Income tax on 90K/yr salary - Bethesda, Northern Virginia, DC? (Baltimore: apartment, rent)

[parentologist]

My kid has taken a job in Bethesda, MD. Could live in DC, MD, or Northern Va. It looks as if local tax rates are high. I just found out that in addition to state tax in MD, there is a county tax, too.

Kid could easily live in northern Va (McLean or Arlington area), and commute. Or could live in Bethesda, or in NW DC. Will rent, not own.

Can anyone explain to me the income tax implications, and pros and cons of each locale? And does anyone know if the income would be taxed at Bethesda rate anyway, because it's earned in Bethesda?

[pcity]

Taxes are paid in the jurisdiction in which you live, regardless of where you work. That said, the tax differences aren't great enough that it should impact your kid's moving decisions.

Living in northern VA and commuting to Bethesda is time consuming and stressful. It isn't worth it just to save a few bucks on income tax.

VA has the cheapest income tax, but they make up for it by taxing car value each year. So whether MD/DC or VA is cheaper depends on the car you drive. Someone driving an older or less expensive car would pay less in VA, while someone who drives a newer, more expensive car might pay less in MD or DC.

[DCarea]

Another thing to consider are the rent rates.

Average rent for 2 bedroom apartment:

* D.C.: $3,158
* Arlington, VA: $3,478
* Bethesda, MD: $3,920
* Silver Spring, MD: $2,229
* Baltimore, MD: $1,662
* Annapolis, MD: $2,160

In DC, NW areas:

Woodley, Park: $4,211
Adams Morgan: $3,605
Kalorama: $2,974
Cleveland Park: $2,930

Source: https://www.rent.com/blog/cost-of-li...washington-dc/

Of course, these prices would be lower if he rents a 1 bedroom or studio, but the relative difference between each location would be the same.

[bufflove]

You can play around with this site for specific data:
https://smartasset.com/taxes/income-taxes#qS0iLa9KA1

It comes out to a couple percent more for MoCo over Fairfax w/DC in between. Obviously other jurisdictions choose to raise $$ in different ways, e.g. VA with their property tax on vehicles. More importantly, local taxes are a very small part of cost of living in an area like this where housing is quite expensive. If the goal is to have a lower cost of living then notoriously expensive NW DC and NoVa are certainly not the direction your "kid" should be looking. S/he would want to live points north and east, in that case.

[parentologist]

Just did an apt hunting trip. Major sticker shock. Wow! You're all correct - the taxes are most definitely NOT the issue. We realized that commuting by car from No Va to southwest Bethesda is definitely a no-go. Terrible bridge traffic. Workplace is not easily reached by public transit, so needs to drive to work.

We found a nice, large 1 BR basement unit with some windows in a lovely area in Bethesda, about 10 min drive to work, and 20 min walk to the metro, but the owner wants $1600 (all utils included). Problem is there is no real oven. It's killing me that kid should pay $1600/month for a basement unit with no real oven!

Anyone know whether I should be grabbing this? We're not under tremendous time pressure, have a temporary place for kid to stay upon arrival, if necessary while doing further apt hunting.

[bufflove]

Originally Posted by parentologist

Just did an apt hunting trip. Major sticker shock. Wow! You're all correct - the taxes are most definitely NOT the issue. We realized that commuting by car from No Va to southwest Bethesda is definitely a no-go. Terrible bridge traffic. Workplace is not easily reached by public transit, so needs to drive to work.

We found a nice, large 1 BR basement unit with some windows in a lovely area in Bethesda, about 10 min drive to work, and 20 min walk to the metro, but the owner wants $1600 (all utils included). Problem is there is no real oven. It's killing me that kid should pay $1600/month for a basement unit with no real oven!

Anyone know whether I should be grabbing this? We're not under tremendous time pressure, have a temporary place for kid to stay upon arrival, if necessary while doing further apt hunting.

Meaning it's a basement unit within a single family home? The price doesn't sound unreasonable. If it is in a SFH neighborhood and that's what your kid is looking for then you might consider grabbing it as I suspect those units are fairly rare.

[Reilly1017]

Is he a big cook? Can he have a cooktop or a small microwave toaster oven?

$1600 for private space and I’m assuming his own bathroom with no roommates and he makes $90K a year? Seems pretty good to me. Does he have other debt? That budget in relation to income is more than fine.