How much money do you save by not paying state income tax? While everyone's situation is different, eliminating state income taxes might save you thousands of dollars each year.
The actual figure will be determined by your income, tax bracket, and current home state. Furthermore, while a state without an income tax may save you money on taxes, there may be a cost, such as a higher state sales tax or fewer public services.
Income tax-free states
There are now 8 states that do not levy an income tax, as well as one that does not levy a wage tax. Of the fifty states in the United States, below are the states that that do not have an income tax:
In addition, earnings are not taxed in New Hampshire. Interest and dividend income are the two types of income that are taxed.
Disadvantages moving to states that do not have a income tax
There are a few reasons why moving to a state where there are no income taxes isn't always a good idea. The first and most important argument is that the amount of money you save by moving to one of these states is directly proportional to your income. If you don't earn a lot of money, paying no income tax is less beneficial.
States that do not levy an income tax nonetheless require funds from other sources, such as property and sales taxes. States that do not have an income tax, on average, have substantially higher property and sales taxes.
If you move to a state with no income tax but don't make a lot of money, your money may not stretch as far. You'll pay more for goods and services in the state because of the higher sales taxes. If you wish to own property, you'll almost certainly have to pay a greater property tax.
Aside from income problems, even if you live in a state without one, you may be liable to an income tax. If you earn money from a business in a state that levies income taxes, you may be liable for taxes in that state.
Advantages of living in a state where there is no income tax
Living in a state that does not tax income can be a huge benefit, especially for high-income families. While many states impose substantial taxes on wealthy incomes, states that do not have a personal income tax do not tax them at all. This enables high-income individuals to save a larger portion of their earnings. As a result, many wealthy people prefer to spend the majority of their time in jurisdictions without a state income tax. Individuals of all income levels, of course, benefit from not having to pay state income tax. Residents of these states will be able to preserve their hard-earned money during tax season for retirement, vacations, school tuition, and other expenses.
If you’re planning for an Interstate Move, contact Interstate Movers in New Haven, CT