Buying a Home in Low-Taxed States

Buying a Home in Low-Taxed States

Gustan Cho Associates are mortgage brokers licensed in 48 states

This guide covers buying a home in low-taxed states. Buying a home In low-taxed states is now possible for remote wage earners. The coronavirus pandemic has changed American businesses and workers. When the COVID-19 pandemic hit the United States in February 2020, many companies issued stay-at-home orders for all their employees. Only workers who can work remotely were employed. Those who needed to report to work were furloughed or laid off if their jobs were non-essential.

More and more jobs that traditionally required reporting to a brick-and-mortar office location are now being transformed into remote positions. More and more workers have become remote wage earners. Buying a home in low-taxed states make homeownership possible for remote workers.

States started to reopen beginning in late April. More and more states are reopening in phases. However, companies are not calling their workers back to work. Instead, companies are instructing their employees to work from home. A large number of companies are now transforming jobs to remote job positions. Having remote workers is a win-win for both the company and the employees.  This article will discuss and cover buying a home in low-taxed states.

Buying A Home In Low-Taxed States Is Now Possible For Remote Wage Earners

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Some states have a higher cost of living than others. Higher cost of living states also has higher housing prices. Many counties in California have home prices that are double the median average home prices. The average home price in California is $797,000, while the average in Tennessee is $497,800. According to the Bureau of Labor Statistics’ new data on consumer expenditures, Americans spent more on taxes than food and clothing combined in 2022. The Bureaus of Labor Statistics said the following:

“Consumer units” (which include families, financially independent individuals, and people living in a single household who share expenses) spent an average of $9,562 on food and clothing in 2018, according to BLS. But they spent $16,749 on federal, state, and local taxes.

See the chart below:

In 2022, the average tax bill in the United States came out as follows for an American worker:

  • $9,819 in federal income taxes
  • $4,098 in state and local income taxes
  • $151 in other taxes
  • $6,717 in social security taxes
  • $4,065 in property taxes

The total average taxes paid by an average American worker was $18,749. This is why buying a home in low-taxed states benefits the average American wage earner in not being priced out of buying a house.

Amount Paid In Taxes Versus Spending on Food and Clothing

According to the Bureau of Labor and Statistics, the average American spent an average of $9,729 annually on food in 2022. $3,833 was spent on clothing in 2022. This totals $11,562 spent on food and clothing for the average American consumer in 2022.

Compare these figures with how the average American consumer spent $9,917 alone. $9,819 for federal and state income taxes and $2,098 for state and local income taxes.

This was more than the average expenditure of $11,562 for food ($9,729) and clothing ($3,833). The average gross income for an average American worker in 2022 was $93,573. The largest expense for an average consumer was $21,884 for housing. The average property tax bill was $4,065 out of the housing expenses.

Benefits of Buying a Home in Low-Taxed States

More and more remote wage earners are fleeing high-taxed states like New York, California, Illinois, and New Jersey to other low-taxed states with lower living costs. For example, Illinois has the highest out-migration rate in the country. Led by Democrat Governor JB Pritzker, Illinois has the highest tax rate in the nation. The state also has the second-highest property tax rate in the country, right behind New Jersey. Illinois faces an incompetent governor, corrupt politicians, and no financial direction.

Pritzker has no solution to fixing the state’s broken pension system other than increasing taxes. Pritzker has doubled the state’s gas tax, increased existing taxes in over 20 items, created new taxes, and is planning on changing the state’s flat tax to a progressive income tax system. There have never been more businesses and taxpayers leaving Illinois than ever before.

Higher wage earners will leave the state in droves with the progressive system. Many high-income wage earners can work remotely. Why would they live in Illinois when there are states like Tennessee, Florida, Texas, Nevada, and others where there are no state income taxes and property taxes are a fraction of those in Illinois? Moving to a lower-taxed state can get homeowners more homes for the money. Home values do not appreciate in high property tax states such as Illinois and New Jersey.

This article on buying a home in low-taxed states was updated on July 17th, 2023.

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