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How much did the taxes weigh in your decision on which state to choose as a state of residence?

 

In looking at the map produced by the Tax Foundation, which shows average total tax burden by state, with the exception of a few outliers, they all seem really close. I know some folks really pay attention to this and its been a key consideration in their decision where to call home. Based on what I see (and excluding the handful of states), it seems like the difference is pretty small and should not drive the decision... or at least not be a primary factor.

 

This map is another way view relative cost of living by state... not seen it until recently and thought it interesting.

 

http://taxfoundation.org/blog/real-value-100-each-state-0

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All States get their revenue.

 

You have to look at what taxes affect you. For example, Texas has high real estate taxes. However, if you don't own any real estate in Texas, that doesn't affect you. Same thing with sales tax. A high sales tax doesn't affect you if you don't spend time or money in that State.

Everybody wanna hear the truth, but everybody tell a lie.  Everybody wanna go to Heaven, but nobody want to die.  Albert King

 

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It's my sense that which taxes are more important than total taxes. Most states need about the same amount of money to keep going but if they get most of it from real estate taxes that would have less impact on me than if they get most of it from gas taxes which can affect the cost to fill my tank. As to sales tax, that varies too--Minnesota for instance does not tax groceries but does tax ready-to-eat single-serving food and restaurant meals so it's a good place to cook at home.

 

Linda Sand

Blog: http://sandcastle.sandsys.org/

Former Rigs: Liesure Travel van, Winnebago View 24H, Winnebago Journey 34Y, Sportsmobile Sprinter conversion van

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The states that consistently show as low tax states generally are also states that have a lot of minerals and so have the income so generated. But all of the studies such as the one you link to look at many things that have little or no impact upon those of us who travel in RVs and so aren't there to pay their taxes. There are several things that are much more important to the person who lives in an RV than many of those used in the study. Such things as wages, sales taxes, and property taxes have very little effect upon a fulltimer. But state income taxes do apply even when you are not there.

 

If you find the least expensive state so far as taxes are concerned, how is that going to work for you if the state will not allow you to use a mail service as your address? The things which are common between TX, SD, and FL which cause them to be the most commonly chosen as a place of domicile for RV folks is that none have any state income tax, none require you to have any physical presence in the state to claim as domicile, all three will accept a mail forwarding service as your permanent legal address, and all three of them have reasonable fees for registering vehicles.

Good travelin !...............Kirk

Full-time 11+ years...... Now seasonal travelers.
Kirk & Pam's Great RV Adventure

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Look at the overall tax burden for the state and the way that burden is distributed. For example, here in NJ we have high real estate, sales, and income taxes. There are reasons, but it's fundamentally a very expensive state to live in if you are looking at taxes. It's difficult to avoid the tax burden as well since every major tax rate is high.

 

Compare this to living in Portland, OR which has high income taxes, but no sales tax. If you have a high income, you might choose to live in Vancouver (no income tax, high sales tax) and commute across the river. If you have low income, however, go right ahead and live in Portland.

 

The bottom line is that you have to use your own individual situation to evaluate the impact of the tax burden in a given location and decide which is best for you.

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We've lived and worked in WA for 30 years where we've never paid income tax. They make up for it with property, sales and other various excise taxes. Our plan is to retire to Montana this year. They do have an income tax (which includes SS) and property tax, but no sales tax. In aggregate, they rank lower than WA and many other states in total tax burden. No doubt every situation is unique and some states have special incentives for various type pensions (no income tax on railroad pensions in MT for example). I was just wondering how much the question of taxes played in decisions where to retire.

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We call Oregon our home and have for years. We both worked and paid income taxes there for years (around 8% as I recall). Oregon does not tax federal retirement benefits earned prior to 1991 - anything after that it is taxed. As a result, I pay little if any state income tax today as the bulk of my "income is SS and military retirement. Unfortunately, they are going to get some for 2015 due to the new Harley I won in August - considered as income and put me over the top so to speak.

 

Property taxes vary between locals. Ours happens to be very low but know of others in the $3-4000 range - all depends on what you have and where your located. We are exclusive agriculture so taxed at a low rate.

 

IF your a federal retiree, it may pay to look closely at Oregon.

 

Lenp

USN Retired
2002 Winnebago Ultimate Freedom

2012 F150 4x4

2018 Lincoln MKX

2019 HD Ultra Limited

 

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...Look at the overall tax burden for the state and the way that burden is distributed. For example, here in NJ we have high real estate, sales, and income taxes. There are reasons, but it's fundamentally a very expensive state to live in if you are looking at taxes. It's difficult to avoid the tax burden as well since every major tax rate is high...

Even within a single state like NJ that has a reputation for high taxes, there are significant differences in the taxes paid based on your personal circumstances and location, location, location. We lived for several years in an area of NJ with moderate real estate taxes because of low county and local taxes necessary to support the schools. The closest shopping was in an enterprize zone with a 3.5% sales tax versus the 7% in most of the state. NJ does not tax groceries or clothing. Fuel prices in that part of NJ were about the lowest in the state which overall generally has lower fuel costs than any of the surrounding states due to a lower fuel tax rate (just paid $1.78 for diesel when visiting family over the holidays). NJ does have an income tax, however Social Security is not taxed. If you are over 62 or on Social Security disability there is an exclusion of pension income up to $20k for a couple. There have been discussions of how to structure income in order to qualify for healthcare insurance subsidies. The same types of things can be done to reduce income tax liability in some states like NJ.

 

Pennsylvania is another state with an income tax but it does not tax Social Security or pension income. Like many things, you really have to look at your own personal circumstances because the one size fits all generalities may not be accurate for your situation.

The one that dies with the most toys is still dead!

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I was just wondering how much the question of taxes played in decisions where to retire.

If we exempt fulltimers, then it should change the picture a great deal. The fact is that many fulltimers really have no intention of moving into the state claimed as domicile when/if they stop fulltime travel, but some states like TX and FL realize that many of those who do start as just using the benefits do eventually stop moving about and stick where that happens to be, just like many who retire and move to those places.

 

I suspect that tax burden plays a greater part in the choices of the RV folks than it does with most others. In my working life, we changed states 9 times and not once were taxes a significant factor in our choices. It probably is more often a factor considered for retired folks than employed ones, but I'd bet that even there is is not given a lot of importance by the vast majority of those who move when they retire. And I suspect it is actually quite rare for tax burden to be a reason not to move when folks retire.

Good travelin !...............Kirk

Full-time 11+ years...... Now seasonal travelers.
Kirk & Pam's Great RV Adventure

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I think whether or not a state accepts a mail forwarder as your domicile address has a bigger impact for full-timers on choice of domicile than taxes have. Now that the Patriot Act is messing with that, those mail forwarders who also have a campground where you could physically live and those with street addresses instead of box numbers are becoming more popular.

 

Linda Sand

Blog: http://sandcastle.sandsys.org/

Former Rigs: Liesure Travel van, Winnebago View 24H, Winnebago Journey 34Y, Sportsmobile Sprinter conversion van

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Tax impact on where we chose to retire wasn't a consideration but we only really looked at a couple states and other things were a lot more important than tax levels. If we had considered some of the high tax states then taxes might have become more important.

 

Where to live while RVing (house or no house) was a completely different matter, we wanted low income tax and low vehicle taxes as our first considerations. Sales taxes didn't enter into it except when we decided to buy a new RV and we'd ended up in a low cost state for other reasons so we didn't move. We did plan our shopping for high dollar items so that we bought in low tax areas and avoided high tax ones, Why spend over 10% more for a set of tires in Arizona when you can just wait for a no-sales tax state to buy a new set?

 

Remember just because you own a house that doesn't impact where you live. As long as you don't spend too many months in the state where you have your house you don't have to claim it as your domicile. We very carefully spent more than six months each year outside of Arizona and documented it, saving a pile of money that was better spent on fuel and camping!

First rule of computer consulting:

Sell a customer a Linux computer and you'll eat for a day.

Sell a customer a Windows computer and you'll eat for a lifetime.

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If you are working or have income from rental or farm land it does not matter where you live but where you earn the income. Health insurance is also a factor now if you are under Medicare age since not all states will cover you when you travel as well as others. So I get taxed in WI (former domicile), ND and also worked in WY but they do not have state taxes.

 

I have been told some states will tax you if you stay in their state a certain number of months whether it is your legal state or not. Some of these I believe are on the east coast and CA is considered a tax aggressive state which may also fall into this category.

 

I am setting up a domicile in WA and do need a physical address for drivers license but you can add a different mailing address that can be a PO Box.

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Our original home state taxes pensions, so does the city where our home was located. By changing our residence to SD, we no longer have city tax or a state tax on our pensions. That can be a big chunk of difference for some couples. Property taxes, sales taxes don't affect us as we are not physically in our new home state.

Pat DeJong

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I have found a lot of the states that are supposed to be tax friendly have high taxes on RVs or personal property. I have not found one site that shows everything. So I've been trying to do a spreadsheet for the 5 or 6 states we are interested in. I found at least one state taxes your RV on the original sales price every year not the current value. Some of the information is difficult to find. But Texas is definitely a good state for RVers if you don't own valuable real estate property in certain counties. Medical is another issue but with most states going to HMOs it opens up more states.

2011 Berkshire 390-rb-40, upgraded tires and front axle airbags, 2012 Jeep Wrangler 2 door, Blue Ox baseplate and BlueOx aladdin tow bar, Blue Ox Patriot brake system, wiring run through right frame rail and homemade led taillight bar.

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SD uses the weight of the vehicle, not the value new or used. The bigger it is, the more you pay however that was still a whole lot less than we had been paying. The insurance is also much much cheaper than we previously had and we now have fulltimers coverages. So more coverage.

Pat DeJong

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We've kept our domicile in NY because the tax situation there actually works well for us despite NY's reputation for high taxes. Our income is structured such that we pay little or no federal or state income tax, and our senior citizen and veteran status gives us good tax breaks on the real property based taxes on our lakeside cottage that we have no intention of selling. The weight based vehicle registration costs are pretty low as well, with the tags for our coach only costing $70/year, and there are no personal property taxes. The 8% sales tax can be a bit rough on a major purchase, but we find that's more than offset by the relatively low insurance costs our rural location brings. I think the bottom line is that domicile selection is a highly individualized decision, and what works for one may not work for someone else.

Dutch
2001 GBM Landau 34' Class A
F-53 Chassis, Triton V10, TST TPMS
2011 Toyota RAV4 4WD/Remco pump
ReadyBrute Elite tow bar/brake system

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All States get their revenue.

 

You have to look at what taxes affect you. For example, Texas has high real estate taxes. However, if you don't own any real estate in Texas, that doesn't affect you. Same thing with sales tax. A high sales tax doesn't affect you if you don't spend time or money in that State.

 

 

Excellent reply!!

 

Will you be part-time (with a sticks and bricks home somewhere) - or full-time,and only need/want a mailing address?

 

*YOU* must weigh the tax options - good/bad/ugly - as they apply to *YOU*.

 

Best of luck for an informed decision for your circumstances & lifestyle.

 

.

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  • 2 weeks later...
I am setting up a domicile in WA and do need a physical address for drivers license but you can add a different mailing address that can be a PO Box.

 

I think you can use your current location (e.g. campground) as a permanent address.

In WA this "nontraditional address" is allowed for voting purposes (http://www.sos.wa.gov/elections/Voter-Eligibility.aspx).

SKP #79313 / Full-Timing / 2001 National RV Sea View / 2008 Jeep Wrangler Rubicon
www.rvSeniorMoments.com
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  • 2 weeks later...

Great points. I knew full timers would have a different set of criteria. We will own a home, so I'm really more interested in responses from those that do... though still like to hear from those that don't.

Would I have to go to Texas to get a mailing address there? I am selling my home in Calif. and as of June 30th will be full-time in my little RV. I would really like to avoid the Calif state tax.

Maggie Blair

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Would I have to go to Texas to get a mailing address there?

You can get an address just by signing up for the Escapee mail service. But to complete your change of domicile will require a visit in order to get your driver's license and such.

Good travelin !...............Kirk

Full-time 11+ years...... Now seasonal travelers.
Kirk & Pam's Great RV Adventure

            images?q=tbn:ANd9GcQqFswi_bvvojaMvanTWAI

 

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I hear WA is talking about an income tax in the future. So taxes can change.

Been a pipe dream of some WA politicians for decades, maybe centuries. About as likely as Oregon getting a sales tax. Not likely.

2004 40' Newmar Dutch Star DP towing an AWD 2020 Ford Escape Hybrid, Fulltimer July 2003 to October 2018, Parttimer now.
Travels through much of 2013 - http://www.sacnoth.com - Bill, Diane and Evita (the cat)
 

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It's getting even more complicated deciding where to domicile because of Healthcare. Texas can be attractive, but now you have to look at individual counties because of the different premiums from one county to the next. I believe in different parts of Florida you can no longer purchase a PPO plan. So besides income tax, sales tax, personal property tax etc., you now have to factor in Healthcare to the domicile equation.

Fulltiming since 2010

2000 Dutch Star

2009 Saturn Vue

Myrtle Beach, SC

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I didn't consider the Taxes when I Domiciled in Texas but I had a daughter living there. The primary reason for relocating was I lived in Illinois and with all the Illinois debt, with no no end in sight. (I see worse than Washington DC) it was time to exit to somewhere.

I'm pleased that I'm an Escapee. The people of Polk are wonderful to work with getting to signed up. The people of Texas just don't treat your identity lightly, read what is required for ID for Drivers License as Texas does not hand out ID's easily. Which is very positive.

Enjoying AZ at this time and Texas in March

Clay

Clay & Marcie Too old to play in the snow

Diesel pusher and previously 2 FW and small Class C

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