Early Retirement Extreme Forums

This list is not the straight-forward tax rate list, but adjusts for cost of living... yet another way to slice the information though it's probably not aimed at ERE since we're not normal when it comes to cost of living.
https://finance.yahoo.com/news/states-w ... 00579.html

Yay, the only way from here (IL) is up!

The RE tax rate in IL is nasty. We pay $4000/year which is 40% of our budget! Conversely, the tax on groceries which is most of our discretionary spending (about 20% of our budget) is 1% and because the RE tax is really high, the home prices are low as the market folds the cost of paying the RE tax into the mortgage costs which in turn depresses the housing prices. IOW, the upfront house costs are low.

+1 for Illinois sucking. We pay $2000 per year on a house assessed at like 30K-33K I think. Market value of 122K.

The only way to get around it is to own less house. It is the one thing I hate about living here and will likely propel us to a state like SD or Montana later in life.

People across the river in Iowa talk about Illinois being horrible for taxes, but Iowa isn't much better. They might have half the RE taxes, but they make up for it in other taxes, mostly income taxes. Folks in my bracket have nearly a 9% income tax rate and they just hiked their gas taxes by 10 cents per gallon so they are only 20 cents behind us now.

Here's the other side of the spectrum.

I confess I was surprised when Oregon didn't make the worst list because, you know, "that income tax rate".

Which all goes to show that one has to consider one's personal situation rather than relying on general purpose articles/rankings.

The term I like to use is 'lifestyle optimization'.

The only reason we are staying in Illinois is due to their homeschooling laws....or rather lack thereof.

I moved from the 5th worst (RI) to the 5th best(NV)!

But not sure how CA ended up on the best list...

http://www.csmonitor.com/USA/Society/20 ... alls-apart

Tragicomically amusing and tangentially related. States are certainly set up to favour a certain type of inhabitant. FL is the obvious example of catering to retires who derive their income from investments. An ERE state list would need to account for more factors. For example, craigslist is well-developed in CA and being able to flip things used makes a bigger difference on the bottom line than paying 3% more in taxes.

The methodology of simply adding the percentages from each category makes it easy to compute and display, but is suspect for truly evaluating tax burden. On the best tax states list, I moved from #29 (Texas) to #11 (Oregon), and pay a higher effective tax rate here despite having a significantly lower salary. This is, of course, influenced by behavior and spending habits. Losing the sales tax wasn't much benefit for someone who doesn't do a whole lot of consumer spending (and groceries aren't subject to sales tax in TX) and the income tax is high with a 9% bracket starting at $8,400/year of annual income. As a renter in both places, I don't directly pay real estate tax and rents are quite similar despite moving from a large city to a college town.

cmonkey wrote:The term I like to use is 'lifestyle optimization'.

Absolutely! Oregon meets my preferred lifestyle quite well, where the beaches (and most waterways) are public and salmon/trout fishing opportunities abound and there is a range of climates to suit most anyone except those who prefer the perpetually hot southern California, Arizona, or gulf coast states.

Ha, if we're talking non-monetary benefits, then yes, Oregon has a lot going for it. Though I'll take searing hot southern summers over western Oregon's gray, miserable winter any day

The only reason we are staying in Illinois is due to their homeschooling laws....or rather lack thereof.

I agree that Illinois has very few requirements for homeschooling. That said, none of the states I checked out require much more to homeschool. Typically the requirements are something like the teacher must be "qualified" (parents are qualified), certain subjects must be taught (the usual reading, math, science, etc.). http://www.hslda.org/ has a summary of every state.

Yeah, in many ways it has more to do with financially optimizing whatever place I want to be. I almost feel like I'd be doing something wrong if financial implications where the key driver in where I lived. They are important, but other considerations are more important.

slimicy wrote:But not sure how CA ended up on the best list...

One reason -- it only uses the property tax percentage without adjusting for real estate values. In terms of actual taxes paid, I suspect California will rank much lower.

Gilberto de Piento wrote:

The only reason we are staying in Illinois is due to their homeschooling laws....or rather lack thereof.

I agree that Illinois has very few requirements for homeschooling. That said, none of the states I checked out require much more to homeschool. Typically the requirements are something like the teacher must be "qualified" (parents are qualified), certain subjects must be taught (the usual reading, math, science, etc.). http://www.hslda.org/ has a summary of every state.

Many states require registration with the local school and the worst also require standardized testing and such. Illinois and Iowa are among the best, there isn't any requirement to register or test. Illinois even has laws protecting home schools from overbearing school districts. Thus our reasoning for staying here. Iowa has higher income taxes, otherwise we'd live there since we have family in Minnesota.

Ideally I'd like to live in South Dakota but you are required to register with the schools over there...

Tyler9000 wrote:

slimicy wrote:But not sure how CA ended up on the best list...

One reason -- it only uses the property tax percentage without adjusting for real estate values. In terms of actual taxes paid, I suspect California will rank much lower.

This page has the property taxes paid on the median house price. The filtering doesn't work for me, but you can see CA is one of the highest.

https://wallethub.com/edu/states-with-t ... xes/11585/

I agree with those who say it's about optimizing where you are at.

There are tradeoffs. While you may have lower or no taxes in one state, you'll find higher costs in other areas. I only saw a few on the list, because of slow internet, but I'm guessing Alaska isn't on there. You'll have minimal to no taxes in Alaska depending on where you're at but you'll also have higher food and energy costs.

It may not be higher costs in an area like Wyoming, but there are still tradeoffs. Maybe not the vibrant culture you are looking for. I'm not saying you should necessarily move to NYC or SF, but head to a place that you enjoy. Nothing would be worse than spending time living at a location you hate just to save a few hundred or thousand in taxes.

Also family/community. The loss of social capital could well dwarf the tax savings, depending on your situation.

cmonkey wrote:

Gilberto de Piento wrote:

The only reason we are staying in Illinois is due to their homeschooling laws....or rather lack thereof.

I agree that Illinois has very few requirements for homeschooling. That said, none of the states I checked out require much more to homeschool. Typically the requirements are something like the teacher must be "qualified" (parents are qualified), certain subjects must be taught (the usual reading, math, science, etc.). http://www.hslda.org/ has a summary of every state.

Many states require registration with the local school and the worst also require standardized testing and such. Illinois and Iowa are among the best, there isn't any requirement to register or test. Illinois even has laws protecting home schools from overbearing school districts. Thus our reasoning for staying here. Iowa has higher income taxes, otherwise we'd live there since we have family in Minnesota.

Ideally I'd like to live in South Dakota but you are required to register with the schools over there...

I think for ere minded folks SD is not as great as it looks on paper unless your plan is to wander and spend lots of time in OR. You will absolutely need a car and auto insurance rates are pretty high. Well medical care is good they did not expand medicaid and unsubsidized plans will be pretty high. Food is taxed at 6%. I could go on but I will just sound negative. It does have really wonderful state parks and great scenery.

That is good stuff to know. 6% food tax is nuts! We are a long time from moving anywhere so I have time to look around a lot.

The PNW would be my second choice. I'd like to live in a place that is more seasonable in winter. I've lived in the Midwest my whole life and it really sucks here in winter.