The Beginner’s Guide to
Considering Moving to a No Income Tax State? Here are Key Things to Know
At the moment, seven states in America don’t charge the residents any income tax. You may feel like moving to one of these states now. Maybe you are already thinking about all the things you can do with the money you keep when you don’t get any income tax deductions. However, before you rush to make any decision to move or not to it is wise you consider all facts. The goal is to objectively review things and see if it is truly an economic decision to relocate to a no income tax state. Below are the crucial items you need to examine before you relocate.
If you are a young person who is looking for his or her first job, then you may consider moving to no federal income tax state. Most likely, by the time you graduate, you will have to accumulate massive student loans. You may be in a difficult financial position despite having secured employment when most of your money goes towards student debts and the federal income taxes. It is therefore wise you find work in one of the states where you are not charged any income taxes. Hence, you may have money that you can use to pay the student debts fast when you don’t have tax deductions. It may be super costly to move when you have a family and a job in another state to the one with zero federal income taxes.
You should be prepared to face other taxes when you move to a state with no federal income tax. It is enticing to imagine earning, and you don’t have to pay taxes. The challenge, however, is that the government needs to generate revenue by collecting taxes. Hence, you will have to pay taxes even though the money is not directly subtracted from your salary. The taxes may be informed of property taxes and sales taxes. Therefore, when you move to these no income tax states, you should expect your expenditure on basic stuff to go up.
The other thing is to acknowledge that the income tax is supposed to promote equity. The government charges the income tax depending on the total money you earn. Hence, people with a high income pay more than the ones with a low wage. The challenge with sales taxes is that you pay an equal amount in taxes irrespective of your income. It is, therefore, unfair for the low-income earners to pay equal taxes as the wealthy people.
Thus, if you are thinking about moving a zero-income tax state, you should explore the above items.