Tax season is safely behind us, so it’s time to breathe a sigh of relief. But if you paid more to the IRS than you’re feeling you ought to have, perhaps it’s also time to start thinking about doing things a little differently. Maybe it’s time to think about living in a state where the tax burden is less than it is where you are now.
Some states have low property taxes, low petrol taxes and low sales taxes. Some have low-income tax levels, and some expect not one cent of tax cash from its residents. Each of these states is the nearest thing there is to an American tax refuge, and there are many considerations for any person brooding about relocating to one.
Using data from tax service supplier HR Block, here are states that qualify as American tax havens.
10. Florida
Florida is a popular destination for retirees, and not only because of the sunlight. Residents don’t pay any personal tax, the sales taxation rate is six percent and the gasoline tax is seventeen cents per gallon.
The state’s high property taxes deter it from ranking higher on the list. The rate is 1.09 % of the median home value according to Vincent Bates, lead tax research analyst for HR Block’s Tax Institute.
9. South Dakota
South Dakota residents pay no private tax. Its sales tax is 4 percent and it levies no company income taxes, and has no estate tax. As of 2010, its gas tax is 22 cents per gallon.
South Dakota also has something else going for it besides for low taxes and that’s low unemployment. As of March 2012, the state had a unemployment rate of 4.3 percent, well short of the nation’s average, according to the bureau of Labor Statistical data.
8. Delaware
Delaware is a small mid-atlantic state that’s the home of Vice President Joe Biden. It assesses no state general sales tax whatsoever, and the highest tax bracket in the state is 5.95 percent.
Delaware’s local governments picked up $626.90 per capita in property taxes during financial year 2006, the latest year available from the Census Bureau notes Elle Kaplan, CEO and founding partner of Lexion Capital Management, an investment management firm. Delaware’s per capita property tax collections rank 43rd nationally, Kaplan asserts.
7. New Mexico
New Mexico’s private tax rates vary, depending on the filing standing and income of the person. However, it tops out at a reasonable 4.9 %.
The petrol tax is seventeen cents per gallon, another attribute that makes the state fascinating to taxpayers. The sales tax is 5.13 percent.
6. Utah
Utah has had a 5 % individual income tax rate since 2008, and it applies to everybody at every income level. It has a sales and use tax of 4.7 percent, and it imposes no taxes on intangible assets like intellectual property. It also doesn’t collect estate taxes.
5. Tennessee
Tennessee levies a 6 % tax on income from dividends and interest. But the state leaves the salaries and salary of its taxpayers untouched.
On the other hand, the state sales tax is 7 percent, one of the state’s increased rates, and the state has the fifth-lowest median household income in the country, at $41,461.
4. Louisiana
Louisiana’s property tax on owner-occupied housing is .43 percent, third-lowest rate in the country.
Louisiana also has a low sales tax rate of 4 %, which is made of 3.97 % state sales tax and 0.03 % Louisiana Tourism Promotion District sales tax.
3. Colorado
Colorado has low taxation levels across the board. It levies a relatively low 4.63 % flat tax on the personal income of its residents and has a low sales tax level of 2.9 percent.
“Most small companies are S Firm or sole proprietorships,” announces Kaplan. “They pay tax for their business at the tax level of people. That suggests Colorado is a fascinating place to run a little business.”
2. Alabama
The property tax on owner-occupied housing in Alabama is .41 %, second-lowest in the country. Nevertheless any person wanting to start a business in Alabama must be aware of its company tax rate.
“Alabama imposes a flat corporate tax of 6.5 percent on all corporate income,” asserts Kaplan. “That means wannabe entrepreneurs and smaller companies in the ‘ramp up phase’ would be far better off moving elsewhere.”
Alabama has a low petrol tax, but there’s a catch. “Alabama’s municipalities have the right to levy their own ‘local option’ taxes on gasoline,” says Kaplan. “Tread conscientiously if you settle in a city that adds the local option of imposing a further petrol tax.”
1. Wyoming
Wyoming is the best place for overall taxation levels in the country. It has low taxes everywhere, including one of the lowest petrol taxes in the United States, at fourteen cents per gallon. It also has low property taxes and sales tax, and levies no private or corporate income tax.
Jerry Lynch, president and certified monetary planner at JFL Consulting, urges caution before heading to the Cowboy State in a fit of low-tax-rate fever. “If you get up and move to a state you’re not familiar with, the move could cost you 10 % of the value of your home,” he said in an interview.
“So if you are moving to another state, rent before buying and ensure you need to live there. What you save in taxes is little compared against the price of selling your house twice.”
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