Moving to One of These 9 States Could Save You Thousands

Should you move to one of the nine states with no income tax? Here's how to decide.

Each year, taxpayers pay trillions in income taxes. In fact, the government collected approximately $3 trillion last year. If you’re like most taxpayers, you owe both federal and state taxes, which means an even bigger chunk of your paycheck goes to the government.

When you’re carrying debt — whether it’s student loans or a credit card balance — it can be frustrating to see so much of your hard-earned money leave your hands. That’s why many people consider moving somewhere with no state income tax.

According to a new study by Student Loan Hero, taxpayers could save an average of $1,977 a year by moving to a state with no income tax. But before you pack your bags, find out what factors you should keep in mind.

States Without Income Taxes

States that collect income taxes use them to fund essential programs and services for residents. More than 50% of state tax revenues go toward education and healthcare initiatives, such as Medicaid. State agencies also use collected income taxes to pay for services, including transportation and law enforcement.

Residents in most of the country must pay federal and state income taxes. However, nine states don’t levy any state income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. Because you don’t have to pay state taxes, you can get a significant yearly savings.

How Much Could You Save?

How much you could save by moving to a state with no income tax depends on your income bracket and where you live now. For example, Oregon workers have a state income tax of 7.75%, the highest rate of any state in the country. Someone earning the median salary in the state — $49,710 — would pay $3,851 in addition to their federal taxes.

Moving to another state to save that kind of cash can be tempting. So tempting, in fact, that 30% of survey respondents would move to a state with no income tax to save money. Moreover, 38% of respondents said they’d use their tax savings to accelerate their student loan debt repayment. (To see how student loans are impacting your credit, check out your free credit report snapshot on Credit.com..)

Using Your Savings for Debt Repayment

The savings you get from not paying state taxes can save you even more money in the long run. Using that money to repay your loan helps you pay off the loans faster, cutting down on interest charges. It can also save you thousands over the life of your loan.

For example, say you had $35,000 in student loans with an interest rate of 6.31% (the current rate for Grad PLUS loans) and a minimum monthly payment of $400 a month. Now, take the average $1,977 you would save by moving to a state without income tax and divide it up over 12 months. That would give you an extra $165 in your pocket each month. If you put that additional amount toward your student loans, you could pay off your debt about three and a half years early and save more than $4,500 in interest.

Other Costs

Before packing up and moving to a new state, consider other costs that may eat into your savings. Between putting down a deposit on a new apartment, moving your belongings and registering your vehicle in a new state, you can spend thousands.

In addition, some states with no income tax make up their revenue through other means, such as sales tax. Florida has a 6% sales tax on goods and services, including essentials such as clothing or food. If you’re not used to paying taxes on groceries, the added sales tax can put a dent in your budget. That’s why it’s important to compare the cost of living when deciding if it’s worth it to move to a new state.

Moving to Save Money

Depending on your circumstances, moving to a state with no income tax can give you a substantial savings. You can use that money to pay off your student loans faster, boost your emergency fund or catch up on retirement savings. But before you make the leap, be sure you understand the added expenses of moving so your decision is financially sound.

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12 Ways to Keep a Big Move From Breaking Your Budget

Moving is annoying, sweaty and expensive. Here are ways to at least make it easier on your budget.

I moved across the hall two summers ago. My girlfriend and I were moving to a larger apartment in the same building, one that could fit two adult human beings better than the tiny Fortress of Solitude I had selected while I was still single.

I hate moving. It’s annoying, sweaty and expensive. The word “moving” vastly undersells the actual act. It’s easy to move. Lift a finger, take a step; you’ve moved. It’s not so easy to account for all of your possessions, pack them in an organized way, transport them safely, then unpack and rearrange them in a new setting, all on a budget.

But I thought moving across a hallway would be easy. While it was certainly easier than having to move to a different building, it was still annoying, still sweaty and still expensive.

I learned a valuable lesson: Moving is terrible, always. Having a plan can make it less so. Here are a few tips that may help you save on your next move and make it less stressful, even if you’re going farther than across the hall.

1. Get Rid of Stuff

There’s no point moving stuff you don’t even want. Try to sell excess furniture, especially larger items, online or to your friends or co-workers, said Ali Wenzke, founder of The Art of Happy Moving blog.

You can list items on sites like Craigslist, NextDoor or Facebook. This way you can get potential buyers to haul away your stuff for you.

Many charitable organizations will take smaller items like clothing, Wenzke said. Keep your receipt so you can write off the donation come tax time.

2. Get Free Boxes

The price of packing supplies can add up. Luckily, you can get free boxes if you just ask.

While many retailers will have spare boxes, furniture stores tend to have a good range of sizes, saidSam Radbil Sr., communications manager for ABODO Apartments, an online apartment marketplace. It’s a good idea to call stores at least a week before you need the boxes, since they may not get rid of boxes every day.

You can also ask friends who have recently moved if you can have their old boxes.

3. Label Everything

If you lose a sock every time you do your laundry, you will likely misplace one or two things when transporting everything you own. Labeling all your boxes appropriately can help keep your valuables from disappearing into the moving ether.

Radbil suggests labeling boxes by room.

“If you want to get really technical about it, even label exactly what objects are contained in the box,” he said. “This will also help you prioritize what boxes to unpack.”

4. Conserve Bubble Wrap (& Other Packing Tips)

A few stray packing tips from Garrett O’Shea, president of PockitShip, an on-demand shipping company: Wrap dishes in your clothing, rather than buying bubble wrap. Put paper or Styrofoam plates in between breakable plates. Put heavy items, like books, in suitcases. Pack essentials last, so they go on top of other items and you can grab them easily.

5. Decide Whether to Hire Movers

This decision boils down to time, ability and cost, said Leigh Meadows-McAlpin, owner of Dwelling, an interior design firm in South Carolina. Meadows-McAlpin frequently discusses the logistics of moving with her clients.

Moving on your own requires time to sort, pack, load and unload, as well as rent and return a truck. You also need the muscle, or friends and family who have the muscle, to pack and load everything. On the other hand, the cost of labor for you and your friends is usually no more than pizza, beers and gratitude.

“As the saying goes, time is money, and if you don’t have the time or ability to move yourself, you should consider spending the money to hire movers,” Meadows-McAlpin said.

6. How to Pick a Mover

The American Moving and Storage Association website is a good place to start, Wenzke of The Art of Happy Moving said. If you can’t find a mover in your area on the site, try searching the sites of their state associations. All the movers listed are vetted by the association and licensed.

“I recommend getting at least three in-person quotes from at least three different moving companies before choosing a mover,” Wenzke said.

An in-person quote should be more reliable and will give you a better feel for the company, Wenzke said. Be sure to ask about equipment, rates, how they handle parking restrictions with their trucks and if they outsource moves to a third party. Also make sure they have proper insurance — stuff happens.

Double-check reviews on Yelp, Angie’s List and other sites before hiring, she added.

Another good place to look is the Move for Hunger website, Wenzke said. The companies there are also vetted and pack up unopened, nonperishable food to donate to a local food bank at no additional cost.

7. Make a Moving Budget

Once you have a few quotes, you can put together a budget of how much the move will cost. Be sure to plan for unexpected expenses and any additional furniture you’ll need if your new place is bigger.

Factor in how much stuff you have and how much time you’ll need since movers usually charge an hourly rate.

“Small moves can start as little as $200 and go all the way into the thousands,” O’Shea said.

Make sure your wallet and your credit can handle the expense. You can get a snapshot of your credit report for free on Credit.com, and see whether you could — or should — get a credit card before your move. (Remember, while credit cards can serve as a great source of liquidity, that available limit isn’t license to overspend.)

8. How to Rent a Truck

If you decide to go it alone, you’ll likely need a bigger set of wheels. Your couch will likely not fit in your hatchback. (Looking for a new car? Follow these steps to save.)

When evaluating a truck rental, be sure to look at mileage costs, the cost of the truck, pickup and drop-off locations and any available discounts, Radbil, of ABODO, said. Remember to reserve a truck in advance as well.

9. Pick a Climate-Controlled Storage Facility

If for some reason you won’t be able to move your stuff to your new place right away, Meadows-McAlpin suggested keeping it in a climate-controlled storage facility. Otherwise heat, moisture and cold can cause mildew, rust and other damage to belongings.

“As a designer, I’ve had to have our workrooms repair or replace furnishings damaged in storage many times, and most of those damages could have been avoided if the clients had simply opted for a client-controlled space,” she said.

10. Report Your Change of Address

Moving is expensive enough, so you don’t want to add to your costs by falling behind on bills because they don’t get delivered to the right place. Luckily, changing your address is as simple as filling out a form on the U.S. Postal Service website.

11. Transfer Utilities

This can be easy to forget in the chaos of a move, but make sure the lights will be on for you when you get to your new home and that you stop paying for utilities once you leave your old home. When I moved into my first apartment after college, I did not plan ahead and had no lights or internet for the first few days. It was a pretty depressing way to start a new chapter of life.

Most utilities have user-friendly websites that allow you to do start and stop service, but otherwise calling ahead of the move can ensure that your new home is fully ready for you. (Once you’re settled, see how to save on your electric bill.)

12. Deduct Moving Expenses

If your move is work-related, you can deduct your moving expenses from your taxes if you meet certain conditions. The move qualifies if your new workplace is 50 miles farther from your old home than your old job location was from your old home, according to the IRS.

If you had no prior workplace, the new job location must be 50 miles from your old home. You must also work at least 39 weeks in the year following the move.

So to make your move pay, be sure to save your receipts for tax time.

Getting ready to move out of the dorm? Here’s 19 mistakes college grads make when finding their first apartment you’ll want to avoid.

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10 Places That Can Boost Your Child’s Future Income (& 10 That Won’t)

Where you raise your kids matters. Here are 10 counties shown to raise the earnings of kids who grow up there, and 10 counties to avoid.

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The Best Cities for Raising Kids in 2017

A Place to Learn & Play

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Why Aren’t Americans Moving Anymore?

Here's what's in store for U.S. migration trends in 2017.

January is a good time to take stock of your career, and with the economy perking up, perhaps you should to consider making a dramatic change. After all, what’s more American than relocating for opportunity?

But even as careers get shorter — the average millennial will have seven jobs by age 28 — and the gig economy encourages all sorts of creative work arrangements, a funny thing has happened to the idea of heading “West.”

Americans don’t really move much anymore.

In fact, the rate of interstate moves has fallen by 50% in a single generation. In the 1980s, about 3% of the population moved to a new state every year. Today, that figure has fallen to less than 1.5%. The rate has steadily dropped, and it’s dropping across demographics, and through both good times and bad, suggesting it’s a trend with staying power.

Economists are worried about this. Movement suggests opportunity, so a decrease in migration suggests the “American Frontier” may be closing for good.

Why does this matter so much? Labor portability is the bedrock of capitalism and social mobility. Workers must be able to move where opportunities are in order for labor to be distributed efficiently. And freedom of movement (take this job, and shove it!) is the main tool workers have to bargain effectively with employers — not to mention getting themselves a big increase in income. (Want to know where your finances stand? You can view two of your credit scores, updated every 14 days, for free on Credit.com.)

“Given the role of mobility both for individual labor market outcomes and for the overall efficiency of the aggregate labor market, the long-run decline in migration rates could indicate a decline in overall labor market dynamism,” wrote Fatih Karahan and Darius Li on the New York Fed’s blog recently. “Many policymakers have worried that lower mobility is associated with a more rigid economy, where workers cannot move to locations with good jobs. Lower mobility might cause the labor market to be slow in adjusting to shocks, making downturns longer and recoveries slower.”

But try as they might, while everyone seems to agree migration is down dramatically, researchers can’t agree on the cause. In fact, they don’t even agree that it’s a bad thing.

First, to be specific about the change that’s occurring: The Urban Institute called attention to this slowing migration trend recently, citing Federal Reserve researcher Raven Molloy, who said the percentage of interstate movers among working-age people (25 to 59) has steadily slowed from nearly 3% in the 1980s to less than 1.5% from 2010 to 2015.

In a separate paper, Molloy wrote that drops have occurred across all age groups and many demographic categories. You’d expect younger people to move more, but even that group has shown a steady drop — those aged 20 to 24 moved at a 5.7% rate from 1981 to 1989 but only a 3.3% rate from 2002 to 2012, Molly wrote.

Renters moved more than homeowners, but both moved less frequently during that same time span — renters from 6.4% to 3.6%; owners from 1.5% to 0.9%. Those with more education moved more, but again, movement across all groups fell: College+ dropped from 4.2% to 2.1% while those with only high school educations dropped 2.2% to 1.1%.

That means some more seemingly obvious explanations — like trouble selling housing during the recession, or an aging population — don’t explain what’s going on.

Maybe there’s a happy explanation for this. Three years ago, Greg Kaplan and Sam Schulhofer-Wohl wrote a paper for the Minneapolis Fed that dispelled another popular theory — that the growth of two-income couples makes moving harder, because it’s more challenging for both partners to find new jobs in new areas.

Instead, they said that the changing nature of industry in America means that most regions now offer very similar opportunities. Gone are the days when people moved West to farm or moved to Detroit to work on cars. Using data known as the Theil Index, the pair point out that the mix of jobs offered in U.S. states is continually growing more and more similar — that “geographic job specificity” has fallen by one-third in the past 20 years.

“Fewer workers need to move to obtain the best jobs for them, because labor markets around the country have become more similar … That decrease in geographic specificity makes it easier for workers to stay where they most enjoy living and maintain their occupation,” the two wrote.

Their other explanation is even more positive. Would-be movers have a much easier time test-driving their potential new homes from afar. It’s easier for people in Minnesota to connect with people in California to see what life there is really like.

“With more information, workers are less likely to make moves they ultimately regret, and the migration rate declines,” they wrote. The authors note that among people who do move from state to state, there’s a 15% chance that they’ll move again the next year. So, perhaps we are finally learning the grass isn’t always greener. “In other words, American workers haven’t lost their flexibility. They just don’t need to move so much anymore.”

Another explanation is a variation on the discredited idea that the greying population explains why Americans are moving less. Corporations looking to fill jobs would generally prefer to hire locally. Nationwide searches are expensive, as are long-distance relocations. Because a greater number of older candidates are available nearby, many companies are skipping the more costly form of job hunting, indirectly contributing to less migration, even among younger people, Karhan and Li argued in their paper.

“In short, a young individual today is moving less than a young person did in the 1980s because of the higher presence of older workers,” they wrote. (Again, it’s a silver-lining theory.) “These findings suggest that the declining trend in interstate migration is a response of the labor market to an aging population and does not necessarily signal a decline in the market’s dynamism or efficiency.”

But a more recent research paper published by Molloy and others at The Brookings Institution threw a lot of cold water on these various theories and conceded they’re unable to identify a clear reason. It does hint at two intriguing explanations that require more study, however.

One involves declining levels of trust. States where more people say strangers can’t be trusted experienced even greater drops in migration, the paper said. So a decline in overall social trust could be making people less likely to take the leap of faith needed to make a big move.

But the paper’s most intriguing suggestion involves understanding why workers get the pay and benefits they do. Perhaps larger corporations are screening employees more thoroughly, increasing a worker’s costs for finding new jobs, again making a move less attractive.

Or, perhaps the most obvious answer of all: Moving just isn’t worth it any longer.

Companies may also no longer feel much pressure to lure employees with big pay increases — and that in turn means there are no gold rushes that encourage workers to uproot their lives. This explanation fits with another trend that’s stymied economists for years — Americans stubbornly slugging wage increases, despite a seemingly tight labor market.

While pointing out that much more research in this area is needed, Molloy and his co-authors ended their paper ominously: This effect is “unlikely to be benign.”

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10 Cities Americans Are Leaving the Fastest

These 10 cities are losing population faster than any other large American cities.

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These Movers Will Help You Escape an Abusive Relationship for Free

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In 1997, high school students Aaron and Evan Steed launched their moving service, Meathead Movers, as a way to make money while juggling sports and school. Based in San Luis Obispo, California, roughly midway between San Francisco and Los Angeles, the company’s business was a hit. But periodically, Steed and his partners received upsetting calls — from panicked women trying to flee abusive relationships.

“We’d just help them out for free,” no questions asked, Aaron Steed told Credit.com. Once Meathead Movers opened four offices and began serving the Los Angeles market, they continued to help out victims of domestic abuse free of charge.

“We just kept helping out, and after three years we found ourselves in a contentious situation where the batterer came home and the police were called,” Steed said. At that point, “we realized we had to team up with a local domestic violence shelter” in order to get it done right.

One day, a friend of Steed’s passed along a contact at The Women’s Shelter Program in San Luis Obispo, which offers women and children affected by domestic violence counseling and support. After speaking with a former executive director there, Steed began collaborating on a strategy to better serve the families without putting anyone in harm’s way. The first partnership was formalized in 2001; today, Meathead Movers has nine partnerships with women’s shelters throughout Central and Southern California.

When victims call asking for help, Steed turns them over to a case worker at one of Meathead Movers’ partners, like Good Shepherd in Los Angeles, which then determines the best course of action. “They’ll confirm it’s a legitimate situation, provide housing, legal advice, and all kinds of other things,” Steed explained. “Then, once it’s time to actually move the person out, the shelter will contact us and we’ll do the move.”

Meathead Movers also often helps victims leave the shelter when it’s time to strike out on their own. By his estimate, Steed’s company has helped between 350 and 400 victims. “We don’t want moving to be a hindrance to get out of a bad situation,” he said.

It’s a random act of kindness that’s inspiring other small businesses: In July, Meathead Movers launched the site, MoveToEndDV.org, which challenges 10,000 businesses “to take the #MoveToEndDV pledge and make a donation or provide a product or service for free to help the shelters that support victims of domestic violence.”

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5 Money Tips You Should Know Before Moving Out

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Moving to a new home can be very stressful and also exciting. This may be your first time on your own without financial support. You want to ensure you are financially prepared and ready for the big step, so here are a few money tips to help you get started.

1. Build Your Credit

Before signing on the dotted line, you should consider building solid credit. If you have a good credit score, then you may get a low, fixed-interest rate when applying for a mortgage. If you ignore your credit score, then you may get a high interest rate or even possibly denied on your loan. If you are moving in with a partner, then consider sitting down with him or her and looking over your credit together. (You can view a free snapshot of your credit report, updated every 14 days, on Credit.com.) Whether you have a joint account or not, you are now both responsible for your mortgage and other expenses that come with your home. (Note: Landlords, too, often check credit, so it’s in your best interest to make sure yours is in good shape before filling out rental applications.)

2. Plan Your Budget Now

While you are still living at home, you might want to plan out your budget before moving into your new home. First, write down all of your current expenses, then include your “new home” expenses and how you will be paying for them. Your “new home” expenses may be furniture and appliances to start out, but you also want to include your mortgage or rent, utilities and any loans you plan on taking out. It might be difficult to guess how much all of your bills will be, but it’s beneficial to provide an estimate of how much you think it might cost. This way, you will be prepared and have enough money aside to pay for it.

3. Pay Down Your Debts

Moving to a new home comes with a lot of additional expenses. You might want to pay down a little (or all) of your debt now before taking on more. It might be impossible to eliminate a debt as large as student loans, but you should try to at least get your number down. So, if you already have steady monthly payments, consider putting a little extra toward it each month. Any little bit helps.

4. Save Money

Take out a pen and paper and write down all of your financial goals for your new home. Let’s say you’ve always wanted a large dining room table or a leather love seat. Try and find the cheapest option and start saving! You can choose to save one at a time or tackle each goal separately.

Whatever your strategy is, saving before you move will help you stay organized and avoid going into debt.

You might want to consider putting 10% of your net pay (take-home pay) toward your savings for your new home to help you get ready. You can even have a little fun with this and give your savings a name such as “A New Beginning.”

5. Practice Makes Perfect

You might want to practice paying your bills before you move out so you can get used to not having the money. This might be a little difficult at first, but it will only help you become more financially prepared for your move. If you find yourself struggling to meet your payments, then you may have to cut back on some expenses from your budget. If you are comfortable taking the money out of your account, consider putting it into your savings so you are ready to pay for it when you officially move in.

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Should I Get a Credit Card Before or After I Move?

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If you’re in the process of moving, or know you will be before too long, you probably have a long checklist of things to do before the movers load up all the boxes. If you have “get a new credit card” on that list, you may want to think twice before you file an application.

According to an email from Bruce McClary, vice president of communications for the National Foundation for Credit Counseling, “moving is hectic enough without bringing credit into the picture.”

Timing is Everything

“People who are relocating and considering a credit move should think about timing,” McClary said. “It is far better to apply for new credit well before the move or a while afterward, in order to avoid any problems closing on a mortgage or being approved for an apartment rental.”

But where is that sweet spot?

“While there is no set rule, an ideal buffer may be about six months or more on either side of the relocation,” McClary said. “The bottom line is that too many credit inquiries … could have a negative impact on a person’s credit rating.”

How New Credit Could Affect Your Move

When you apply for a new line of credit, a hard inquiry is generally placed on your profile, which will ding your score. (Your history of applying for credit accounts for 10% of your credit scores.)

“While it may not amount to much, a small drop in a credit score can be the difference for being approved or rejected for some who already are on the margin,” McClary said. “Others may still be approved, but may miss out on the best available terms when qualifying for a mortgage loan.”

Remember, many landlords check a potential tenant’s credit reports and review their credit scores before agreeing to rent out an apartment, so dings to your credit due to a new inquiry could hurt your odds of getting that place, too, particularly if your credit is on the bubble.

You can see how your credit inquiries and spending habits are affecting your credit by viewing two of your credit scores for free, updated every 14 days, on Credit.com. If you discover your credit needs a bit of work, now may not be the time to apply for that credit card. You may also want to consider paying down your debts and disputing any errors you find on your report to help your score rebound.

Don’t Forget…

No matter when you apply, it’s important you don’t let payments fall through the cracks.

“It sounds like a no-brainer, but with all of the confusion and chaos of relocating, even the most alert consumers can be at risk of missing a payment or two,” McClary said. “This can not only cause a problem when the time comes to apply for new credit after the move, but it can have a negative impact on new accounts that were opened beforehand.”

Your payment history is the biggest influencer on your credit, making up 35% of your scores. To help prevent negative damage, McClary advises consumers “set automated reminders and switch to email and online account management if you haven’t done so already.” He said that “even if you prefer paper statements, having online account access is a good backup plan when in transition.”

Sending Your Change of Address Cards

You probably have a list of people to notify that you’ve moved. And, although they may not exactly qualify as your friends, it’s important your creditors are on that list. Not only does letting them know you’ve moved help them keep track of where to send any snail mail, but it is a security measure.

“If your creditor is relying on an outdated address, your normal card activity in your new neighborhood may trigger a fraud alert that could cause them to shut down the account,” McClary said. “Even if the account suspension is temporary, it can still be a big hassle.”

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10 Areas With Great Schools Where You Can Actually Afford to Live

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