Relocation for Tax Reasons

Americans are frequently on the move – and they often move from states with high income and real estate taxes to states that will allow them to keep more of their hard earned money. When individuals are required to relocate because of job changes or job requirements, they do not have much choice as to where they must live. However, retirees will often take into consideration whether or not there is a state income tax in the place in which they plan to relocate. Another factor in the choice of a state move is the homeowner's property tax.

Following is a list of states with NO State Income Tax:

• Alaska
• Florida
• Nevada
• New Hampshire (On Dividend and Interest Only)
• South Dakota
• Tennessee (On Dividend and Interest Only)
• Texas
• Washington
• Wyoming

From the period of April 1, 2000 to June 30, 2004, statistics show that 1.4 million native born Americans moved from their high tax homes to one of the nine states that have no income tax requirement.

Some states are particularly tax friendly to retirees:

• Colorado
• Hawaii
• Illinois
• Kentucky
• Michigan
• New York
• Pennsylvania

However, New York not only has a state tax but also imposes a city tax on individuals working in the city – even though they may live in New Jersey or Connecticut. Because of New York 's high tax structure to those who are employed in the state, their growth rate is the lowest in the nation at 1.1%. The national average is 3.3% and the highest growth rate of any state in the nation is 12.2% in the state of Nevada.

Another factor that might be taken into consideration when deciding where to move could be sales tax:

• Alabama – 4%
• Alaska – none
• Colorado – 2.9%
• Delaware – none
• Georgia – 4%
• Hawaii – 4%
• Louisiana – 4%
• Montana – none
• New Hampshire – none
• Oregon – none
• South Dakota – 4%
• Wyoming – 4%

The five best states for property taxes (per capita) are:

• Alabama - $210
• New Mexico - $283
• Kentucky - $286
• Arkansas - $321
• Louisiana - $324

While the national average is $783, the five worst states for property taxes (per capita) are:

• New Jersey - $1,591
• New Hampshire - $1,555
• Connecticut - $1,500
• New York - $1,329
• Rhode Island - $1,233