As a financial advisor, nearly every client I’ve ever counseled has had one thing in common — their biggest expense has been taxes. For most higher earning individuals, income taxes can account for 40% or more of their income. There is no other expense that even comes close. This is why tax planning is so critical to financial success. The less you pay in state and federal income taxes, the more you have to invest. Even slight savings can compound over time.
For many who live in a higher income tax state (such as California, New York, New Jersey, Illinois, Oregon, etc.), they dream of paying less state income tax. Did you know that of the 50 states, seven impose no income tax?
States with no income tax:
- South Dakota
Two additional states get an honorable mention. Tennessee and New Hampshire do not tax wages, but only tax interest and dividend income.
Before you rent a U-Haul and move to one of these states with no income tax, it makes sense to get some tax advice. Taxes are complicated so work with an experienced and competent tax professional.