I read an interesting and accurate comment earlier today by a contributor to a discussion forum at TopRetirements.com. She wrote: “We are also looking at…South Carolina. The property in SC appears to be much less than FL as they only assess property at 4% of the market value. We compared a $220,000 home in SC to one in FL, and the difference is nearly $2,000. Has anyone else found this to be true?”
It’s a good question…and a good point. As we have counseled here many times, taxation is relative to a couple’s personal situation. If you have a million dollar income in retirement, a golf community in a no-income-tax
There are some scenarios in which a state with an income tax is cheaper to live in than a state with no income tax at all. According to the tax calculator at the web site dollarology.net, a couple with an annual income of $100,000, annual “non-food” expenses of $50,000, a grocery bill of $10,000 a year, a home worth $800,000 and a car driven 10,000 miles per year at 22 miles per gallon would pay a total of $8962.17 if they lived in Delaware, which assesses an income tax, and $9556.36 if they lived in Florida, which assesses no income tax. The Delaware couple would pay almost $6,500 more in state income tax, but that would be more than offset by lower sales taxes (Delaware does not charge any) and property taxes (much lower in “The First State”).
Interestingly, couples that live more modestly will find Florida slightly more advantageous than Delaware and most other states. (Since income would be lower, you would think the effects of income tax would be disproportionately less significant in Florida, but it is not so.) When you lower income to $60,000, non-food expenses to $30,000, groceries to $8,000 and the house value to $225,000, the result is an advantage of $55 per year in taxes for Florida over Delaware.
Yes, it is a negligible difference, and not enough in itself to turn a couple from considering a higher income tax state. Indeed, when you take our first example above –- the couple with a $100,000 annual income –-
By the way, the most advantageous tax state of all is Alaska. We understand the golf there is excellent -– in July.