California seems to be in the news for all the wrong reasons such as high taxes, rising insecurity and numerous other factors. However, it is not the only state from which people are migrating.
The hunt for lower taxes is one of the main reasons why people move from one state to another, especially as they approach retirement. Lower taxes allow you to save more money, thus making a lot of financial sense. Here are some of the tips to consider if you want to join the exodus to lower tax states.
Evaluate all the local and state taxes
There are different tax types that one should consider when moving to a different state. Many people are migrating from California because of the increase in personal income tax, but the tax and so states that charge no personal income tax seem very appealing. Moving to a different state based on income tax alone can be very misleading.
One might find themselves paying high amounts in property tax in a state where they pay no income tax. The ultimate decision on which state to settle for may also be guided by the income level. If you have a high income, avoiding high-income tax rate states would be a wise idea. If you are retired, then the best option is a low property tax state.
Estate and inheritance tax
If you are keen on the amount of tax you are comfortable with while alive, then perhaps also consider the estate inheritance tax imposed on your estate upon your demise. An inheritance tax is a tax that inheritance beneficiaries pay while an estate tax is a tax imposed on the entire estate.
Most states charge estate tax while there are some that charge estate and inheritance tax. It would be best if you thus considered all the taxes you will likely incur when planning to move to a lower tax state. Other than taxes, there are a few other things to consider, such as earthquakes, hurricanes, and other natural calamities common in some states. Some states may also increase their tax rates to adjust to the COVID-19 related lower tax revenue.