As Tax Day (April 15th) looms, we are once again reminded of how deeply the government reaches into our pockets. However, as Bloomberg details, there is one way to reduce your income tax burden – switch states.
Federal tax rates are the same no matter where you live, but state income taxes are all over the place. State and local taxes are a major factor when considering cost of living. As the new tax plan goes into effect, they’ll be even more important.
If you don’t properly consider all the forms of taxes in those states though (income, sales, and property), you could end up paying a higher total tax bill than you might expect. Download the City Versus City cost of living calculator to ensure you don’t make a rash decision based on the lure of a lower income tax rate.
That said, the chart does provide a decent overview that will be interesting to compare your more precise results against after you get ZIP code level comparisons from City Vs City cost of living calculator that accounts for all types of taxes.
The Winners And Losers
California and Hawaii are by far the worst states for income taxes. North Dakota, on the other hand, is the best. Who knew?