Posted on Monday, January 31, 2011
More home owners may start factoring in taxes more as they pick where to live, particularly as some states’ dramatic tax increases make them less affordable.
Some of the states with the largest population gains from the 2010 U.S. Census are also known as low-tax states, such as Florida, Texas, and Nevada, Reuters News reports.
"There can be pretty big dollars involved," says Lisa Osofsky, a CPA and financial adviser who assists clients in New Jersey, New York, and Connecticut. For example, a person who could be earning several million dollars could save $50,000 or $100,000 by living in a lower-tax state, she says.
A family of four with $150,000 income could save $13,368 in state and local income taxes if they moved from New York to Florida, according to figures by Bob Meighan of TurboTax. They’d likely save even more when property taxes and estate taxes are figured in too.
Retirees in particular may be lured to low-tax states. After all, retirees who have money in a tax-deferred retirement account during their work years would profit if withdrawing the money in a low-tax state.
Also, a couple with $85,000 in retirement income and Social Security benefit could make an extra $112 a month in income tax savings by moving from California to Michigan, as well as cashing in on an overall lower cost of living.