Income taxes can hinder wealth creation. Fortunately, for Americans seeking to save on taxes, there are nine states without income tax where we can choose to reside. These states are listed below in alphabetical order:
- Alaska
- Florida
- New Hampshire
- Nevada
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
Ideally, you'll secure a fantastic job and find your soulmate in one of these nine income tax-free states. As your income grows over the years, you'll save more by avoiding state income taxes.
When you retire, you probably won't need to relocate because no income tax usually means tax-free Social Security benefits, IRA or 401(k) withdrawals, and pension payouts. In fact, there are now 41 states that don't tax Social Security benefits after Missouri and Nebraska decided to stop taxing Social Security benefits in 2024.
If you become wealthy, you can also consider states that don't tax estates or inheritances. Thankfully, most states without state income taxes also exempt estates and inheritances from taxation.
Therefore, if you want to get rich and save on taxes, it's beneficial for people early in their careers to study state taxation rates. As you age, regardless of how high the state income tax rate is, it becomes increasingly challenging to move due to the network you've established.
High-Paying Jobs Tend To Be In High Income Tax States
Regrettably, most of the highest-paying jobs tend to be concentrated in states with the highest income taxes, such as California, New York, New Jersey, and Connecticut. These states serve as major hubs for industries like technology, finance, and management consulting.
Upon graduating from college, my only job offer came from New York City, where an additional city tax ranging from 3% to 3.87% is imposed. Despite my attempts to secure a consulting position at firms like Deloitte, KPMG, or Andersen Consulting in Virginia, another state with relatively high income taxes, I couldn't progress beyond the initial interview stages.
While the idea of avoiding state income tax may appear attractive, especially for individuals with high incomes, understand that there's no free lunch. States without income tax still require revenue to fund vital services like infrastructure, education, and emergency services. This funding is primarily sourced from sales, property, and estate taxes.
If you intend to invest in a home, a crucial step towards long-term wealth accumulation, it's essential to consider property tax rates across states. Note that states like Texas, Florida, and New Hampshire, which do not collect state income taxes, often compensate through higher property taxes. In addition, home insurance, premiums in Florida, Texas, South Dakota, and Tennessee have been rising after the normal.
The Best No Income Tax States To Work And Get Rich
I've decided to rank the best nine no income tax states into three buckets, from worst to best. The variables include money-making opportunities, weather, other taxes rates, entertainment, food, and culture. The first three variables are more objective than the last.
If you currently reside in one of these no income tax states, I'd love to hear your pros and cons too.
Bucket #3: The Least Attractive No State Income Tax States
Alaska (Republican leaning)
Alaska boasts stunning natural beauty, making it a paradise for nature enthusiasts. However, the state's harsh winters, limited food variety, sparse entertainment options (such as no major sports teams), and heavy reliance on oil revenues, which account for 85 percent of the state budget, pose significant challenges.
Apart from the oil and gas sector, there are few other lucrative industries in Alaska. You can work in the tourism industry, but it's hard to get rich, unless you own the leading tourism company.
While Alaska is one of the five states without a state sales tax, local jurisdictions have the authority to impose sales taxes, which can reach up to 7.5%. The average property tax rate in Alaska stands at 1.18%, surpassing the national average. Despite a relatively affordable median home price of around $369,000 in Anchorage according to Zillow, there are no inheritance or estate taxes in the state.
During the summer months, Alaska offers unparalleled attractions, with Denali National Park being a standout destination. However, the state's isolation and limited availability of high-paying jobs prevent it from being a top choice among no-income-tax states for employment.
South Dakota (Republican leaning)
If you're a fan of pheasant hunting, South Dakota in the fall is ideal. Likewise, if you enjoy fly-fishing for trout in the Black Hills or fishing in the dammed-up lakes along the Missouri River, which almost bisects the state, you'll find plenty to appreciate. Additionally, the Black Hills offer excellent opportunities for hiking, mountain biking, and camping for three out of the four seasons.
However, winters in South Dakota are long and harsh. They can begin as early as October, bringing with them weeks of bitterly cold temperatures ranging from -20 to -40 degrees below zero, with wind chills making it feel even colder.
South Dakota's largest industries by revenue include hospitals, corn, wheat, soybean wholesaling, and meat, beef, and poultry processing, which collectively generated billions of dollars in 2023. But if you're a regular worker in these industries, it'll be hard to get rich.You have to own the businesses to make a fortune.
Regarding taxes, the state imposes a 4.5% sales tax. Localities have the authority to add up to an additional 4.5%, resulting in an average combined rate of 6.4%, which falls below the national average.
The average property tax rate in South Dakota is 1.32%, ranking 15th according to the Tax Foundation. Despite this, the median price for a home in Sioux Falls is affordable, standing at only $325,000 according to Zillow. Furthermore, South Dakota does not have inheritance or estate taxes.
New Hampshire (Democrat leaning)
“Live free or die,” has to be the best state motto in our country.
New Hampshire is yet another state that offers fantastic outdoor activities throughout the spring, summer, and fall seasons. From mountains to oceans, lakes and woods, the state is a haven for outdoor enthusiasts. Whether you enjoy hiking, snowboarding, swimming, canoeing, kayaking, hunting, fishing, snowmobiling, ATVing, or taking in the vibrant fall foliage, New Hampshire has it all. Plus, it has a relatively non-humid climate and plenty of sunny days. Everything is a short drive away, including Boston, which is 63 miles away.
In addition to not having a state income tax, New Hampshire does not tax earned income. However, there is currently a 5% tax on dividends and interest exceeding $2,400 for individuals ($4,800 for joint filers). Fortunately, this tax is gradually being phased out, decreasing to 3% in 2024, with complete repeal scheduled for January 1, 2025.
On the downside, New Hampshire has an average property tax rate of 2.15%, ranking third according to the Tax Foundation. Therefore, if you're considering a move to New Hampshire, renting instead of buying may be a more prudent option. However, the state does not impose inheritance or estate taxes.
New Hampshire's largest industries by revenue include colleges and universities, hospitals, and property, casualty, and direct insurance, which collectively generated billions of dollars in 2023. If these industries don't align with your interests, finding a high-paying job in New Hampshire may prove challenging.
Bucket #2: The Second Best Group Of States With No State Income Taxes
Tennessee (Republican majority)
Tennessee, a landlocked state in the U.S. South, boasts vibrant cultural hubs like Nashville and Memphis. Nashville, the capital, is renowned for its country music scene, featuring iconic venues like the Grand Ole Opry and the Country Music Hall of Fame. Meanwhile, Memphis is famous for attractions like Graceland and Sun Studio, pivotal to the legacies of Elvis Presley and rock ‘n' roll.
The state imposes a 7% sales tax, with an additional 2.75% state tax on single item sales ranging from $1,600 to $3,200. Localities can tack on up to 2.75%, resulting in an average combined state and local rate of 9.55%, the second-highest in the nation. However, local taxes are capped, with only the first $1,600 of any single item being taxable.
Property tax rates average 0.75%, ranking 38th according to the Tax Foundation. The median home price in Nashville hovers around $452,000, roughly the national average. However, the median home price in Memphis is only $152,000 according to Zillow! Tennessee does not impose inheritance or estate taxes.
Tennessee experiences varied climates, with mild winters in the western part and cooler winters in the east due to its proximity to the Appalachian Mountains. Nashville typically sees light frosts in January, with average lows of 28°F and highs of 47°F, while Memphis experiences average lows of 33°F and highs of 50°F. Both areas fall within USDA Hardiness Zone 7a, where snowfall is infrequent and rarely lasts more than a few days.
Wyoming (Republican leaning)
When Wyoming comes to mind, Jackson Hole often takes center stage as a ski destination favored by many affluent individuals. I once had a client who moved from San Francisco to Jackson Hole with his wife and triplets to reduce their tax burden.
Wyoming's allure extends beyond tax advantages; it's a breathtaking state offering some of the finest outdoor experiences. From the majestic Grand Teton and Yellowstone National Parks, home to iconic landmarks like Old Faithful and Devils Tower, Wyoming is a haven for nature enthusiasts.
The state's economy is heavily reliant on mining and agriculture, particularly beef cattle and sheep farming. Additionally, Wyoming's tourism industry is thriving, catering to millions of visitors who flock to its parks and historic sites. However, earning a substantial income in Wyoming can be challenging unless you're able to work remotely in finance or tech.
Wyoming imposes a 4% state sales tax, with municipalities authorized to add up to 2%, resulting in a combined rate of 5.36%, the seventh-lowest in the nation according to the Tax Foundation.
Property taxes in Wyoming are among the lowest in the country, averaging just 0.61% and ranking 44th. Meanwhile, the median home price in Cheyenne stands at a modest $354,000 according to Zillow. However, in Jackson Hole, where many affluent individuals relocate for tax purposes, the median home price soars to around $2.6 million. Notably, Wyoming does not levy inheritance or estate taxes.
Washington (Democratic majority)
Located in the Pacific Northwest, Washington is known for its rainy and overcast weather, although its summers are typically warm and dry, ideal for outdoor activities. Seattle, often compared to a smaller version of San Francisco, is a hub for high-paying jobs and recreational opportunities.
Despite its appeal, Washington falls short of being a top destination for those seeking states with no income tax, primarily due to its high median home prices. For example, Seattle, where many high-paying jobs are concentrated, boasts a median home price of approximately $890,000 according to Zillow. However, neighboring Tacoma offers more affordable housing, with a median home price just below $500,000.
Washington imposes a 6.50% state sales tax, with a maximum local sales tax rate of 4.10%. The average combined state and local sales tax rate is 8.86%, placing Washington's tax system 28th overall on the 2023 State Business Tax Climate Index.
Property taxes in Washington average 1.09%, ranking 23rd. The state also levies an estate tax on estates valued over $2.193 million, with tax rates ranging from 10% to 20%. However, there is an exemption threshold adjusted annually for inflation, along with a $2.5 million deduction for family-owned businesses valued at $6 million or less.
Bucket #1: The Best Three States With No State Income Taxes
Finally, we reach the best three states to work and get rich, with no state income taxes. They are Florida, Nevada, and Texas. These are great states for the middle class and retirees. In fact, Trump has proposed middle class tax cuts in his second administration that will benefit residents in these states and more.
Florida (Republican majority)
Florida offers a high quality of life with a plethora of attractions and amenities. The state enjoys a warm climate year-round, perfect for outdoor activities like beachgoing, golfing, and boating.
In addition to its natural beauty, Florida boasts vibrant cities such as Miami, Orlando, and Tampa, providing residents with access to excellent dining, entertainment, and arts venues. With numerous parks, nature preserves, and recreational areas, Florida offers abundant opportunities for residents to lead active and fulfilling lifestyles.
The cost of living in Florida is generally lower, with reasonably priced housing options, goods, and services. For instance, the median home price in Miami-Dade County is approximately $600,000, making it an attractive destination for both working professionals and retirees seeking to maximize their retirement savings.
Furthermore, Florida's homestead exemption offers property tax relief to homeowners, further enhancing its appeal as a retirement destination. However, homeowner's insurance rates are surging as insurance companies pull out or jack up rates. Before buying a home in Florida, ask if you can get home insurance coverage and at what cost.
Florida imposes a 6% sales tax, with localities authorized to add up to 2%. On average, the combined sales tax rate stands at 7.02%, placing it in the middle range. The average property tax rate is around 1.06%, ranking 25th according to the Tax Foundation.
Getting rich in Florida is more feasible due to a very positive business tax climate and plenty of high-paying jobs in finance, cleantech, defense, IT, and life sciences. The problem with Florida are the constant risk of flooding from the hurricane. Home insurance costs are rising at the fastest past as a result. To counteract such costs, Governor Ron Desantis wants to abolish property taxes.
Nevada (Democrat majority)
The state boasts a business-friendly regulatory climate, with minimal red tape and low corporate tax rates. This has led many businesses to establish operations in Nevada, contributing to economic growth and employment opportunities across various industries. The tourism industry remains Nevada's largest employer, with mining continuing as a substantial sector of the economy: Nevada is the fourth-largest producer of gold in the world.
The state's natural beauty is showcased through its stunning landscapes, including picturesque deserts, majestic mountains, and tranquil lakes. Outdoor enthusiasts can indulge in activities such as hiking, skiing, and boating, while urban centers like Las Vegas provide world-class entertainment, dining, and nightlife options.
Housing prices in Nevada are generally more affordable, allowing individuals to find suitable housing options within their budget. The median home price in Reno is about $550,000 while the median home price in Las Vegas is only about $420,000.
Additionally, Nevada does not impose inheritance or estate taxes, making it an appealing destination for retirees looking to preserve their wealth for future generations. However, Nevada's sales tax average is around 8.23%, which is relatively high. So better to buy things elsewhere. Meanwhile, the average property tax rate is only 0.8%, ranked #30 according to the Tax Foundation.
Texas (Republican majority)
Texas offers a thriving economy and ample employment opportunities across various industries. The state's business-friendly policies, coupled with its robust job market, attract businesses and professionals alike. Texas is home to diverse sectors such as energy, technology, healthcare, and finance, providing a wealth of career prospects for individuals seeking job opportunities or entrepreneurial ventures.
There's a reason why companies such as Tesla and Oracle have relocated their headquarters to Texas. Meanwhile, Apple is investing billions in a new factor in Texas too.
In addition to its economic advantages, Texas boasts a rich cultural heritage, vibrant cities, and breathtaking natural landscapes. From the bustling metropolises of Houston, Dallas, and Austin to the serene beauty of the Hill Country and Gulf Coast, Texas offers something for everyone. Outdoor enthusiasts can explore its numerous parks, lakes, and trails, while culture aficionados can enjoy world-class museums, theaters, and music venues.
Texas offers a relatively low cost of living compared to many other states, with affordable housing options and a reasonable overall expense profile. The median home price in Houston is only $272,000, $320,000 in Dallas, and $552,000 in Austin according to Zillow. Austin home prices are currently going through a pullback.
The Texas state sales and use tax rate is 6.25 percent, but local taxing jurisdictions (cities, counties, special-purpose districts and transit authorities) also may impose sales and use tax up to 2 percent for a total maximum combined rate of 8.25 percent. Unfortunately, the average property tax rate is 1.9%, #6 rank.
Minorities May Have A Different Point Of View
One common assumption about states without income tax is that they offer a welcoming environment for everyone. However, this isn't always the reality, particularly for minority communities.
I had a white friend who moved from San Francisco to Tampa Bay after selling his company for tens of millions. He and his white wife adopted three black children and she wanted to be close to her family. Despite their initial excitement, they decided to move back to San Francisco after only ten months.
When I asked why, he explained that his children faced discrimination and bullying in Tampa Bay, which was not as welcoming to minorities as San Francisco, a minority majority city. Cultural attitudes about different people are simply different everywhere you go.
Personally, I've felt at ease living in New York City and San Francisco since 1999. These cities are so diverse that I don't stand out as a Taiwanese Hawaiian person. However, during my time in Williamsburg, Virginia, and visits to other southern cities like Abingdon, I sometimes felt out of place.
While people were generally warm, I encountered racism in high school and college in Virginia. As a result, I've gravitated towards more diverse cities over more homogenous ones. The racial tension I felt also served as a tremendous catalyst to become financially independent ASAP.
Cities That Require The Highest Income To Afford A House
Now that I've ranked the best no state income tax states, it's time to drill down to the best cities in these states. Once again, determining the best cities in these no income tax states is subjective. However, we can use objective measures to help make a cogent argument.
As someone who wants to earn the most money and build maximum wealth, you want to go to cities with the most high-paying jobs. You also want to live in a vibrant city where there's lots to do without having to freeze your behind off for three-to-four months a year.
To find the cities in the no income tax states with the highest paying jobs, we can do a back-of-the-envelope analysis by finding which cities require the highest incomes to afford a home. After all, high incomes and high home prices go hand in hand. The reason why homes are expensive in the first place is because of the income and wealth opportunities available to its residents.
As a reminder, below is a chart that depicts how much a household needs to earn to afford the typical home in their local market, based on data from Zillow.
Top American Cities To Get Rich And Pay No State Income Taxes
To identify the best cities, we just identify the highest income requirements cities within the nine no-income-tax states. They are:
- Seattle, WA ($213,984)
- Miami, FL ($151,163)
- Austin, TX ($149,267)
- Nashville, TN ($128,535)
- Orlando, FL ($121,418)
- Dallas, TX ($121,398)
- Las Vegas, NV ($119,529)
- Tampa, FL ($116,329)
- Jacksonville, FL ($109,271)
I stop at Jacksonville because any other city in the nine no-income-tax states falls short of the United States median income of $106,536. I'm looking for cities with the most robust income opportunities in the country.
comment or ask me about Houston, given it is in no income tax state Texas. Unfortunately, Houston ranks as one of the unhappiest cities in America given the high required net worth needed to feel rich relative to the low cost of living.
Seattle Is The Best No-Income-Tax City To Earn The Most
Seattle stands out as the premier metropolis without state income taxes. What distinguishes it? The heavy hitters—Amazon, Microsoft, Starbucks, Deloitte, Providence Health, and many other influential players call it home. Though the weather may not suit everyone, if it's good enough for Bill Gates, it's certainly worth considering for the rest of us.
Miami takes second place as a no-income-tax city, having attracted tech talent and venture capitalists. However, the post-pandemic allure toward Miami has waned, as entrepreneurs and investors recognize the positive network effects of cities like San Francisco and New York.
In third place is Austin, drawing in new businesses and migrants from pricier locales such as San Francisco and Los Angeles. It's a magnet for big names like Tesla and Oracle, enticing them to relocate their headquarters. At one point during the pandemic, it seemed like everyone was moving to Austin.
Whether you're part of the majority or a minority, these cities have something to offer everyone.
Choose The Best Job First, Best City And State Second
While the appeal of avoiding state income taxes may be tempting, prioritize finding the best job opportunity first. If that happens to be in one of the top no state income tax states, consider it a bonus. However, if not, you can always explore relocation options after gaining more experience.
With remote work becoming increasingly common post-pandemic, the opportunity to move to a no state income tax state has expanded. But it's wise to make such a move before committing to buying a house, choosing schools for your children, and establishing strong social connections. Once these aspects are in place, relocation becomes more challenging.
Upon retirement, relocating to a no income tax state may seem appealing. However, since your income is likely to be lower in retirement, the tax savings may not be as significant as when you were working. At this stage, the move may only be worthwhile if you're motivated by factors like being closer to grandchildren or enjoying better weather.
Hard For Me To Relocate After Being In San Francisco Since 2001
Personally, I value living in a city with a moderate climate that enables me to enjoy outdoor activities year-round. As an avid tennis and pickleball player, I can't do freezing temperatures during the winter. And if it does snow, then there had better be a fantastic mountain to ski on close by!
Cities like San Francisco, Los Angeles, San Diego, and Honolulu are among my favorites, despite their high tax rates. Fortunately, Hawaii doesn't tax Social Security and pension income. California doesn’t tax Social Security income either.
While I could potentially save money by moving to Austin or Seattle, I have no desire or need to do so. My friends are here in San Francisco, and my family resides in Honolulu. Additionally, passive investment income is taxed at a more favorable rate. Therefore, I'm content where I am.
However, for younger individuals or those with substantial wealth, making a move now to save on taxes could be a wise decision. Unless life becomes unbearable in a high-income tax state, you'll likely adapt to paying higher taxes and find ways to make the best of the situation.
Reader Questions
Which is your favorite no state income tax state and why? Which do you think are the best states for retirement? Are you willing to relocate to a no income tax state to save? If you have, I'd love to know how difficult the move and the adjustment was. What are some of the downsides of living in a no income tax state? If you currently reside in one of the nine no state income tax states, I'd love to get more of your point of view!
Recommendations To Build More Wealth
As people become more mobile thanks to technology, more people should logically migrate to a no income tax state. Therefore, I think it's worth investing in real estate in the best cities in the no income tax states.
To do so, check out Fundrise, a private real estate investment platform that began in 2012. It primarily invests in lower-cost cities with higher rental yields. I am personally an investor in Fundrise to the tune of over $300,000 and Fundrise is a Financial Samurai sponsor.
For superior cash flow management and net worth tracking, explore Empower, a free wealth management tool I've trusted since 2012. Empower goes beyond basic budgeting, offering insights into investment fees and retirement planning. Stay on top of your finances because there's no rewind button in life.
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Sam,
I’m not sure where you are getting your numbers for property taxes in Tennessee. Tennessee on average has lower property taxes than almost everywhere. Shelby County (Memphis) is much higher than almost anywhere in the state, likely contributing to skewed figures. Davidson County (Nashville) is about 0.75% and Shelby county is on average 1-1.6%, but most of the state averages in the 0.5-0.6% range including Williamson county (home to many celebrities).
Alas the Washington State estate tax exemption has been stuck at the same level since 2018. While in theory and by law it is supposed to adjust with inflation, it is tied to an index that no longer exists thus it is stuck. The legislature has failed to correct this, which would think they would do if they cared.
Stealth tax increase by the Seattle metro. While the US Census bureau changed the cities in the Seattle metro officially, the idea that the estate tax exemption should be tied to inflation in the Seattle metro is obvious. This intentional non-increase of the estate tax exemption will show to be foolhardy. The state received more than expected the first year of the capital gains tax, as no one expected the state Supreme Court to uphold it. (Washington has decided capital gains tax on stock investments are a sales tax, as opposed to how the IRS and all other states view it, an income tax). This also led to the exodus of one the state’s most famous residents (Bezos). The combination of the two will lead to many with some money fleeing the state as they get older. Washington (like Texas) is a great state to earn income (mostly during your working years), but not so great to retire or die in. California, despite it’s punishing taxes on income, can be quite generous to retirees (if they have structured their retirements accordingly).
For me the only downsides of Florida (I am a retiree) is summer heat and high cost of car insurance. The first problem we solve by spending summers far away from it. The lowest quote quote for our cars is $1600 for 6 months and we don’t drive expensive cars (under 1/10 of annual income). The average quote was $2000 for 6 months but some of them went as high as $3000 plus one-time sales tax on each car even though sales tax has already been paid in other states. I have solved the second problem by registering cars elsewhere (in North Carolina I paid under $2000 for 4 cars for the whole year). How an average Joe making under $200K and having a $60K truck parked in a driveway while wife drives a new SUV can afford Florida rates I don’t know.
I’d say New Hampshire should be higher ranked on your list.
Distance from my house to Boston is 39 miles vs 64 that you listed. Draw 40 road miles from San Francisco and you are still in very suburban areas.
Parts of southern NH are part of the Boston census area for cost of living salary adjustments for remote workers.
There are large employers in southern new hampshire including Fidelity. There are also a number of defense contractors.
Boston is commutable and much more doable with hybrid work. Many of the biotech companies are north of Boston reducing that distance.
Property taxes are high as a percentage of assessed value, but low in dollars terms. Compare the cost of a 4 bedroom 2.5 bath house in different metro areas. I pay 10k a year for a 10/10 school district.
Diversity in aggregate is less than what you may want, but I’ve never had a problem. My next door neighbor is black. My older child’s best friend is black. The diversity of the population moving in is more diverse (and more affluent) than the historic population of retirees and seasonal tourism workers.
I live in Texas and love it. Note that it can be unbearably hot in the summer depending on where you live, which can be as much a negative as the harsh winters you mentioned for other states. Texas is a large and diverse state. I’m always curious when people comment that they don’t like the vibe in Texas. Where exactly have you been? The vibe is very different in Austin, San Antonio, El Paso, Laredo, and Port Aransas. Remember that the 15 smallest US states could all fit inside Texas!
The biggest drawback to living in Austin (besides the summer heat, traffic, and mosquitos) is the property taxes. In Austin the property tax rate is 2.3%, which has affected my personal and investment real estate choices. Personally, I live in a smaller, less expensive home than I can “afford” because I refuse to pay $40,000 a year in property taxes (with a homestead exemption)! For investment properties, the taxes certainly cut into profits and have altered what I buy.
Finally, although I still believe the Texas economy is booming, I wanted to point out (since it was mentioned twice in the article) that Oracle announced in April 2024 that after four years it is moving it’s headquarters from Austin to Nashville. Maybe that will move Tennessee up on your list!
Oh dang, why did oracle say they were moving? Surely Oracle will still have lots of people in Austin?
Larry Ellison stated that Nashville is the center of the healthcare industry, which is the new focus for Oracle’s software. Oracle bought the electronic medical record giant Cerner Corp. in 2022 for $28 billion.
I imagine there were some pretty serious tax benefits as well, as Oracle plans to spend $1.2 billion on its new campus. From what I read, it won’t be completed until 2030, so I don’t know when the actual transition will take place.
This is most likely related to desire to expand in healthcare, to which Nashville offers large healthcare firms (think HCA) and rock bottom (personal) taxes. Tennessee’s business taxes are not the most friendly, but assuming they received tax breaks, which I would assume they did, it could make sense. Cerner has always been based out of Kansas City. I’d find it hard to believe that Oracle couldn’t have worked with the state governments in KS or MO to receive a similar deal.
The New Hampshire interest & dividends tax rate is 4% for this period, drops to 3% next year, and is repealed Jan 1, 2025. I know because I’ve had to pay it for the past 10 years. :-)
Reference: https://www.revenue.nh.gov/transparency/interest-dividends.htm
Oops. I actually am a year behind myself. :-) It was 4% for 2023, is 3% for 2024, and then ends.
Good to know! Will update the post with this info. thx
Sam, it’s great that here in Texas we have no state income tax. But we have very high property taxes and sales tax. In different surveys Texas is 10th to 25th in total state tax burden. Still, it’s the best way to go since you can somewhat control property taxes by choosing how big a house to live in and control sales tax by watching your spending or buying at garage sales. It hasn’t always been so but the Texas economy is booming. I live in a suburb of Houston and the amount of commercial development is amazing. That in itself is a problem since it leads to more congestion but it’s a good problem to have I guess. Love your blog. Charles
I hear you on the high property taxes. I’m wondering if the best way is to rent a humble home in Texas and earn high income. Thanks for commenting Charles.
Glad you’re enjoying the suburb of Houston! You may find this post a chuckle: The Unhappiest Cities In America Based On A Wealth Realty Ratio
Florida, Texas, (and California) are suffering from insurance crises. Despite Florida’s lower property taxes than Texas, the average homeowner’s insurance premium have exploded to about $10K annually, making this on par with Texas. Texas, not to be outdone, is now seeing catastrophic increases. Landlord insurance in Texas has become almost impossible to find. (Ask me how I know!).
Moved from East bay to The Smokies in TN a year ago, I cant be happier about the move, affordability, taxes, fun, SAFETY, and we both work remotely!
There is no way we are coming back to CA ( my wife is from Santa Cruz, CA)
I think our next step will be to move back to home country Spain, I still cant handle the health industry here.
Nice to hear Luis. I’ve not heard of people leaving Santa Cruz from The Smokies as NOT missing Santa Cruz. Did it feel unsafe in Santa Cruz?
What if you could comfortable afford to live in Santa Cruz, would you still prefer The Smokies?
Oh no, we moved from Pinole (East Bay) to the Smokies in TN, My wife is originally from Santa Cruz but it was never an option to move there and one of the reasons was affordability.
After moving to the smokies I think we found our sweet spot and we are super happy here, of course not having my wife’s family as close is not ideal but they visit often.
We own property in IL (super high property taxes, state tax etc), we also own in FL- low to zero taxes and so far home insurance not terrible. Overall- our healthcare insurance is rising too fast & that doesn’t matter where you live. But I just read an article today in WSJ- older people causing insurance costs to rise. And these too big/too greedy insurance companies are feeling it. We rent in NYC to get our city fix. Our daughter lives in Seattle so we get to see that beautiful climate as well. Every state/city has pluses and minuses…it’s all about family and friends so you can’t quantify that. Thanks again Sam once again for your hard work!
Sounds like you are living a rich and diverse life! I have always thought about living in different places of the country in the world again once our kids are older.
I hear you on healthcare insurance, as we pay $2500 a month in unsubsidized premiums. The reality is, Americans are getting less healthy, so the healthier half to subsidize the less healthy.
In addition, it’s hard to be for profit healthcare companies, so you might as well Invest in them, like United healthcare.
I visit Washington State often and enjoy it there. The vibe is really different than Vancouver, Canada and it feels slower and more family friendly. If moving were easy, I’d consider.
I never realized Vancouver was hustling and bustling city. I’ll have to visit again one day.
It’s packed! Nice get the best of both worlds since Bellingham is only an hour away.
Probably one of the best places to live, if you are restricting yourself to no income tax states. Oregon has no sales tax, and winter is easier than NH.
I live in New York (not in the city), family reasons. Was planning to move to Tennessee when we retire but our pensions are exempt from state tax, our Social Security is immune to state tax, my disability is immune to state tax, and the first 20k removed from pre-tax retirement accounts (401k plans, etc.) for each of us (so 40k total) is exempt from state income tax. Our portfolios are of the “buy and hold” variety and I don’t favor dividend stocks so very little is taxed there, and RMDs at age 75 are a long ways off. I plan to move a good deal to Roth IRAs in the interim, and then we shall see. Look at everything, don’t just assume you have to move to North Dakota.
Great advice! Great see New York is friendly to retirement income.
The lack of availability of medical care should also factor into choosing a state to live. Some of these states have such strict anti-abortion laws that women with non-viable early pregnancies would have difficulty obtaining a termination unless they traveled out of state.
Note, Washington State has a new capital gains tax. I believe this is one of the reasons Jeff Bezos moved out of WA to Florida.
I moved to San Antonio last year from Wn. For months, I would not see the sun. It snowed. The year before I moved I fell on my right hip walking across an icy parking lot. At 70, I realized had I broken my right hip I might die from surgery, infection,blood clot. After falling, I walked as gingerly as possible. I worried all winter that I might fall. I did not want this fear, so I moved.
When you retire, you may be able to move. My suggestion is if you aren’t happy move.
Glad you’re OK! And I’m glad you moved to a warmer city in retirement. Yes, if you’re unhappy, please make a change folks.
We haven’t paid state taxes in 22 years! After graduating USAFA was stationed in Texas..then Florida where we stayed residents for whole active duty career.
Retired at 43 with a nice tax free pension and high paying defense contractor job in Anchorage.
Anchorage is the best kept secret. Wonderful city that doesn’t have the “typical Alaska winters”. Our families in Minn and NH have it way worse.
Yes we pay a little bit more for travel, but the PFD money sends our family of 5 to Hawaii every Christmas (and it’s only a 5 1/2 flight).
Life is pretty good in Alaska!
Impressive! And I’m glad you enjoy living in Alaska. I visited Anchorage and Denali National Park as a teenager. They were so beautiful. I still remember sleeping in a cabin next to a lake on a hike and trying to fish. None were caught. Then we found this stream where there were hundreds of salmon.
I personally believe you missed the mark not making Houston one of the top three best cities. If you look at the average pay for workers in its primary industry (oil and gas) it isn’t quite tech money but it is close. Layer on top the inexpensive housing and you have a beautiful nexus of earning and spending. Not exactly the most beautiful city topographically but we’re all math nerds here anyway right?
Maybe! I have you some as one of the least happiest big cities in America. Check out this post: https://www.financialsamurai.com/wealth-reality-ratio-unhappiest-cities/
Are you there now?
We looked at this before and our observation was that the “NET” effect on wealth (excluding CA and NY) were a wash. Some states that did not have income tax, they had some of the highest property taxes (e.g. Texas, New Hampshire). Some states taxed SS whilst others taxed private pensions more…. but the NET (for us) was a wash.
Yes, super high property taxes in Texas and New Hampshire. I wonder if it would still be a wash if one rented in those states and owned property elsewhere instead.
Smart to calculate the net result. Which state did you end up in?
Colorado.
Florida has some stiff home insurance. If you have a mortgage with required insurance on it, the tab can be well into five digits yearly with a $6k deductible or percent. Add the close to the water premium with the salt corrosion and flood insurance and it is noticeable. There is a segment of paid off homes with the owners going bare. Options are few and many are pushed into Citizens which is the state plan.
And you can add high auto insurance to that. Everyone gets a lawyer per one insurance broker.
Yes, I hear about the high insurance tab. The 10 coolest housing markets in the country now are all in Florida. More boom bust prone it seems.
I agree about FL car insurance because it is a no fault state. There is also a sales tax on car registration transfer even though you paid your sales taxes out of state. That is why none of our cars will bear Florida registration but homeowners insurance is not bad in my opinion. Yes, we pay about 80% more than what we used to pay for our NC property but the house 2.5x more expensive and we live in a coastal area. Saving on state taxes, however, is noticeable. In fact, our FL residence pays for itself including mortgage even though the cost of living (gas, groceries, utilities, property taxes, services) is several percent above the national average.
Please note that the NH I&D Tax is being phased out. The I&D Tax rate is 5% for taxable periods ending before December 31, 2023. That rate is 4% for taxable periods ending on or after December 31, 2023, and 3% for taxable periods ending on or after December 31, 2024. The I&D Tax shall be repealed for taxable periods beginning after December 31, 2024.
Live Free or Die. Effectively no individual sales, income, or estate tax. Bring back the SALT deduction and my higher property taxes would not matter.
Good to know about the Interest & Dividend Tax being phased out. How cool is that state motto, Live Free or Die?
So tax friendly in NH, except for property taxes.
So renting and earning in NH sounds like a good idea. Just don’t know how which lucrative industry to join to get rich there.
Great post Sam, I like your approach to evaluating the states and counties in your assessment, very helpful.
What data was used to categorize Florida as primarily Democratic?
We moved from NY to FL mainly for the weather, proximity to the beach, and lower overall cost of living, — but that overall lower cost also includes no state income or estate tax as a significant advantage. It’s been a great move for us as part-time consultants/ retirees. That said, we made our money in high-income NYC, and we raised our two kids, now young adults, in culturally rich, diverse and inclusive NYC. The best city/ state to live varies significantly by life stage.
Can you share some downsides of living in Florida? Also, which city are you living in Florida? Thanks
I’m in Northeast Florida (Jacksonville is the MSA, St. Augustine, Ponte Vedra Beach, Amelia Island are some of the other towns close by). A well-known downside is the high property taxes and rapidly escalating insurance. We regularly get cancelled for our primary and/or rental properties, and we’ve never made a claim. Another downside is that, even though Jax is quite large by land mass, it’s far less populated than my first home (NYC) and even Miami, Orlando or some other FL cities. That is also an advantage to quality of life, but from a career perspective, I think it’s a career downside. We moved here when we were already semi-retired — all our clients are still in NY. I imagine it would have been much harder to have built the careers we did (in HR and IT) if we started here.
Eh, Florida is a Republican state, Sam.
True that. Updated. But the registered vote count is actually quite close.
DeSantis won a landslide re-election!
Hi Sam, great post. What would you consider the best states to retire to in order to preserve wealth? For example, are there states beyond the ones you listed that don’t tax retiree income at a state level that we might want to consider post working?
Thanks!
I was originally from N.H. It’s a beautiful state but with cold winters. While there is no state tax they do tax pensions. Since I have a pension I’m thinking of relocating eventually to Nevada. While N.H. has a higher property tax percentage wise it’s still relatively much cheaper, (thinking CA here), because property values aren’t as high as western states in general.
Didn’t Jeff Bezos just move from Washington to save on taxes?
That was a large capital gains play, not an income tax play.