If you’re considering moving to a different state, taxes in the new state may be the deciding factor—especially if you expect them to be lower.
If your objective is to move to a lower-tax state, it may seem like a no-brainer to move to one that has no personal income tax. But you must consider all the taxes that can potentially apply to local residents – including property taxes and death taxes.
For example, the state of Washington has no personal state income tax, but has an estate tax that could cost big bucks if you die there. The combined state and local sales tax rate can be as high as 10.4%.
You must establish domicile in the new state to benefit from lower taxes and to avoid continued exposure to taxes in the old state.
Lastly, consider the distinct possibility that some states may raise taxes in response to lower tax revenue and higher spending due to the COVID-19 mess. We think this is more likely to happen in already high-tax states than in lower-tax states.
Always talk to your tax advisor or CPA. If you need a referral call me.