outside of NYC and Yonkers, most people would not likely notice or feel much of a difference or variance beyond +/- $200 per year.

[allanny13]

What towns are you comparing where Westchester and Fairfield county taxes are similar? Many of the best towns in Westchester (Scarsdale/Bronxville/Rye/Chappaqua etc.) have some of the highest taxes in the state whereas the best towns in FFC (Greenwich/Darien/New Canaan/Westport) have some of the lowest.

[BicoastalAnn]

In general NY has higher income taxes but the significance isn't great enough to go out of your way IMO. For example, a $500k salary has only a $1kish difference between the 2 states according to this calculator: https://smartasset.com/taxes/income-taxes. The property taxes are more significant to most people. NYS has a mansion tax (above and beyond transfer taxes) of 1% for properties over $1m if that's a factor for you.

[Sweetpotatofries]

This is something we've been grappling with - we're moving up from NYC and considering either Noroton/Cos Cob in CT and Pleasantville/Mt Pleasant in Westchester. Similar commutes (we will only do 90 minutes or less for a GCT --> Wall Street commute for my husband) so we have outer boundaries in each area. Our budget for a smaller, 3-bed 2/2.5 bath home in each differs because the property taxes are really what seems to make the biggest difference. We could afford a 650K house in Westchester but the property taxes are going to be $1200-1500/month depending on the house, including school tax, and the STAR exemption usually won't be more than $1-2K. We can afford a $750-$800K house in CT with taxes of $500-700/month for a similar monthly payment on your typical 20-year mortgage at current rates. Of course home prices in the towns we're looking at in Westchester are correspondingly lower bc of the taxes.


The question is, does size of downpayment make a difference to you, and will other taxes make a difference? For us the other CT property taxes are negligible (our 12 year old car would have a tax of $100/year, nothing compared to property tax). We still don't know what the right answer is and it seems really tough to say why people would choose to live in Westchester vs CT if all you think about is taxes, when in reality it isn't just taxes factoring into the equation. For us there's only a little bit of CT within tolerable commute distance, for you there's a lot more choices...

[allanny13]

Hopefully someone else can corroborate this but as we were househunting and preapproved for a mortgage in both Westchester and FFC, I also remember an additional mortgage tax in NY that did not apply to CT, which I recall being somewhat substantial (1%?).

[Vandy-bound]

Thank you all for your responses, especially Nep for the in-depth description. We are casting a net around Armonk and focusing on towns that would be on a train line into the city. We don't need to consider schools at all (both kids in college). Our housing budget max is <$1million, and we intend to stay as far below that as we can comfortably. We'd like to minimize the commute to both Armonk and NYC, so we aren't looking north of Armonk at this point.

Since we won't be actively househunting until the spring, we are trying to figure out where we should prioritize our hunt, hence, the question about the tax differences. With newer vehicles (sigh), our current CT vehicle tax is pretty ridiculous.

I appreciate the replies and have been scouring the forums for specific town threads that fall into our circle. I'm sure we'll have more questions after the new year!

[BicoastalAnn]

Originally Posted by Vandy-bound

Thank you all for your responses, especially Nep for the in-depth description. We are casting a net around Armonk and focusing on towns that would be on a train line into the city. We don't need to consider schools at all (both kids in college). Our housing budget max is <$1million, and we intend to stay as far below that as we can comfortably. We'd like to minimize the commute to both Armonk and NYC, so we aren't looking north of Armonk at this point.

Since we won't be actively househunting until the spring, we are trying to figure out where we should prioritize our hunt, hence, the question about the tax differences. With newer vehicles (sigh), our current CT vehicle tax is pretty ridiculous.

I appreciate the replies and have been scouring the forums for specific town threads that fall into our circle. I'm sure we'll have more questions after the new year!

Look at White Plains in NY! It is an easy commute down to NYC (35ish minute ride, with trains about every 5 mins during rush hour) and to Armonk. If your husband works at IBM, there is a shuttle of some sort that runs from the Metro North station directly to the Armonk office. Property taxes in White Plains are pretty much as low as it gets in Westchester, due to the larger corporate tax base compared to its neighbors.

[MrGompers]

I see some people mentioned "mortgage tax" I think they may mean "real estate conveyance fee"

CT charges a percentage on the transfer of property as a one time fee, although a fee is really a tax.

"In Connecticut, the Sellers are responsible for paying a conveyance tax upon the transfer of title to real property. There are two conveyance taxes to be paid, one to the state and one to the municipality where the property is located.
Some real estate transactions are exempt from conveyance tax, including transfers between spouses, sales to certain non-profit entities, and foreclosures by sale. The state conveyance tax is .0075 (.75%) of the sales price up to $800,000.00. Any amount above $800,000 is taxed at .0125 (1.25%). The municipal conveyance tax is 0.0025 (.25%) for most towns. There are 18 eligible municipalities that are permitted to impose a tax of up to 0.005 (.5%)"

I believe this info is up to date and correct.

Cacace, Tusch & Santagata » Blog Archive Connecticut Real Estate Conveyance Taxes - Cacace, Tusch & Santagata

Also, it should be noted that neps info regarding state income taxes is off. If a CT resident works in NY (or some other state) that person pays income tax to that state, then receives a 100% credit against income taxes due to CT.

For example, if NY state is 6% but CT is 4% the taxpayer will pay 6% to NY, but zero to CT. If however, CT was 7% the taxpayer would pay 6% to NY and 1% to CT. The taxpayer has to file returns in both states to receive credit.

DRS: Resident Working in Another State

FWIW, NY's top marginal income tax is 8.82% whereas CT's is 6.99% I think to hit these tax rates you need to be earning at least 250k.