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State Tax Tips on Moving to a New State

State Tax Tips on Moving to a New State

When you made the decision to move across the country, it would be quite important one in your life, because that would affect many aspects in the life, for example it could have some effect on your finances. So if you have already been offered a better job in a different state or just intend to have a change of scenery, you should pay attention to the issue of tax, since you would pay different sales tax, state income tax and real estate taxes, although the federal income tax should be the same. The following tips might be useful to you in regard to your tax consideration when you are moving from one state to another.

1. To make large purchases.

When you are moving to a new state, sometimes you would consider making a large purchase, for example to buy a new car. If you are going to do with such a large purchase sometime in the near future, you had better do some research on the difference of the sales tax rates between in your current state and the new state. If the sales tax rate is lower in your current state, you would save a lot of money in sales taxes by making the purchase before you move. While the sales taxes are lower in the state you are moving, you should do your purchase after moving to that state. Based on report by the IRS, there are no sales taxes in the states of Alaska, Delaware, Hawaii, Montana, New Hampshire and Oregon.

2. To consider state income tax.

According to the IRS, the state income tax rate is various in the different states, for example, there is no state income tax in the states of Alaska, New Hampshire, Tennessee, Florida, South Dakota, Washington, Nevada, Texas and Wyoming . It is kindly suggested that before moving to a new state, you should calculate the new income tax rate you have to pay concerning your income and budget. If you are moving to get a new job with just slightly more pay than your current one, increased tax rates could much decrease the benefit of moving. For instance, if you have to your state income higher than 10 percent, but your salary is only raised from $70,000 to $75,000, it might not be worthwhile doing so. However, if you are moving to a state with lower income taxes, your money could go further.

3. To choose where to live.

Even if in a given state, there are various tax rates in different cities, counties and administrative districts. For example, real estate tax rates could be influenced by the school district and other local laws. The tax rates sometimes would depend on whether you might live in a city center or a suburb or a rural area. Therefore it is strongly recommended that you should be engaged in a thorough research on the real estate tax rates, sales tax rates and other taxes in different areas of your new city so as to make an informed decision about the best and cheapest location to live.