First of all, I know. The title may seem a bit inappropriate. I'm not going to be telling you what you should do with your life. I wouldn't want anyone to tell me what I should do with my life. I do think that there are some interesting key points that could convince myself to move to these U.S. states I'm talking about. I'm involving you to hear what your thought is and if you would consider moving for these reasons as well. Let's have a look at what these 2 states are and why I would consider moving to them.
Why on earth would I consider moving to Florida?
Answer : The beach, Disney World & beach parties.
Not exactly :-). Let's have a look why I would actually consider moving there.
As a non-American, I believe every state has its charm. I wouldn't mind traveling around a bit. I also know that every state has its down sides. I know California (state I'm currently living in) has quite a lot of downsides. But that doesn't take away the fact that it's a beautiful state to live in. Even with the super hot weather, terrible driving and lack of water, I still love it. And trust me, these things are actually extremely annoying.
Get To The Point
The actual reason why I would consider leaving California is based on a few different reasons. The main one, which I will be talking about today is called, taxes. Let's have a look at some California state tax facts.
Personal Income Taxes
Tax Rate Range: Low – 1.0%; High - 13.3%.
Income Brackets: ** Lowest – $7,582; Highest – $508,500
Number of Brackets: 9
Personal Exemptions: Single – $106; Married – $212
Tax Credits: Single - $99; Married – $198; Dependents – $326; 65 years of age or older – $99
Standard Deduction: Single – $3,906; Married filing jointly – $7,812
Medical/Dental Deduction: Same as Federal taxes
Federal Income Tax Deduction: None
Retirement Income Taxes: Social Security and Railroad Retirement benefits are exempt. There is a 2.5% tax on early distributions and qualified pensions. All private, local, state and federal pensions are fully taxed.
Even though I'm not part of the U.S. military, I added their tax rules as well in case someone who is reading this and is part of the military was wondering what their tax rules are.
Retired Military Pay: Follows federal tax rules.
Military Disability Retired Pay: Retirees who entered the military before Sept. 24, 1975, and members receiving disability retirements based on combat injuries or who could receive disability payments from the VA are covered by laws giving disability broad exemption from federal income tax. Most military retired pay based on service-related disabilities also is free from federal income tax, but there is no guarantee of total protection.
VA Disability Dependency and Indemnity Compensation: VA benefits are not taxable because they generally are for disabilities and are not subject to federal or state taxes.
Military SBP/SSBP/RCSBP/RSFPP: Generally subject to state taxes for those states with income tax. Check with state department of revenue office.
Would you like to see what Florida's income tax looks like?
Here you go.
Personal Income Taxes
No state income tax
Retirement Income: Not taxed.
Now, I don't know about you, but I'm planning on keeping making a lot of money. Taxes have been a part of my personal life for as long as I can remember. Coming from Belgium - where income tax easily rounds up to 50% or more - I'm used to some tax burdens. So I'm not jumping to leave California right away, but with my business income increasing, I'm starting to give it a second thought.
Now, If I wanted to go even a step further, I would consider moving to Alaska. As Florida, Alaska does not have any income tax, nor retirement tax. It does have a difference in sales tax though. Let's have a look at both states' sales tax.
State Sales Tax: 6% (food, prescription and non-prescription drugs exempt). There are additional county sales taxes which could make the combined rate as high as 9.5%.
Gasoline Tax: 54.82 cents/gallon (Includes all taxes)
Diesel Fuel Tax: 58.09 cents/gallon (Includes all taxes)
Cigarette Tax: $1.34/pack of 20
State Sales Tax: The state currently does not have a sales and use tax. However, 62 municipalities impose local sales taxes that range up to 7.5%. Typical sales tax rates are from 2% – 5%.
Gasoline Tax: 29.7 cents/gallon (Includes all taxes)
Diesel Fuel Tax: 36.2 cents/gallon (Includes all taxes)
Cigarette Tax: $2.00/pack of 20 (Anchorage – add $3.45)
Now, I'm not really that much of a smoker, but I do buy gas from time to time. With Alaska having a Gasoline tax of 29.7 cents/gallon, it beats Florida by a long shot. Florida's Gasoline tax is 54.82 cents/gallon. Now, I do buy stuff from time to time, so I'd be very happy not having to pay any sales and use tax at all. Unlike Florida, where you would have to pay State Sales Tax.
At the end of the day I actually would consider moving to one of these states when there is a lot of income involved. With the constitution not really having a clear statement on if taxes are actually mandatory, I wouldn't mind paying a little less. But in reality there's a lot more to it. Obviously I'd have to like this new environment. I'd have to enjoy living there and even though I am currently not in a place where I am actively looking to move, it does cross my mind from time to time. That's why I decided to write about it.
Besides tax laws, there are a few health laws that I would take in consideration if I would decide to move. Recently, California has made some incredibly bad moves when it comes to health. I'll keep that for another article as I am patiently waiting for some public reactions to the new health laws recently introduced here in California.
What about you? Would you move to another state for tax purposes? I'd love to hear your thought on it! Let me know by commenting in the comment section down below!
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