When considering where to move and begin the next chapter of your life, you may be one of the people that want to do a cost of living comparison first. Taxes can be a significant player in the cost of living!
Wherever you are in the US, (and most other countries), taxes are combinations of the following elements. We all know that if one of these elements is not present, the authorities usually find a way to make it up elsewhere!
Be sure to check any of the data contained herein, as it obviously changes from time to time.
Personal Income Tax
Most states tax personal income in the US, currently with a few exceptions:
Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming.
How does a state pay its bills without an income tax? The food you eat, the clothes you wear, the gasoline you put in your car. These goods are taxed by many state governments.
Tennessee has the highest sales tax in the country - an average of 9.45 percent, according to estimates from the Tax Foundation.
In New Hampshire, homeowners pay some of the highest effective property taxes in the nation, according to an analysis by RealtyTrac. Average in-state tuition at New Hampshire’s public universities is the highest in the country, according to a Bankrate analysis of statistics from the Department of Education’s College Affordability and Transparency Center.
In Washington, pump prices are routinely among the highest in the country — in part because of a sky-high gasoline tax. The Energy Information Administration says Washington charges 37.5 cents per gallon in gas taxes, the fifth-highest in the country.
Texas and Nevada have above-average sales taxes, and Texas also has higher-than-average effective property tax rates.
Florida relies on sales taxes, and its property taxes are above the national average.
Wyoming and Alaska make up for the lost income tax revenue through their natural resources. Both states enjoy hefty tax revenues from coal mining and oil drilling operations, respectively.
All of those extra taxes contribute to higher-than-average living expenses in some of those states. Florida, South Dakota, Washington and New Hampshire all have higher than the median cost of living, according to data compiled by the Center for Regional Economic Competitiveness. Alaska is among the most expensive places to live, but a big part of that is because it’s so remote.
Remember that the tax environment of a state is only one part of the puzzle when choosing where to live! After all, no one would live in in any of these RED States
Here's an example from the Kiplinger comparison chart - you can make your own at Kiplinger - click on your state and add to your 'COMPARE' list.
Sales Tax and Use Tax
Purchase SC base rate: 6% NC base rate 4.75%
Use taxes are also applied to anything bought out-of-state but shipped in or brought in for use in state. Internet purchases, catalog, TV, and other such purchases are subject to the 6% use tax (if sales tax equal to South Carolina’s was not paid). Cities and municipalities can add on additional local sales or use taxes; however, prescriptions, hearing aids and dental prosthetics are exempt. Unprepared food is also exempt for the state sales tax but might be taxed locally. Residents 85 and older can get a 1% reduction. According to bankrate.com, South Carolina ranked 18th in the nation in sales taxes for 2015 (Tennessee came in at #1 with a combined average rate of 9.45%).
Sales taxes in North Carolina have a base rate on goods and some services of 4.75%, and most counties add another 2% or more in local taxes. North Carolina also imposes a use tax on personal property, digital property and some services bought outside of the state for use in state. In both states, use taxes are paid annually with state income taxes. North Carolina ranked 25th for combined sales tax rate in 2015.
Real Estate Taxes
Primary residences, taxes paid equal 4% of the fair market value of the home times the local millage rate plus any other local district taxes assessed, such as for fire or police, but with a school district tax credit.
Non-primary residence owners pay the local millage on a rate equal to 6% of fair market value plus district taxes and are not exempt from paying school district taxes. Resident homeowners aged 65 and older or disabled can receive a $50,000 exemption against fair market value.
Residential real estate is also taxed on an ad valorem basis, with each county administering assessments and collections. Rates vary by county, and are applied to 100% of assessed value (values are determined by the assessor’s office). As an example, Brunswick County’s current rate is 48.5¢ per $100 of value. On a $350K home, the tax will be $1,570. Municipalities may add additional taxes to this, so you’ll want to contact the county tax assessor-collector office to determine current rates for a specific area. Homeowners age 65 and older or the disabled who meet certain income limit requirements can receive breaks on their property taxes in North Carolina.
Transfer taxes on the purchase or sale of homes in North and South Carolina are also different. In North Carolina, the transfer tax is $1 per $500 of sale price; however, in a few counties an additional amount (up to $5/$500) can be added. South Carolina imposes a deed recording fee of $1.85 per $500 regardless of county. In both states, the transfer taxes are typically paid by the seller, but terms may vary.
Personal Property Taxes
Non-business personal property is exempt from taxes, with the exception of automobiles. Residents receive an annual vehicle tax and registration statement from the state. The amount of the tax varies widely depending on millage rates, but the DMV offers a tax estimator tool on their website. Tax due on a $20,000 automobile in Greenville, for example, would be approximately $270. The Palmetto State also collects personal property taxes on all types of vehicles, boats and airplanes. Automobiles are taxed at 6% of market value times the local millage rate for personal property.
Neither of the Carolinas impose inheritance taxes or intangibles taxes (stocks, bonds, mortgages, etc.), although they do tax capital gains. You should consult with your tax accountant or financial advisor on these issues.
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