Money Rehab with Nicole Lapin - It Pays to Live in Certain States… Here are Nicole’s Picks!

Episode Date: July 5, 2021

Happy birthday, America! To celebrate, Nicole breaks down which states give their residents the most tax love… and how it could save you big. Learn more about your ad-choices at https://www.iheartpodcastnetwork.comSee omnystudio.com/listener for privacy information.

Money rehabbers, you get it. When you're trying to have it all, you end up doing a lot of juggling. You have to balance your work, your friends, and everything in between. So when it comes to your finances, the last thing you need is more juggling. That's where Bank of America steps in. With Bank of America, you can manage your banking, borrowing, and even investing all in one place. Their digital tools bring everything together under one roof, giving you a clear view of your finances whenever you need it. Plus, with Bank of America's wealth of expert guidance available at any time, you can feel confident that your

money is working as hard as you do. So why overcomplicate your money? Keep it simple with Bank of America, your one-stop shop for everything you need today and the goals you're working toward tomorrow. To get started, visit bofa.com slash newprosmedia. That's b-o-f-a dot com slash n-e-w pros p-r-o-s media. bfa.com slash newprosmedia. Hey guys, are you ready for some money rehab? Wall Street has been completely upended by an unlikely player, GameStop. And should I have a 401k? You don't do it? No, I never do it. You think the whole world revolves around you and your money.

Well, it doesn't. Charge for wasting our time. I will take a check. Like an old school check. You recognize her from anchoring on CNN, CNBC, and Bloomberg. The only financial expert you don't need a dictionary to understand. Nicole Lappin. I hope over the weekend you had a chance to light some sparklers,

have a barbecue, see some fireworks, party in the USA, and all the other tried and true ways to wish America a very happy birthday. So in honor of the 4th, I'm going to get a little patriotic, but money rehab style. Today, I'm bringing you my rankings for the best states in the union when it comes to tax perks. One of my biggest pet peeves is when so-called financial experts encourage people to sweat the small stuff. They'll tell you to cut the morning latte because those expenses add up. I say, in the finance world, you should really sweat the big stuff. They'll tell you to cut the morning latte because those expenses add up. I say, in the finance world, you should really sweat the big stuff. Why skip the $5 latte when instead you could lower the APR on your credit card and potentially save thousands? Sure, $5 lattes add

up, but not like thousands of dollars of savings add up. APR is one biggie. Another is taxes. I know some of you might feel settled down, while some of you might have your sights set on starting a new life in some other part of the beautiful US of A. But regardless, you should listen up and consider how, when done right, taxes can change your financial life. I know, you're laughing to yourself and mocking me for my nerd vibes, but setting roots in a tax-friendly state can save you thousands of dollars. And so I'm not kidding when I say it could change your life. And you may still think that moving for taxes sounds a little nutty, kind of like 90-day fiancé move to another country to marry someone you never met kind of energy and vibes. But it really does happen. In fact, a recent study found that the pandemic accelerated moves

from high-tax states to low-tax states. So either there are more tax nerds than you think, or this is a real money move that you too should consider. So let's take a look at the best states you can call home. Us financial experts don't always agree, but for most of us, Wyoming, Florida, and Nevada pretty consistently get top placement on our good lists. For starters, Wyoming, Florida, and Nevada do not have state income tax. Yep, you heard me correctly. There are actually nine states that do not tax income. So if you're living in one of those nine states, less money is coming out of your paycheck than your fellow Americans in the other 41 states. Plus, come tax season, you only have to file one tax return,

unlike the rest of us who have to file state and federal taxes. But if you're living in a state without income tax, you're not guaranteed to be living large. You're not even guaranteed to save much money on taxes. That's because states without income taxes may compensate with other tax streams. For example, Texas does not have state income tax, but Texans spend 1.8% of their income on real estate taxes, which is one of the highest rates in the country. But Wyoming, Florida, and Nevada, they are different. And I'm going to tell you why. First, I'll give you an overview, and then I'll tell you what your financial life would look like if you were in one of those states.

Let's start with Wyoming. So unlike the Texas example I just talked about, Wyoming has no income tax and low sales tax and low property taxes. The state sales tax is 4%, which makes it the 8th lowest in the country. It also has the 10th lowest property tax rate. More on that later, but for now, let's travel to the Sunshine State. My apologies to Florida, but I would say this is the ugly duckling of my top three picks. Florida pretty much only avoids the naughty list because it doesn't raise other taxes to

compensate for their lack of income tax. The sales tax rate is around 7%, which is pretty average in the U.S. Property taxes in Florida aren't anything special either. But something is better than nothing. Or I guess when it comes to taxes, nothing is better than something. But a low something is better than a high something. And now let's head west to Nevada. Similar-ish to Florida, the sales tax isn't going to knock your socks off. It's just under 7%. But Nevada has the fourth lowest property tax in the country, which is a big deal. I know so far this has all been pretty abstract. So let's look at what it would look like to actually live in one of these states. And let's compare and contrast with my home state of California,

because here on Money Rehab, we face our finances head on. Let's imagine you own a $300,000 home and you're making $60,000 a year. What are our state rankings when looking at property taxes? Nevada is the champion, where you'd only owe about $1,600 in property taxes. Wyoming is a close second. There you would owe a little over $1,700 on property taxes. In California, you'd be paying just over $2,000. And in last place, Florida, where you'd be paying just about $2,500.

So far, not really seeing the tax love, right? Nevada is the winner. Florida is the loser. Sorry, Florida, still love ya. And my home state, California, isn't looking so bad. But wait for it. Now we're gonna add in the layer of income tax. At 60 grand a year,

let's say you owe around $10,000 in federal taxes. So across all of our state examples, we're bumping our take-home pay down to $50,000. Then federal taxes. So across all of our state examples, we're bumping our take-home pay down to fifty thousand dollars. Then state taxes. In California, state taxes on 60 grand could be around two thousand dollars. So the take-home money gets cut to around forty eight thousand dollars. But in Wyoming, Nevada and Florida, nada. No more cuts. You're staying at that 50 grand post-income tax take-home pay. So after both property and income taxes, our final rankings in first place, Nevada, where your take-home pay would be around $48,400. Just barely behind Nevada in second place is Wyoming, where your take-home pay would be

$48,300. Florida, which last time we checked was in last place, gets boosted to third place with a take-home pay of $47,500. And yep, in very last place is my homestay of California, where I would get to take home $46,000. $2,400 less than what my Wyoming pals are taking home. Ouch. I do love the fact that I'm from California, and it makes sense for me to be here with my career because there are more TV studios in Los Angeles than there are in Nevada. But there is a parallel universe where

Mama Money Rehab is living in Vegas, and she's keeping $2,000 more than Mama Money Rehab is in this universe. Such is life. So for today's tip, you can take straight to the bank. If you're at a crossroads, as we so often are in life, and you're choosing between two states, choose the one that gets you more tax love. It will pay off down the road of whatever state you're in, big time. Money Rehab is a production of iHeartMedia. I'm your host, Nicole Lappin. Our producers are Morgan Lavoie and Catherine Law. Money Rehab is edited and engineered by Brandon Dickert with help from Josh Fisher. Executive producers are Mangesh Hatikader and Will Pearson. Huge thanks to the OG Money Rehab supervising producer, Michelle Lanz, for her pre-production

and development work. And as always, thanks to you for finally investing in yourself so that you can get it together and get it all.