Should I Move to a More Tax-Friendly State? What to Consider

Tax policies vary from state to state. As such, many Americans think about moving from states with high tax implications, like Minnesota, to states with lower tax burdens, like Texas, Nevada, Wyoming, and others.

That said, there are other factors worth considering before making such a move. Here are a few of the most important.

Cost of Living

A new state’s light tax policies may be alluring, but living expenses like housing, groceries, utilities, fuel, and healthcare might be higher in the exchange. Take a deep dive into how these cost-of-living adjustments may come into play in your new location.?

Employment Opportunities

Your targeted state may or may not have opportunities that line up with your professional goals and abilities. For this reason, it’s a good idea to research the employment situation in the new state. Are there enough opportunities you can take advantage of? Will your compensation be sufficient? You need to know before you go.

Quality of Life

A state with low taxes may be disadvantageous in other respects. Access to healthcare, educational resources, crime rates, and recreational opportunities are all worth thinking about, as they’ll play a major role in your life. Consider your preferred lifestyle and what adjustments you might need to make to have it before relocating.

Weather and Climate

A new area’s climate can affect more than just your comfort level. States with extreme temperatures, poor air quality, and more sun exposure can affect your overall physical and mental health. They may also pose challenges when it comes to heating and cooling costs, driving, and enjoying outdoor activities.

Take the time to learn about your target state’s annual weather patterns and evaluate how they may impact you.

Tax Implications

State taxes may be lower in the new location, but your federal income tax burden won’t be. You could also face variable rates in sales, property, excise, estate, and local taxes. Perform a complete accounting of what tax responsibilities you may incur beyond the state level and decide whether you can afford them. If not, it may be best to stay put.

Real Estate Market

What housing opportunities are available in the place you’re thinking about moving to? What market trends might you have to account for? Furthermore, what’s going on with your current state’s seller market?

Talk to a qualified realtor or financial expert for detailed information on real estate opportunities, new housing costs, and projected income for selling your current property. If you don’t intend to buy anytime soon, find out the typical rental charges in your new area.

Moving Costs

The cost of relocating can be surprising. Moving services, transportation fees, temporary storage, packing supplies, cleaning expenses, and new utilities may cut into your moving budget. Before you make arrangements, take stock of everything you’ll need and determine whether it’s worth the cost.

Community and Culture

Local customs, population diversity, amenities, school quality, and public transportation are just a few of the factors that can impact your decision to move to a new area. That’s on top of economic issues, healthcare access, and community standards that may be starkly different than what you’re used to.

Ask others familiar with the locale you’re looking into about what changes you may expect as you carry out your planned move. That way, you’ll have a better idea of what you’re getting into.

Proximity to Family and Friends

Personal relationships are extremely important to think about. If you leave your current state, you may be more removed from your personal support network. Of course, the opposite may also be true — you could be moving to be closer to the family and friends you love.

Think clearly about how the nature and availability of your support network will be impacted by your move, whether it’s closer or further away.

Reach Out for More Information and Advice

Zabel & Co. helps clients through transitional times, including relocating to other areas for tax reasons.

Our advisors have authoritative knowledge about how moving to a new state may affect crucial aspects of your life, occupation, and relationships. More importantly, we offer resources that can be highly valuable if you decide to follow through with a move.

Ready to learn more? Contact us today using our online form to set up a consultation.