Tax Free States Question Forum

[Anonymous User]

My understanding is that Florida, Texas and Washington are the three big tax free states (meaning that there is no state withholding tax). Given that California takes +$1,000 a month from my paycheck the idea of trying to lateral to a tax free state is very appealing (especially given my $1k a month tuition debt). I checked the states’ sales tax and they are all about the same, and reasonable. No state withholding tax sounds too good to be true, is there a downside? i.e. perhaps the feds will tax me more since my net take home would be higher.

(I understand South Dakota is also tax free, but my guess is that the pay would be much lower so there might not be an advantage is this instance. Also, while my monthly $750 401k contribution lowers my fed tax, it doesn't for CA).

[Tiago Splitter]

State and local tax is deductible if you itemize. So if you are itemizing you will lose some of the benefit of switching, but you'll still be better off assuming you end up with the same salary.

[bearsfan23]

Nevada and Alaska are also tax free

[kalvano]

You pay for it in other ways, although probably not quite as much as you do directly.

[Anonymous User]

Texas (Dallas) has a very high property tax.

[Br3v]

You pay for it in other ways, although probably not quite as much as you do directly.

I.e. You do not pay for it in other ways


OP I think Tennessee too?

[Anonymous User]

With the exception of Texas, you probably "pay for it" the most by way of reduced salary. Seattle firms generally start around 125k, with only a few of the big SV firms paying market rate. Can't speak to Florida, but the few Miami firms I've researched seemed similar (think they were 135k? I forget).

Texas seems to stretch money the furthest—a lot of Houston & Dallas firms outwardly match NY salaries (no idea about bonuses, though). With lower COL and no income tax, it probably goes a long way.

[conn09]

You're going to lose more money from smaller bonuses then you'll save from paying less taxes.

[n1o2c3a4c5h6e7t]

You're going to lose more money from smaller bonuses then you'll save from paying less taxes.

If you factor in COL, this is clearly false. Market salary in NYC, including bonuses, is pretty mediocre.

[CanadianWolf]

You pay for it in other ways. This is one reason Republicans push for lower property taxes & higher consumption (sales) taxes. It may be difficult to see readily, however, as not all states are created equal (e.g. oil & weather).

[Instinctive]

Texas (Dallas) has a very high property tax.

This is the biggest way you pay for it in Texas. But it still tends to leave you coming out ahead when compared to, say, NYC. Even before COL.

[Yardbird]

Texas (Dallas) has a very high property tax.

This is the biggest way you pay for it in Texas. But it still tends to leave you coming out ahead when compared to, say, NYC. Even before COL.

Infrastructure isn’t as nice as states with taxes. The road conditions leave much to be desired. You’ll probably end up changing tires on your car more frequently than you would in other states. At least, that was the case in Houston.

[n1o2c3a4c5h6e7t]

NYC roads are horrible, as are many other roads in states where the authorities frequently put salt in snow. The property tax argument is also misguided because a nice house in TX costs one-fifth the cost of its equivalent in NY or LA. People have their preferences on where to live, and I understand that, but let's not pretend that it's all somehow financially equivalent because of the differences in taxation schemes/infrastructure/bonuses.

[Tiago Splitter]

NYC roads are horrible, as are many other roads in states where the authorities frequently put salt in snow. The property tax argument is also misguided because a nice house in TX costs one-fifth the cost of its equivalent in NY or LA. People have their preferences on where to live, and I understand that, but let's not pretend that it's all somehow financially equivalent because of the differences in taxation schemes/infrastructure/bonuses.

Yeah the "they make up for it in other ways" argument is really weak all the way around, especially when comparing Texas and California. Someone actually tried it in the NBA thread to suggest that DeAndre Jordan, who was about to sign for $20 million a year, was not better off financially choosing Dallas over LA.

[Instinctive]

Texas (Dallas) has a very high property tax.

This is the biggest way you pay for it in Texas. But it still tends to leave you coming out ahead when compared to, say, NYC. Even before COL.

Infrastructure isn’t as nice as states with taxes. The road conditions leave much to be desired. You’ll probably end up changing tires on your car more frequently than you would in other states. At least, that was the case in Houston.

I do not like Houston much. Dallas is far better. For a number of reasons I'm sure somebody in the field could explain that I can't (more people sounds too simple), the roads in Houston all seem to get WAY more traffic and congestion on them.

That said, I've lived in a number of places across the country. The roads here in NY aren't really any better. The roads in Oklahoma suck. The roads across the south tend to suck too.

[conn09]

You're going to lose more money from smaller bonuses then you'll save from paying less taxes.

If you factor in COL, this is clearly false. Market salary in NYC, including bonuses, is pretty mediocre.

Maybe in your 1st year. But with salary compression and lack of gigantic fucking bonuses, you end up losing money.

NYC goes something like
160->170 -> 185 -> 210 for general lockstep

Pretty much every market i've looked at doesn't increase your base salary at anything close to that. You may start at 145, but you're only going to be at like 160 or 170 at the end of year four. So you're already missing a ton in just missed salary.

[wiz]

Texas (Dallas) has a very high property tax.

This is the biggest way you pay for it in Texas. But it still tends to leave you coming out ahead when compared to, say, NYC. Even before COL.

Infrastructure isn’t as nice as states with taxes. The road conditions leave much to be desired. You’ll probably end up changing tires on your car more frequently than you would in other states. At least, that was the case in Houston.

I do not like Houston much. Dallas is far better. For a number of reasons I'm sure somebody in the field could explain that I can't (more people sounds too simple), the roads in Houston all seem to get WAY more traffic and congestion on them.

That said, I've lived in a number of places across the country. The roads here in NY aren't really any better. The roads in Oklahoma suck. The roads across the south tend to suck too.

No zoning, insane sprawl, lack of public transportation, few entrypoints into the city, incessant construction/roadwork, highways have not been widened to account for growing population.

Takes like an hour to drive from any suburb to downtown between 7-9 and 4-6:30. Not sure NYC/LA/Chicago are better (don't think they are), but at least those cities have passable to great public transportation.

[wiz]

You're going to lose more money from smaller bonuses then you'll save from paying less taxes.

If you factor in COL, this is clearly false. Market salary in NYC, including bonuses, is pretty mediocre.

Maybe in your 1st year. But with salary compression and lack of gigantic fucking bonuses, you end up losing money.

NYC goes something like
160->170 -> 185 -> 210 for general lockstep

Pretty much every market i've looked at doesn't increase your base salary at anything close to that. You may start at 145, but you're only going to be at like 160 or 170 at the end of year four. So you're already missing a ton in just missed salary.

National firms with TX offices (Latham, K&E, STB, GDC, Sidley, Skadden, Akin, Weil, etc.) all pay NYC market + bonuses. Top TX firms have also paid NYC market + bonuses in recent years, although bonuses will probably be a bit more variable going forward if oil continues to suck.

[n1o2c3a4c5h6e7t]

You're going to lose more money from smaller bonuses then you'll save from paying less taxes.

If you factor in COL, this is clearly false. Market salary in NYC, including bonuses, is pretty mediocre.

Maybe in your 1st year. But with salary compression and lack of gigantic fucking bonuses, you end up losing money.

NYC goes something like
160->170 -> 185 -> 210 for general lockstep

Pretty much every market i've looked at doesn't increase your base salary at anything close to that. You may start at 145, but you're only going to be at like 160 or 170 at the end of year four. So you're already missing a ton in just missed salary.

I was talking about TX, where firms generally follow market.

[twenty 8]

I really think that tax free states, Fla in particular, is what facilitated NY to jump to $190k, considering that 140k in tax free Fl is as good as 160k in NY. Then there is the lifestyle advantage of living in a nice climate most of the year. Plus FL COL (while not inexpensive) is a bargain compared to NYC and most of the NE. If I were coming out of LS this year that 30k jump to 190k could possibly swerve my thinking to NYC. Maybe that’s why NYC jumped its pay by 30k and not 10k. It’s doubtful that many (if any) firms in Fla will jump to 190k, since most are still not much over 140k.

[conn09]

I really think that tax free states, Fla in particular, is what facilitated NY to jump to $190k, considering that 140k in tax free Fl is as good as 160k in NY. Then there is the lifestyle advantage of living in a nice climate most of the year. Plus FL COL (while not inexpensive) is a bargain compared to NYC and most of the NE. If I were coming out of LS this year that 30k jump to 190k could possibly swerve my thinking to NYC. Maybe that’s why NYC jumped its pay by 30k and not 10k. It’s doubtful that many (if any) firms in Fla will jump to 190k, since most are still not much over 140k.

Dude there's like 50-60 total summer associate spot in the state of Florida. And like only 20 of those are for the 140k jobs. New York doesn't give a fuck about Florida.