In what way does TX make up for the lack of state income tax? (Austin: to rent, how much)

[Trainwreck20]

If you live in an inexpensive-to-modest house, you will make out like a bandit. If you get all ga-ga over what you can get with your money, you will make up the income tax difference in property taxes.

Finally, if or when you get married and if your spouse works, your household income will go up but your property taxes are unaffected. Dual income families are therefore indirectly rewarded.

[centralaustinite]

Originally Posted by Trainwreck20

If you live in an inexpensive-to-modest house, you will make out like a bandit. If you get all ga-ga over what you can get with your money, you will make up the income tax difference in property taxes.

Finally, if or when you get married and if your spouse works, your household income will go up but your property taxes are unaffected. Dual income families are therefore indirectly rewarded.

Yup, and if you lose your job, property taxes are still due, regardless.

[1grin_g0]

Is the rent cheaper in Austin than your current rent in California? If so then it would be an easy decision for me.

[Ronaldon]

Originally Posted by aeron

Is the rent cheaper in Austin than your current rent in California? If so then it would be an easy decision for me.

It would be, yes, but I don't account for that. With this question, I specifically only want to know if I'm able to save $$$/year on state income taxes when compared to living in CA, or if there's something else I'll be spending in Austin that I haven't been spending on in CA. I wouldn't change my lifestyle, so the money I save on state income tax would go directly to my savings account instead of the state.

The only thing I see people mention is property tax, which doesn't apply to me (it would be included in rent and I do not have to account for it separately, and even then the total rent cost is still cheaper than my rent in CA).

So from what I gather so far, other than property tax, there are no cons when it comes to comparing taxes in CA vs TX. TX wins by a large margin. Cheaper rent + no state income taxes = more savings. I don't see any cons here, unless I'm missing something.

[AFD1017]

And let's not forget school funding. We have the most regressive taxation system in which our legislators enjoy free time while learning how to sex a goat but we locals pay about 36% in property taxes. Great, except we're supposedly rich so my money is diverted to the Old Dime Box ISD because the Lord knows, the kids need new shoulder pads for Friday Night lights.

[turf3]

TX makes up for income tax by high property taxes. If you rent, you are paying property tax, just not directly.

If you are comparing TX to CA, I expect the state spending on social services is substantially less (not putting a value judgement out there, just talking about the accounting).

There are a lot of philosophical reasons for preferring income taxes or property taxes, which is a different discussion.

[Rynldsbr]

Originally Posted by Ronaldon

It would be, yes, but I don't account for that. With this question, I specifically only want to know if I'm able to save $$$/year on state income taxes when compared to living in CA, or if there's something else I'll be spending in Austin that I haven't been spending on in CA. I wouldn't change my lifestyle, so the money I save on state income tax would go directly to my savings account instead of the state.

The only thing I see people mention is property tax, which doesn't apply to me (it would be included in rent and I do not have to account for it separately, and even then the total rent cost is still cheaper than my rent in CA).

So from what I gather so far, other than property tax, there are no cons when it comes to comparing taxes in CA vs TX. TX wins by a large margin. Cheaper rent + no state income taxes = more savings. I don't see any cons here, unless I'm missing something.

Based on your specific question, you are likely to save substantially. Additional costs outside of the property tax may include services not included here that may be included where you are now. Here there is various electric providers (suburbs - not Austin) so electric utility rates may vary, water rates may vary, natural gas/propane rates may vary, trash pickup, lawn service, and others. I don't think it will come anywhere near the $20k you indicate you will save, but some additional or higher fees may eat some of the savings if they don't compare equally.

[Aquitaine]

We were in the same position coming from NYC a few years ago. I wouldn't have moved somewhere just for tax reasons but it is a huge perk, and being self-employed (and now employing others) earning the same no matter where you live is great in a place like Texas.

Definitely look at a whole cost of living index (there are a few good ones out there). Income tax is the biggest piece. But other things add up -- vehicle registration, going out, utilities.

You can also 'double dip' your property tax deduction. The bill comes in December and is due in January. You can pay, for instance, 2016's property tax in January 2017, and 2017's property tax in December 2017, and then your property tax deduction for your 2017 taxes is 2x (though, of course, zero every other year).

Finally, spend a little more to live near where you work. A few thousand extra bucks in your pocket won't make up for sitting in rush hour traffic for an hour every day.

[mark311]

Originally Posted by Ronaldon

So from what I gather so far, other than property tax, there are no cons when it comes to comparing taxes in CA vs TX. TX wins by a large margin. Cheaper rent + no state income taxes = more savings. I don't see any cons here, unless I'm missing something.

That's pretty much it. Depending on where you live now in CA, things might vary and you'll want to make sure that you're looking at an apples to apples comparison when looking at rental pricing. For example, it's a no brainer that a family member renting a $2200 studio apartment in the Bay area will save if she moves here, however, my friend that has a 4000 square foot home in Temecula, CA doesn't have very much to gain by moving here from CA as he already lives in a "bargain" area of CA. In-between homes, we rented in the suburbs here (Cedar Park) back in 2013 and our 2br/2ba apartment that was nice, but wasn't really luxury by any means was $1450 per month. They wanted to raise the rent to $1700 if we were to stay any longer, but we had bought a home by then.

Again, depending on where you live in CA, you might get a new AC inflated electricity bill here while in San Diego we didn't really have to use AC or heat for that matter. None of the apartments that I lived in while I was in San Diego had AC at all while it's mandatory here. The only other thing that would hurt you financially is traveling back to CA if that's where your family is. You're looking at a $450 plane ticket most of the time especially if you want to fly back during the Holidays. You can also count on your rent increasing every year when your lease is up as property values continue to rise and landlords get hit with higher taxes. After making the drive there once or twice, you won't want to do it anymore and will end up flying. The drive back and forth to CA for visits is horrible.

[centralaustinite]

And it sounds like you have thought this through but just in case, don't forget the value of any industry networks that you may be a part of in CA that might be hard to replicate in Texas, yes many things can be done remotely but somehow that makes in person networks even more valuable.

Also consider your insurance status, if you self-insure via the ACA, then you are much better off in CA. My brother spent years thinking about moving his business from CA to TX and no income tax was a part of it but over time (he waited too long) the cost of living in Austin rose and his network in CA became more important and he could not even hope to match the type of insurance he could buy on the exchanges in CA with what is available in TX.