Articles

Thinking About Moving?

In Accounting & Finances, Business, Family, Taxes on October 14, 2014 by Sufen Wang

movingThese State Tax Rates Will Make You Think Twice
 
Home is where the heart is. It’s also where you pay taxes. Before you go searching for greener pastures, check out this breakdown of some of the states with the highest tax rates in the nation.
 
tax houseA lot of folks spend their days California dreamin’, ready to head west and strike it rich in the nation’s most populous state. But living in the Golden State comes at a high price in the form of taxes. With the state income tax ranging from 1% to 13.3%, and the state sales tax currently at 7.5%, California life isn’t so easy on the pocket. Note that the 1% income tax rate is only fair game up to $7,582 for individuals and $15,164 for married joint filers; after that it just goes up and up and up. And remember, that sales tax is also just the minimum – when you look at local taxes in individual cities and counties, the sales tax can jump to as high as 10%.
house_money1Even worse, living in California means spending half the time living in a car, but residents don’t even get a break on driving-related taxes. CA has the highest annual vehicle license fee (VLF), along with the highest gas taxes in the United States, at 53 cents a gallon versus the national average of 31 cents.  Furthermore, although Californians get a nice little break in property taxes with the first $7000 of the home’s value exempted, the property is so darn expensive in the first place, this little bit of tax relief doesn’t even make a dent. Traffic, a high cost of living, and expensive real estate – what more could you ask for?
 
newjerseyCalifornia’s pretty bad, but the east coast has its fair share of tax-unfriendly states. New Jersey has the highest property taxes in the country, with the average tax amount on the state’s average home value of $348,300 coming in at $6,579. Connecticut is close behind with the second-highest property taxes, with the average tax on the state’s average home value of $291,200 at $4,738. connecticutConnecticut’s gas taxes are also hot on the heels of California, at 49 cents per gallon, and although there are no local sales taxes, residents pay a state sales tax of 6.35% on most items. New Jerseyans have it lucky when it comes to gas taxes and fees, only paying 15 cents per gallon, but the 7% state sales tax coupled with additional taxes and fees in areas like Atlantic City, make it tough to survive in the Garden State.
 
newyorkNew York, New York, big city of dreams…and the highest combined state and local taxes in the country. New York’s state income tax ranges from 4% to 8.82%, and although the state sales tax of 4% doesn’t sound too shabby, local jurisdictions tack on additional sales taxes from 3% to 4.75%. Smokers also are going to want to pick a different state – any state – other than New York to live in. The $4.35 tax on cigarettes is the highest in the nation, and New York City adds an extra $1.50 tax to each pack. Yikes! 
 
Rhode Island is a tiny state with some pretty hefty tax rates. The 7% state sales tax applies to most items, including vehicles, and the Ocean State has the seventh-highest median real estate taxes. Maine is also up there – and not just in terms of geography. The Pine Tree State lowered the income tax from 8.5% to a maximum 7.95% last year, but single taxpayers only have to make $20,900 before they become eligible for that lovely tax rate prize. And Maine also charges an annual vehicle excise tax, which can run into the hundreds of dollars each year.
 
hawaiiIf you’re ready to abandon the first 48 and head off for a permanent tax vacation in Hawaii, maybe hold off on that one-way ticket. Hawaii’s gas taxes average around 48 cents a gallon, giving California a run for its money. Hawaii also has a top income tax rate of 11%, and pretty much everything other than prescription drugs is taxed – including services and food. Even California doesn’t tax its food! The good news is that Hawaii’s property taxes are low, with the median property tax on the state’s median home value of $517,600 coming in at $1,324.
 
Bear_CaliforniaOf course, all of these states have a lot to offer beyond high taxes. However, if you’re considering moving to save money, don’t forget to take into account the full gamut of each state’s taxes, from income, to sales, to property, to gas. Otherwise home sweet home could become home bittersweet home.

Sufen Wang, M.S.Accountancy
Wang Solutions, Long Beach, CA (562) 856-0793
Editor: Hannah Huff, M.F.A. Creative Writing: Poetry, (626) 806-5805

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