3 Things to Consider Before Moving to Avoid State Income Taxes

If you are thinking of moving to avoid state income taxes, you might want to know the following three things. If any of this is helpful, tune into my new podcast, Your Money Guide on the Side, by clicking the link in my bio.

1. Don’t Let the Tax Tail Wag the Spending Dog

Yes, Florida has no income tax, but home prices, insurance, and property taxes can eat up those savings immediately. For example, one couple I know moved from Vermont to Florida thinking they'd save a ton of money, but between hurricanes, repairs, and $5,000+ annual insurance premiums, they're now spending more than they would have had they stayed in Vermont.

2. State Governments Will Get Their Money Somehow

Tennessee has no state income tax, but it has the second highest sales tax in the country. Texas boasts no income tax either, but property taxes average 1.58%, over double Florida's rate.

3. The Biggest Cost Isn’t Always the One You See

Online property tax estimates can be way off, especially if the home hasn't sold recently. Moreover, many states wait to reassess home values until after they're sold to you, which can lead to unexpected costs down the line.

Conclusion

Bottom line: do not move for income tax savings alone. Run the numbers, do what works for you, and catch you all over on the podcast!

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