Would you adjust where you live in accordance with taxes levied by local and State Government?Â Would your dream neighborhood be no more if property taxes were over the line?Â Would you decide not to move to a specific State, based solely upon the personal tax rate of the state?Â What constitutes a deal breaker?
Let’s say you are making $100,000/year and currently reside in Florida.Â Sure, you’ve got the sun, beaches, extremely hot weather and hurricanes…wait that’s not a good thing.Â Anyway, you do not mind Florida, but are offered a job in Oregon.Â It’s less work, (not fewer hours, just a lighter workload) the Pacific Northwest has always appealed to you, and the new company has offered you a $15,000/year raise!Â Surely, this is an offer that most would not refuse.
Here is my issue: The State of Oregon currently has an income tax rate of 9% for those who make over $7,601 annually.Â The State of Florida currently has no income tax (likely due to the money people spend to vacation).Â If talking solely on an income basis, you have the bragging rights about your $15000/year raise but a full two thirds of your raise is eaten up by the State income tax.Â If you want the actual number, of your $115,000 salary, $10,350 is taken by the state.Â This (of course) is assuming no pre-tax withdrawals, which is unlikely if you are making smart choices with your money…you are, right?
So, would you move to (or away from) a state based on the tax rates?
Cost of living over the past 20-30 years has become much more constant throughout the US.Â But income tax rates have not changed much from state to state.Â It is important to consider variables such as tax rates and overall cost of living before making what could be a life-changing move.Â Schools, property costs, neighborhood, employment, local economy…all of these are some of the variables.
Want to know the individual income tax rates by state?Â Here goes:
|Alaska||No State Income Tax||Nebraska||2.56-6.84%|
|Arizona||2.5-4.5%||Nevada||No State Income Tax|
|Arkansas||1-7%||New Hampshire||No State Income Tax|
|Colorado||4.63% flat rate||New Mexico||1.7-4.9%|
|Florida||No State Income Tax||North Dakota||2.1-5.54%|
|Illinois||3% flat rate||Pennsylvania||3.07% flat rate|
|Indiana||3.4% flat rate||Rhode Island||3.75-9.9%|
|Kansas||3.5-6.45%||South Dakota||No State Income Tax|
|Kentucky||2-6%||Tennessee||No State Income Tax|
|Louisiana||2-6%||Texas||No State Income Tax|
|Maine||2-8.5%||Utah||5% flat rate|
|Massachusetts||5.3% flat rate||Virginia||2-5.75%|
|Michigan||4.35% flat rate||Washington||No State Income Tax|
|Missouri||1.5-6%||Wyoming||No State Income Tax|
*All rates effective as of 2007 tax year
**Many states with no income tax have higher property tax or other comparable taxes.
Income tax may be one of the last things on your mind when considering a move and/or career change.Â Whether it is a consideration or not, it can and will affect your finances.Â Be sure you know all of the variables before you pack up and get outta dodge!