Thinking about moving to a state with lower taxes? These are the mistakes to avoid

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Thinking about moving to a state with lower taxes? These are the mistakes to avoid
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Advice from our Tax Guy: Watch out if you want to retire in a state with lower income taxes -- the property tax or sales tax could be much higher, making your life more expensive than you planned.

If you’re contemplating moving to a different state, taxes may be a deciding factor. This column explains how to evaluate the tax picture in states you may be considering.

The property tax rate on a home in some Colorado Springs locales is about 0.49% of the property’s actual value, as determined by the county assessor. Say you move to one of these areas and buy a $500,000 home. Your annual property tax bill would be about $2,450, which is a really low number. Say your taxable income is $200,000. Your Colorado state income tax bill would be $9,260. Your combined property tax bill and state income tax bill would be about $11,710.

Mixed message conclusion: Much-higher property taxes in Dallas could overwhelm the no-state-income-tax factor. But if you have a really high income, the no-state-income-tax factor could lead to the opposite conclusion. Unless you would buy a really expensive home. That could put Colorado Springs back into the number one position, due to the much-lower-property-taxes factor.

See also:Opinion: There is more to picking a place to retire than low taxes — avoid these 5 expensive mistakes Kentucky No estate tax, but an inheritance tax ranges from 4% to 16%. Members of the most-common class of beneficiaries are exempt. Tiny exemptions are allowed for members of other classes of beneficiaries.Maryland A good choice for folks who love to pay taxes, because Maryland has both an estate tax and an inheritance tax. The top estate tax rate is 16%. For 2020, a $5 million exemption is allowed.

Pennsylvania No estate tax, but the inheritance tax rate ranges from 4.5% to 15%, depending on the relationship between the beneficiary and the decedent . Surviving spouses are exempt.Vermont The estate tax rate is a flat 16%. For 2020, a $4.25 million exemption is allowed.Washington, D.C. The top estate tax rate is 16%. For 2020, a $5,762,400 exemption is allowed.

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