Tax Exempt States for Full Time RVing
I know a few of the states have no state tax when it comes to purchasing RV's( NH being one), I'm looking for a state with this and where you can renew you drivers license and vehicle registration onl...
Forum Discussion
There is no state where making it your domicile lets you escape Federal income tax if you have taxable income. Not even moving out of the U.S. exempts you, if you are a U.S. citizen or U.S. legal resident, although the tax rules change once you start paying foreign taxes. (I paid enough income tax to the PRC in two years to cover five years of U.S. tax).
There are states with no income tax at all: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. Two tax only interest and dividend income. Some don't tax some part or, or all of, income from pensions, retirement savings plans or Social Security payments. Some don't tax interest income paid within the state.
Five states have no sales tax: Alaska, Delaware, Montana, New Hampshire, Oregon, although Alaska allows municipalities to collect a sales tax. Some states with a sales tax do not collect sales tax on motor vehicles. But they might collect an excise tax, a one-time or annual ad valorem tax (on vehicles and other personal property) or allow counties and/or municipalities to collect the tax.
Not often considered, some states have substantial estate taxes, inheritance taxes, or both (double dipping) and others have neither or very high exemptions. Some states use intangible taxes for income, because these tend to be quite progressive.
What state works for you having the lowest overall taxes thus depends on your income, the sources of your income, your property holdings, and your intangible wealth.
People tend to look at "no income tax" as being important even if they have little taxable income or the tax is in fact quite low. It might be that your income tax would be something like $1200 a year and property tax $400, and a state with no income tax collect $6000 on property and intangibles. Some of the states with the lowest per capita tax bills have a small income tax.
There is a second side of the picture: how easy is it to domicile in a state without actually living there? This is the full-timer problem, involves matters like voter registration, ID and/or driver's licenses, vehicle licensing, and cost, availability and geographic scope of medical insurance.
Put all these together, full-timers end up using Florida, South Dakota and Texas. None are yet pinned down by "real ID" requirements, do not make much issue with using rented addresses. They do not necessarily have the lowest vehicle registration fees, but none tax vehicles ad valorem annually. Texas does have vehicle inspection requirements. Texas and Florida depend more on sales and real property taxes; Florida used to have an intangibles tax but repealed that in 2007.
This all works for full timers because they won't own real estate and will be doing their purchasing where ever they are, paying whatever the local rate. State of domicile may want a use tax, but mechanisms for collecting this are so far ineffective unless it becomes an er satz tax on disposable income, and that is hard to measure if the state does not require filing an income tax return.
If I were full timing and expected to winter in Texas, I would choose Texas, where vehicle registration is particularly cheap and insurance not too bad outside the metro areas, and I could take care of business while there. If I wintered in Florida, I would make that my domicile as a full timer, but if I were a snowbird with a home in another state, I might domicile there instead. I know mostly Michigan snowbirds, and those I know domicile in Michigan rather than Florida, for various personal reasons.
If looking for a state to move into for a low cost retirement, my list would be different, e.g. Florida tends to be expensive, Texas is not so bad, but New Mexico, Missouri and Mississippi also have cost advantages depending on locale. Even some states in the middle of the total tax range, like Oklahoma and Arkansas, can be low cost where property values are low.
There are states with no income tax at all: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. Two tax only interest and dividend income. Some don't tax some part or, or all of, income from pensions, retirement savings plans or Social Security payments. Some don't tax interest income paid within the state.
Five states have no sales tax: Alaska, Delaware, Montana, New Hampshire, Oregon, although Alaska allows municipalities to collect a sales tax. Some states with a sales tax do not collect sales tax on motor vehicles. But they might collect an excise tax, a one-time or annual ad valorem tax (on vehicles and other personal property) or allow counties and/or municipalities to collect the tax.
Not often considered, some states have substantial estate taxes, inheritance taxes, or both (double dipping) and others have neither or very high exemptions. Some states use intangible taxes for income, because these tend to be quite progressive.
What state works for you having the lowest overall taxes thus depends on your income, the sources of your income, your property holdings, and your intangible wealth.
People tend to look at "no income tax" as being important even if they have little taxable income or the tax is in fact quite low. It might be that your income tax would be something like $1200 a year and property tax $400, and a state with no income tax collect $6000 on property and intangibles. Some of the states with the lowest per capita tax bills have a small income tax.
There is a second side of the picture: how easy is it to domicile in a state without actually living there? This is the full-timer problem, involves matters like voter registration, ID and/or driver's licenses, vehicle licensing, and cost, availability and geographic scope of medical insurance.
Put all these together, full-timers end up using Florida, South Dakota and Texas. None are yet pinned down by "real ID" requirements, do not make much issue with using rented addresses. They do not necessarily have the lowest vehicle registration fees, but none tax vehicles ad valorem annually. Texas does have vehicle inspection requirements. Texas and Florida depend more on sales and real property taxes; Florida used to have an intangibles tax but repealed that in 2007.
This all works for full timers because they won't own real estate and will be doing their purchasing where ever they are, paying whatever the local rate. State of domicile may want a use tax, but mechanisms for collecting this are so far ineffective unless it becomes an er satz tax on disposable income, and that is hard to measure if the state does not require filing an income tax return.
If I were full timing and expected to winter in Texas, I would choose Texas, where vehicle registration is particularly cheap and insurance not too bad outside the metro areas, and I could take care of business while there. If I wintered in Florida, I would make that my domicile as a full timer, but if I were a snowbird with a home in another state, I might domicile there instead. I know mostly Michigan snowbirds, and those I know domicile in Michigan rather than Florida, for various personal reasons.
If looking for a state to move into for a low cost retirement, my list would be different, e.g. Florida tends to be expensive, Texas is not so bad, but New Mexico, Missouri and Mississippi also have cost advantages depending on locale. Even some states in the middle of the total tax range, like Oklahoma and Arkansas, can be low cost where property values are low.
