2019 Study: Moving Interstate Could Save (or Add) Up to $7,700 On Your State Tax Bill

Posted in: I'm Moving, Money Saving

Totaling up moving costs when you’re moving out of state can leave you with sticker shock.

With a typical interstate move costing about five times more than a local move, you might be wondering if it will pay off.

One way to gauge the payoff of moving out of state is looking at how well it will set you up for financial success. A big part of that calculus is how much moving between states could lower (or increase!) your tax bill.

HireAHelper’s latest study compares taxes on income, sales, and property in all 50 states and the District of Columbia. We found that moving between states can have a big impact on your tax bill. If you were to move from the state with the least taxes to the most, for example, you’d owe around $7,760 more in taxes each year!

Key Findings

Tax Study
  • Where you choose to live could cost you up to $7,760 per year in additional local taxes. That’s the difference between the highest estimated state and local taxes in the District of Columbia, at $9,730, and Tennessee with $1,970.
  • Alaska has the lowest effective tax rate, with combined income, sales, and property taxes equal to 3.94% of a typical resident’s income. New York had the highest with an 11.93%, a effective local tax rate. That’s a gap of 7.99 percentage points in tax liability.
  • Across all 50 states, the average local tax bill was $4,066. This includes an average income tax of $1,655, property taxes of $1,538, and $873 in sales taxes. The average effective local tax rate is 8.2% of income.
  • State income taxes are the biggest indicator of local tax burdens. Of the 10 states with the lowest tax bills, eight levy no state income tax on earned income: Tennessee, Nevada, Florida, South Dakota, Alaska, Texas, Washington and Wyoming.
  • By contrast, the highest state income tax burdens were found in Washington D.C., at $4,781; Oregon, at $3,724; and Hawaii, at $3,272. Oregon also had the highest effective state income tax rate, at 7.30%, followed by Hawaii at 6.29%.

Where Total State and Local Tax Bills Are the Lowest

The very first statistic you should know about is “total taxes”. We made an interactive heat map with the total combined tax burden of each state’s income taxes, property taxes, and sales taxes.

The total state tax cost in each state

If you want a low tax bill, a smart strategy to get one might be to move to one of the nine states that levy no state tax on earned income:

  • Alaska
  • Florida
  • Nevada
  • New Hampshire
  • South Dakota
  • Tennessee
  • Texas
  • Washington
  • Wyoming

Among these states, New Hampshire is the only one that didn’t land among the 10 with the lowest total tax burdens. That’s no surprise, consider that of the three types of taxes we looked at, the average state income tax bill was the highest. With income taxes costing more, it’s also where locals stand to save the most.

Here are the 10 states that had the lowest dollar-for-dollar tax burdens:

  1. Tennessee: $1,970
  2. Nevada: $2,002
  3. South Dakota: $2,112
  4. Florida: $2,131
  5. Alaska: $2,274
  6. North Dakota: $2,617
  7. Texas: $2,859
  8. Washington: $2,886
  9. Louisiana: $3,027
  10. Wyoming: $3,095

Where State Taxes Are the Lowest, Compared to Wages

But that’s simply the total tax costs. Here’s an interactive map with the average effective tax rates, which means each state’s income taxes, property taxes, and sales taxes compared against the state’s average annual wage.

The effective state tax rate by state

We calculated the effective local tax rate, or the total tax burden as a percentage of the average wage in that state, to get a more complete picture of living expenses, due to outside factors that affect the cost of living.

For example, lower local wages would keep income taxes down. And low property taxes could be the result of a state real estate market with lower costs of living and property values.

Here are the 10 state where incomes are the highest, compared to their total state taxes:

  1. Alaska: 3.94%
  2. Nevada: 4.45%
  3. Tennessee: 4.52%
  4. Florida: 4.76%
  5. Washington: 5.02%
  6. South Dakota: 5.18%
  7. North Dakota: 5.44%
  8. Texas: 5.87%
  9. New Hampshire: 6.10%
  10. Delaware: 6.11%

The Top and Bottom State Income Taxes

Tax Study

As stated in the last section, unsurprisingly the top states tend to be those that levy no income tax. All nine of these states tied for the No. 1 spot for the lowest state income taxes.

After these states, however, which offer low state income tax rates? Here are the 10 lowest tax rates levied in all 50 states.

Curious about the states with the highest effective income tax rates? Only three states managed to have total state income taxes that totaled more than $3,000—and had effective state income tax rates above 5% to match.

Washington D.C. has the largest state income tax bills, dollar-for-dollar—but these are offset somewhat by higher local wages. Oregon, on the other hand, has some of the steepest tax rates that sets an effective tax rate of 7.30% on the state’s average wage.

Here’s a look at the 10 states with the highest effective state income tax rates:

  • District of Columbia: $4,781
  • Oregon: $3,724
  • Hawaii: $3,272
  • New York: $2,985
  • Massachusetts: $2,943
  • Connecticut: $2,818
  • Virginia: $2,620
  • Minnesota: $2,527
  • Colorado: $2,503
  • Illinois: $2,495

Top States With the Lowest Sales Taxes

Four states levy no sales taxes: Alaska, Delaware, Montana, New Hampshire, and Oregon. Alaska is also the only one of these states where a local and municipal sales tax is charged; in the others, there’s no sales tax at the state or local level.  

Here are the top 10 states with the lowest average combined state and local sales taxes:

  1. Delaware: 0%
  2. Montana: 0%
  3. New Hampshire: 0%
  4. Oregon: 0%
  5. Alaska: 1.43%
  6. Hawaii: 4.41%
  7. Wyoming: 5.36%
  8. Wisconsin: 5.44%
  9. Maine: 5.50%
  10. Virginia: 5.65%

You’ll need to watch for higher sales taxes in some states, however. The highest state and local sales tax rates are found in Tennessee, Louisiana, and Arkansas. Tennessee’s average combined state and local sales tax rate is 9.47%, while Louisiana’s is just behind at 9.46%, and Arkansas levies an average 9.43% sales tax.

The States With the Lowest Property Taxes Per Capita

But what if you’re planning to become a homeowner (or buy property) in you destination state? Property taxes might be a top concern. Comparing property taxes fills in the picture of what your tax burden could be in a given state, and can help you anticipate how much they’d add to your housing costs.

Here are the 10 states where the property taxes per capita are the lowest:

  1. Alabama: $548
  2. Oklahoma: $699
  3. Arkansas: $712
  4. New Mexico: $768
  5. Kentucky: $775
  6. Tennessee: $836
  7. Delaware: $860
  8. Louisiana: $887
  9. West Virginia: $915
  10. Idaho: $944

Property taxes are highest in the District of Columbia, New Jersey, and New Hampshire. These are the only three states where the collected property taxes per capita top $3,000.

New Hampshire also happens to be the only state that levies no state income or sales taxes, which means that it carries low tax burdens despite high property taxes. But for New Jersey and D.C. residents, these high property taxes pile onto high income and sales taxes from their states, too.

Full Rankings of State Tax Burdens

Tax Study

Moving is always a lot of work—but planning a long-distance move can be particularly back- and budget-breaking. Check out the differences in the taxes you pay now and the taxes you’d pay in your state destination. You’ll know whether you can expect to come out ahead or will have more tax costs to plan for after a move.

See exactly where your state ranks inside the full rankings of all tax burdens by state. You can sort the table by clicking column headers.

Methodology and Sources

HireAHelper surveyed state income taxes, state and local sales taxes, and property taxes in all 50 states and the District of Columbia to estimate the total tax burden for a typical resident.
State income taxes were calculated based on each state’s mean wage data from the Bureau of Labor Statistics’ (BLS) May 2017 National Occupational Employment and Wage Estimates, using SmartAsset’s income tax calculator.
Sales taxes were calculated based on the average combined and local sales tax rates in state, as reported by the Tax Foundation in a January 2019 Report,  and assuming a spend rate of 27.5% of the state’s mean wage.
Property taxes were sourced from the Tax Foundation’s State & Local Property Tax Collections per Capita, FY 2016. The Tax Foundation calculated these amounts by averaging out property tax revenue collected in each state across the state’s population, to get a per capita property tax.
We calculated and added up the tax burden in each state according to the above, to find the total bill for income, property, and sales taxes. Effective tax rates were calculated as each state’s total state taxes as a percentage of the local mean wage, per BLS data.

Header illustration by Marlowe Dobbe

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