Income Taxes Too High? Move!
No one likes paying income taxes, but doing so is one of those things that’s necessary in any civilized society. That said, there’s no reason why you shouldn’t try to minimize your tax bill. You should pay your due, but why pay more than you have to in income taxes? It turns out that tax rates in the United States can vary dramatically depending on where you love. Some states have sky-high income taxes and other states don’t have them at all. On top of that, some cities will tax you, too.
While there are lots of ways to minimize your income taxes, your best bet if you want to truly minimize the amount you have to pay each year would be to move to a place with lower tax rates. Ideally, you’d move to a place where state taxes were relatively low or even nonexistent. That’s not a dream; there are seven states in this country that have no state income tax at all, and a couple more that have taxes that are truly minimal. While you’re always going to have to pay something, these states offer a genuine opportunity to put a huge dent in your tax bill simply by making the decision to live somewhere else.
States With No Income Taxes
While the vast majority of the states in the U.S. have state income taxes and seven states do not. We’ll list them below.
Alaska – OK, it’s cold. Really, really cold. But it’s also pretty and sparsely populated. And Alaska residents receive an annual check from the state for their share of the state’s earnings on oil and gas royalties. The check is usually for $1000 or so, so combining that with the fact that the state has no income taxes and you’re in good shape. Obviously, living in Alaska isn’t going to suit everyone, but if you’re the adventurous type, you might want to think about it.
Florida – Beaches. Lots of golf. Unlike Alaska, Florida has warm weather. They don’t call it The Sunshine State for nothing. And besides all of those things, you’ll pay no state income taxes if you’re a Florida resident. The state is not without taxes altogether, of course; you’ll pay a higher than average sales tax when you buy things as well as property taxes that are likely higher than average. But you won’t have to pay on your taxable income and for many people, the combination of that and the good weather makes for a great place to live.
Nevada – Do you like to gamble? If so, you’d be in luck, as Nevada draws a lot of state revenue from their many casinos. That revenue is good for residents, as it makes up for the fact that they’re not having to pay anything in state income taxes. The weather isn’t as good as you’d get in Florida, and depending on where in Nevada you choose to live, the weather can be uncomfortable. Las Vegas is where most Nevada residents live, and the temperatures there in the summer can be unbearable. On the other hand, the weather in Reno and Lake Tahoe can be quite pleasant. Regardless, there’s lots to do in Nevada, and you’ll have more money with which to do it since you’re saving on your income taxes.
South Dakota – OK, South Dakota isn’t everyone’s favorite tourist destination, but there are things to do there besides look at Mount Rushmore. And you’ll save a bunch of money on income taxes that you can use to travel to other places if you’re not entirely thrilled with living in one of the more sparsely populated states in the country.
Texas – They say that everything’s bigger in Texas…except your income taxes, because you won’t pay any if you live in the Lone Star State. There are lots of big cities, interesting geography, and higher than average property taxes and sales taxes. But income taxes are 0, and that’s unlikely to change anytime soon.
Washington – Yes, it rains a lot, but there is a lot to do in Washington State. It’s a beautiful place, with nice mountains and forests, and Seattle is a pretty hip and fashionable place to live. And, of course, the state income taxes don’t exist, making it a great place to live. Sales taxes are higher than average, and the state does have a gross receipts tax for businesses. Property taxes are higher than average, too, and if you live in Seattle, you’ll also find that the cost of property is rather dear.
Wyoming – Speaking of sparsely populated, Wyoming has the fewest residents of any state, and no income taxes. While the state is mostly farm and ranch land, the northwest part of the state is mountainous and includes Yellowstone National Park. There aren’t any big cities, though, so if you need one, you’ll have to go to Denver or Salt Lake City. Still, Wyoming is attractive and housing in most parts of the state is quite affordable.
In addition to the states above, Tennessee and New Hampshire have no income taxes on wages, but they do tax interest and dividend income.
Further Savings on Income Taxes
For most people, moving to another state to save on income taxes is inconvenient, and depending on your occupation, may even be impossible. Don’t worry; there are other ways to lower your tax bill. The Federal government does allow you to take a number of deductions from your income before calculating your tax bill, and most people aren’t taking advantage of all of the deductions to which they’re legally entitled.
That’s because most people don’t know about all of the deductions they could be taking. Why? Because our tax code is complex. So how do you learn about them? One way is to take the advice of someone with years of experience. We’ll recommend a Website where you can find out about ways of saving on your income taxes that you can’t even imagine, and it’s all legitimate. And the best part? Access to this resource is tax deeuctible. You’ll save money as well as save money on the cost of learning how to save money.