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These are the states you should live in to pay the least taxes
Normally, from a socio-economic perspective, people consider the job first, then the area, then, maybe at the timing of their first paycheck, the state tax income tax rate. When purchasing a property, the regressive property tax as a number, rather than a rate is considered. By the outcomes of collection or utility thereof. Meaning, if the county levying and collecting personal property taxes develops placement services for citizens, business acquisition services money used to attract employers , parks, community events, and other community activities, such as maintenance and social services. Which states have particularly complicated tax rules for families? How has the total amount families pay in state and local taxes changed as a result of the new tax code? There are yet changes to salt state and local taxation. Though referencing the second question, I believe the difference will be accounted for in utility of taxation. With less deduction available for property tax and sales tax, the state and local governments will be required to allocate tax collections with an emphasis upon utility. Which states have the best mix of taxes and government services? Notice the best states have large corporate or excise tax resources from which to draw. Should people pay taxes based on where they live or where they work? The age-old question of domicile. I would answer in this way. Citizens should pay taxes when there is an unmet need. Normally, the needs of the state are met when economic activity exists. Thus, the citizen should pay tax where they spend the majority of their time. Opinions expressed are my own and do not necessarily reflect the opinions of Northern Michigan University. I personally do not think that the younger generations of earners usually consider taxes when deciding where to live. They are willing to move where employment pays high wages for the qualifications that they have accomplished. They seek better opportunities for employment, even if there are state income taxes that have to be paid. However, the seniors or retired taxpayers are more inclined to consider locations where there are better medical facilities, good weather, and happy and healthy environment. Having to pay state income taxes or higher sales taxes may also be considered to a certain extent, if their retirement or other sources of income are limited. The state and local governments must lower some state tax rates to attract new residents and stimulate the economy, with consideration of age and income bracket. The younger wage earners making above-average income should be paying more to offset the state taxes collected from seniors, whose income sources are limited and just coming from social security and retirement funds. These states must consider restructuring their state tax reporting to attract new residents, which will contribute to economic growth and development. California seems to have complicated state tax rules that are not clearly benefiting low-income families. For this year, , the current tax filing season is following the tax codes. I have prepared some returns for families with children, showing more refunds than the prior years, and I think that the changes in the new tax code will result in additional refunds because of the Child Tax Credits and Child Care Credits. But, I have prepared some returns where families with no children are now paying a little bit more because of the income bracket structure. So, I think that the economy will continue to progress and will balance the tax contributions from those taxpayers who had the means and ability to pay. And taxpayers who have bigger families will benefit more because of the increase in child tax and other credits, thereby resulting in higher refunds. These families will have the ability to use more funds to further the needs of their children and create a more wholesome and happy family. Yes, people should pay taxes based on where they live or where they work, in order to have a balanced distribution of population and growth within the nation. This will also assist the state and local governments to better serve the needs of their residents, based on the economic development and contributions they receive. When funds are appropriated well, the state will find ways to build infrastructures and maintain growth and economic development, which eventually will mirror the GNP of the whole nation. I cannot speak to the tax policies of the fifty states plus D. In my experience, people choose where they are going to live by proximity of family, lifestyle, cost of living, and finally, taxes. Taxes are almost always last, though they do tie into the cost of living. This alone makes it clear that taxes are not the primary driver of where to live. That said, it is important to work with our client families to help them understand how their tax burden will change in light of their pending move. Taxes may come into play for some individuals when deciding where to live, what job offer to take, etc. However, many of my clients already know where they want to live, and they usually base the decision on non-financial factors -- it is closer to family, in a state they would enjoy living, etc. I do not believe that taxes should be the sole reason why someone picks to live in one state over another. However, I am keenly aware of the differential in taxes among states, so tax planning becomes even more important if someone is going to live in California versus Texas. Usually, incomes are adjusted to account for a state that has a higher cost of living, so the hope is that the increase in income will help offset some of the increased tax burden. However, this is not usually the case with physicians, as you can earn more living in an area that is more remote, less competition, etc. Many states offer incentives to businesses if they create and maintain job growth in the state. The incentives can range from tax credits, exemptions, lower rates and more. These types of incentives are a great way to attract people and businesses to an area. Another idea is to offer a more generous homestead exemption for property tax, so that people are incentivized to buy a home instead of rent. If someone owns a home, they may be less likely to relocate to another city or state. The complexity of state tax rules comes up when a state does not conform to a Federal rule. If a state adopts all of the Federal rules, then the return tends to be more straightforward. To the extent a state "decouples" from the Federal rule, that will create more complexity with the state tax filing. It is a matter of waiting to see how the states will respond. The amount that families pay in state and local taxes has not necessarily changed as a result of the new law, but rather they are going to receive less deductions on their Federal return. The lower marginal tax rates are supposed to help offset the loss of deductions, but for many in California, New York and other similar states, they may not see a true offset. The unfortunate part is that this is a form of double taxation without a corresponding offset. You pay Federal tax on your income, and then pay state tax on that same income. Prior to the law change, you could get a deduction for the state and local taxes you paid if you itemized but going forward, that deduction is severely limited. I can't think of any that have a "best" mix. Most states are running large deficits and are looking for income wherever they can find it. States are becoming more aggressive with their audits, so I don't know if there really is a place that has a good balance. Generally, you are subject to tax on all of your income in the state that you live in for the year. However, if you end up paying tax in the state you work in and the state you live in, you receive a deduction for taxes paid to another state. I have a client who lives in a state that does not impose income tax Washington , but works in a state that does Pennsylvania. Unfortunately for her, she has to file and pay taxes in Pennsylvania, even though she lives in Washington. Since Washington does not have an income tax, there is no offset with the Pennsylvania tax. I do not necessarily believe that a distinction should be made as to where taxes are assessed -- whether it is where you work or where you live. I think having that distinction will just create abuse in a system that is already overly complicated. Lee Owner of Strategic Financial Planning Do people usually consider taxes when deciding where to live? I find that some of my clients do, and others do not. I do believe all people should be aware of the impact that state and local, sales, property, as well as federal income taxes will have on their savings and investment nest egg. Whether they do and how much they weigh that factor in deciding where they live should vary based on their personal situation and personal preferences. My city Plano and my state Texas have both made considerable efforts to woo companies to move their headquarters and create jobs here. There have been many examples of success, with Toyota being a prime one. I would say that Texas does a reasonably good job of limiting the complications of its tax rules. I think this is still being debated amongst states. I have heard of states like California trying to come up with creative ways to potentially assess taxes, to limit the impact their residents would experience by the SALT limitations. It would certainly be nice if it were one or the other, but currently, the answer is usually both. Most likely, they will need to file a resident return in the state they live, and a non-resident return in the state they work. Methodology In order to identify the states with the highest and lowest tax rates, WalletHub compared the 50 states and the District of Columbia across four types of taxation: For each state, we assumed all residents own the same car: Data used to create this ranking were collected from the U. Was this article helpful?
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