The Most Expensive (and Cheapest) States for the Rich
Robert Frank | @robtfrank
Published 2:28 PM ET Wed, 8 Aug 2018 Updated 10:17 AM ET Fri, 10 Aug 2018
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Wyoming was the most favorable state in the nation when it came to the total tax burden on high earners, according to a study by SmartAsset.
Nevada ranked second followed by Tennessee, the study found.
Washington state ranked as the most expensive, followed by Vermont and Oregon.
If you're rich, you might want to consider moving to Wyoming or Nevada.
Wyoming was the most favorable state in the nation when it came to the total tax burden on high earners, according to a study by SmartAsset, a personal-finance tech company. Nevada ranked second, followed by Tennessee.
The study looked at the total taxes paid by high earners, including property taxes, income taxes and estate taxes.
Wyoming has neither an estate tax nor an income tax. Effective property tax rates in the "Equality State" are assessed at 0.61 percent of home value, one of the lowest in the country.
For its definition of "wealthy," the report assumes income of $465,626, which is the national threshold for the top 1 percent. For property tax, it assumes a home value of $2.3 million and it assumes an estate value of $15 million. The study then looked at what the total taxes would be for all three (though the estate tax is only a one-time tax).
Surprisingly, the most expensive state for the rich wasn't California or New York. It was Washington state.
The total combined tax in Washington would be $3.9 million for a one-percenter, using SmartAsset's model. While residents get a break on their state income tax as Washington is one of seven states without a personal income tax, its estate taxes are hefty. Based on the assumptions, there would be income tax of $151,562, property tax of $23,167 and an estate tax of $3.7 million.
Vermont was the second-most expensive, with a total tax burden of $3.7 million. Oregon ranked third, with a total tax burden of $3.6 million. In Wyoming, Nevada and Tennessee, the total burden would be around $1.6 million.
Of course, including the estate tax can be misleading – not just because it's only a one-time tax but also because so few of today's wealthy pay it because there are so many simple and legal workarounds.
Still, the wealthy pay more than just income taxes so it's useful to have a tax ranking that includes their broader tax burden.
Note: All tax figures are estimates based on 2018 tax rules, SmartAsset said. The report also did not include Hawaii due to a lack of information on its 2018 estate tax laws.