Hidden Costs of No-Income-Tax States – Higher Property, Sales, and ‘Sin’ Taxes to Watch Out For
According to Go Banking Rates, many people want to move to states with no income tax because they think it will save them money. However these states still need to raise money, so they often have higher taxes and fees in other areas. For example, property taxes in states like Texas are much higher. A homeowner in Texas might pay $3,000 each year on a $250,000 house, while a homeowner in North Carolina might only pay $2,000. Sales taxes are also higher in some of these states, with Florida‘s rate at 8.75% compared to New York’s 6%.
Besides property and sales taxes, states without income taxes often have higher “sin” taxes on things like cigarettes, alcohol, and gambling. For instance, Texas charges $1.41 for a pack of cigarettes, while California only charges $0.49. These states also add many other taxes that people might not notice right away, like taxes on oil and gas, utilities, and hotel stays. They may also charge extra fees for things that affect the environment, like plastic bags or car batteries.
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$3,000 vs $2,000: The Hidden Costs of Living in States with No Income Tax – What You Need To Know! (PHOTO: Investopedia)
Consider All Expenses: The True Cost of Living in No-Income-Tax States
In the end, even though not paying state income tax seems like a good deal, you will still pay in other ways. These states shift the costs to other areas, so the total amount you spend might not be much less. If you are thinking about moving to a state with no income tax, it’s important to look at all the costs, not just the income tax savings.
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