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Cities with the Lowest State and Local Income Tax


Your Location Really Does Effect How Much Money You Take Home

Most people have taken the time to consider how their location affects how much money they make, but few take the time to actually look at the tax figures of the area. When you spend a little time looking over the numbers, the differences between locations becomes more dramatic and surprising.

A Difference of Thousands of Dollars

You may not think tax differences in different states will make much of an impact on how much you earn, but they can mean a difference of between $3,000 and $4,000 depending on the state that you live in, and that’s only if you work at a job making $40,000. Imagine what the differences would be like at a higher paying position.

Why Such Large Differences Exist?

The main reason that there is such a large range of differences is because some states don’t charge an income tax at all, while others charge a steep income tax. For instance moving to Alaska, Florida, or Texas will keep you from having to pay any income tax to the state government at all.

Moving to New York or New Jersey will land you with one of the higher income tax rates in the country. You also have to consider how tax rates change depending on how much you make.

Some states like Pennsylvania tax everyone the same regardless of how much they earn, but other states like New York raise or lower tax rates depending on what you bring home each week.

Making the Most of the Situation

If you want to take advantage of this situation you have to move to one of the states that charges the lower amount of income tax. Florida, Alaska, Washington, and Texas all avoid charging their residents an income tax and they are a few very affordable locations to live in.

By picking one of these places, or at least avoiding one of the states that charges a high amount of income tax you can maximize the money that you earn throughout the year.

Not to Be Confused with Federal Taxes

Even though there are plenty of states that don’t charge residents income taxes, those residents are still required to pay their federal income taxes. By avoiding state charges the total amount paid towards taxes is reduced, but it is not eliminated entirely.

If you are trying to figure out how to make more money, or to simply live a little more comfortably it may be in your best interest to look around at neighboring states that charge less income tax than your current one does. Sometimes it is worth it to make a move to a neighboring state, if you are able to save enough money in taxes that you pay each year.

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