Every year after tax season, I get several calls from clients thinking about moving to greener pastures. These questions can be difficult and far-reaching given our national accounting license, and the fact that we currently service clients in 17 different states.
But people get their income tax bills, begin dreaming of a warmer climate, and ask the question. So let’s get into the basics one might use in determining if a move is the right decision.
In 2023 according to US Census Data, Illinois lost over 300K residents. The top five destinations for people leaving our state included…
Indiana (29,426)
Florida (27,109)
Wisconsin (26,943)
Texas (24,181)
California (21,982)
There are pluses and minuses whenever looking at this decision, so let’s begin with the most obvious one.
Taxes
In order to describe the differences, I’d like you to imagine a long and skinny balloon. This balloon represents the four major tax groups we all pay including Property, Income, Sales, and Other Taxes and Fees.
The point to understand is that it takes a certain amount of money to operate a state. If you eliminate or significantly reduce one tax, the state in question must increase revenues from other tax groups to make up the difference.
If you look at a state like Texas that doesn’t have an income tax, you’ll find that their property tax rate is the seventh highest in the nation. It’s actually twice that of Florida.
California Income Taxes can be more than twice that of Illinois. I’ve done the math for individual clients many times, and taxes alone normally don’t make enough of a difference to necessitate a move.
Living Expenses
Hidden living expenses can easily negate any potential savings one might have in taxes.
Clients who purchase a property and move to Florida immediately see increases in property and auto insurance. Given the natural disasters they face each hurricane season, those clients have difficulty finding coverage in the first place.
Normally they see their rates quadruple. One of my clients purchased a condo in Florida for $1M and the annual insurance coverage was $30K.
The same goes double for certain parts of California. Given the fires, mudslides, and other catastrophes that happen every year, I’ve had a couple of clients who actually moved back.
No matter where you move, if you purchase a home you can expect your property taxes to increase. The closing statement on your new home will be sent to the County Treasurer who will then increase your taxes based on the new purchase price.
It may take six months or a year for the process to be completed, but you can certainly expect a nasty tax increase will be coming in the mail.
Let me leave you with this…
Another factor many don’t begin to consider is a cultural one. Different states, cities, and towns have a different feel.
If you’re used to going downtown to enjoy Shakespeare or the Symphony, you might have a problem if you moved to Indiana. If you enjoy restaurants that have a Michelin Star, the Wisconsin Supper Clubs might not be your cup of tea.
As a Midwesterner, the attitudes of most California residents can be naturally problematic. If your idea of a good time on a Saturday Night isn’t to put on a pair of boots and go boot, scoot, and boogie, then Texas might not be for you.
My point is that I’ve never had anyone move to a completely different place where they didn’t end up with a full range of complaints.
The grass is always greener on the other side of the fence. But after uprooting their lives and spending all of the money it takes to move, many don’t realize that the grass they had was pretty green to begin with.
And finding a decent hot dog, a great piece of deep dish, or a lakefront like ours somewhere else, is simply impossible. Think about it.
We’re all going to get through this. Let’s get through it together.
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. Whether you need Payroll Services, or Accounting and Tax Work, you have but to ask. I’m here and I remain,
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
773-267-7500
888-310-0300
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