Much is made of making your permanent home in retirement in a state that has no state income tax. I posit that there are other considerations. First, what are the no-income-tax states? They are Alaska, Tennessee, Wyoming, Florida, New Hampshire, South Dakota, Texas, Washington, and Nevada.
Question #1: The MOST important consideration is do you want to live in any of these places? Looking at this list I can say yes to possibly two, definitely no to seven, and I’m not saying which in order to avoid nasty commentary.
Question #2: If the state is not getting income taxes, where are they getting their revenue? Sales tax? Property tax? Poor state services such as road maintenance and law enforcement? If you are a person that spends a lot at restaurants, stores, or wants to live in a really nice house, the taxes you pay instead of income taxes may be just as high.
Question #3: How affordable is the state overall? If property and other costs of living are higher than your current state-with-income-tax, maybe you are better off where you are.
With investments and life decisions, taxes are a consideration. However, my favorite saying applies: Don’t let the tax tail wag the life dog.
