PLANNING A MOVE? KNOW THE STATES WITH NO INCOME TAX

Are you, clients, family or friends planning to relocate from one state to another?  Are there appreciated assets intended for sale in the future that would produce a taxable capital gain?   9 states in the US have no state income tax.  Consulting with a tax professional is very important as part of planning for the move.  Sales of appreciated assets would ideally be done while still a resident of a no-income tax state, or after establishing residency in a no-income tax state.  Such assets may include real estate or stocks, for example.   The rules for establishing residency can vary by state and should be understood in the planning of sales of appreciated assets as well.

Example:  We advised a client moving from Texas to California to consult with his tax professional after he stated his intent to sell a large stock portfolio in the future.  Texas has no state income tax and California does, with a base starting tax rate of 9.3%.  He decided to sell the portfolio while still a Texas resident and avoided significant CA tax by doing so.

The following 9 states currently have no state income tax.

Alaska • Florida • Nevada • New Hampshire • South Dakota • Tennessee • Texas • Washington • Wyoming

Note:  New Hampshire residents must pay income tax on interest and dividends.

Note:  Washington state residents must pay capital gain tax on long-term gains for assets held for 1 year or longer.  There are separate rules in WA state regarding income levels and their capital gain tax.

Opes Wealth Management is a financial advisory and wealth management firm and cannot provide tax advice.  This information is intended to alert you to seek professional tax advice for the sale of appreciated assets, whether moving to a new state or remaining in your domicile state, for tax planning purposes.

Please call to learn more about Opes Wealth’s services and how we may be of help in your planning and wealth building goals.  Services are available nationwide.

Written by Ann Timoney

Personal Financial Advisor, CFP®

408-981-1335 C / atimoney@opeswealth.com

Ann joined Opes in 2004 as a Mortgage Advisor when the firm offered integrated mortgage, financial planning and investment management services. She was attracted to the opportunity to become a Personal Financial Advisor in 2006 to help her clients with their real estate decisions in the high-cost Silicon Valley area, and financial planning for their long-term goals.

Disclaimer: Client tax situations are unique and specific, and you are encouraged to consult a tax professional to analyze your specific situation.  This material has been prepared for informational purposes only, and is not intended to provide tax, legal or accounting advice; nothing contained in these materials should be taken as such. The opinions expressed in this article are not intended to provide specific advice or recommendations for any individual or on any specific tax strategy or security. The material is presented solely for information purposes and has been gathered from sources believed to be reliable, however Opes Wealth Management cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. Advisory services are only offered to clients or prospective clients where Opes Wealth Management and its representatives are properly licensed or exempt from licensure. No advice may be rendered by Opes unless a client service agreement is in place.