[Randy]

For those that have already been able to FIRE or those that are working on it, is part of your plan becoming a resident of a tax friendly state?

It really kind of bothers me that I would have to pay state taxes on my retirement streams (I live in MD).

Many people in the FIRE community aim to reduce their tax burden in retirement by moving to states with lower or no income tax.

Others prefer to stay in their current location or move for reasons unrelated to taxes, such as family or lifestyle.

I’m curious to know: Is relocating to a tax-friendly state a major part of your FIRE plan?

If so, which states are you considering, and how much of a difference do you think it will make to your financial goals?

If not, what are your main reasons for staying where you are or choosing a different location?

Share your thoughts, experiences, and any tips you’ve picked up along the way.

[Destin]

I live in Wyoming no tax and it’s not worth it to me.

[Sarah]

I highly recommend avoiding NH, not income or sales tax, but the cost of living is sky high and they tax up the wazoo on everything else.

[Tom]

No. I’m going to live where I want to live. However, I should have almost everything in a Roth by then.

[John]

Mine is but it makes
More sense to sell my primary residence first and I’m not quite

Ready to do that

[Keith]

No I plan to retire in md. Quality of life , cost of living, taxes etc all play a part.

Also being close to family. Lots of low tax states have lots of hidden taxes.

You can find areas within high cost states that are cheaper than low cost states.

[Michelle]

No, because my life, my kids, my grandkids, my parents and all my friends and community are here with me in CA.

Worth it to enjoy the best weather and fresh grown food, and all the other amazing things CA offers.

[Laura]

We’re contemplating being snowbirds and living part time in Panama and part time in the US.

Not definitive but definitely considering a no state tax state.

While I agree with the comments about consider all the costs, I’ve compared my state to a few no tax states, and in addition to high state taxes, I also pay higher sales tax and higher property taxes too.

[Don]

Total tax burden is what matters. Don’t forget to consider property tax, sales tax, etc that may be higher to offset the lack of state income tax.

[Lauren]

My plan has been to grow wealth in tax friendly investments and accounts.

My trust, Roth, after-tax 401k, and real estate take priority over my tax deffered IRA and 401k. T-bills over CDs for my safe investments.

I just built my strategy to maintain my life in California.

[Chrissy]

Living in a state with no state income tax, I highly recommend it. However those of us that enjoy it just hope when you do move that you continue to vote for those in office that will keep it that way

[Russell]

Income taxes are progressive, the alternatives are usually highly regressive, which will hurt you more as a retiree.

If you are going to FIRE, odds are your plan includes minimizing costs, not maximizing your wealth pre-retirement, so presumably your retirement income is modest.

I’ve lived in MD for years, recently moved to WA for work. My family is shocked at the cost of things here, especially having lived in MS last.

No income tax, but sales tax is like 10% in Seattle.

A pool membership in MS cost our family about $50/mo, here it will be over $220.

The cost of services like garbage collection…all of these are costs and taxes we would pay in retirement at the same rate we pay while employed.

Contrast that with an income tax, where I’ll be in a far lower tax bracket…and I’d definitely prefer an income tax state to retire in.

[Debbi]

There are often are other factors to consider like whether other communities fit your needs and whether you need to be near family.

Most people need social connections to support their well-being.

They take a long time to grow and can be harder to find as you get older.

If you are getting close to fire and think you might want to live elsewhere, you can plan some visits to check your prospects out.

I also wouldn’t sell property right away in case you change your mind because if you do, it could be really expensive to go back.

[Gary]

I do like TN’s lack of income tax, and I lived in no-income-tax WA for many years. But, these states have very high sales, property, and other taxes.

As mentioned above, consider the state’s entire tax burden, not just one narrow tax.

[Skippy]

I live in PA and would love to move to DE, but my pension is tax free in PA. A portion would be taxed in DE.

The trade off may be in real estate and sales taxes.

We have a vacation home in DE and the taxes are $400 year. Primary residence in PA is almost $10k.

[Brian]

I plan to establish residency in a low tax state, but will be coming back frequently until friends, and family start kicking off.

[Author]

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