Tax-wise, some people have just had enough.
Take Mike Scanlin, CEO of investment management website BornToSell, who currently lives in California, is in the process of moving both his residence and his business to Nevada, which offers a significantly lower state tax burden than the Golden State.
"I've lived in California since birth, and I attended a state university." the 50-year-old Scanlin says. "As an adult, I've have paid way too many crazy California taxes during my life. Not only are the income tax rates way too high, but the business limited liability corporation tax is a joke, too."
His tax gripes go beyond those of his business.
"Additionally, property taxes are high, sales tax are high, and our state legislature is chronically operating at a loss, while our infrastructure crumbles," he says. "They don't call it the People's Republic of California without reason."
Scanlin says he needed to establish tax residency in a zero state-income-tax state, and Nevada fits the bill. It has no zero personal or business income tax, although it does have a 6.85% sales tax. "The money I save by not paying California taxes will cover my entire mortgage and property tax in Nevada," he says. "It's like getting a free house, plus, I really like Las Vegas."
There is no shortage of Americans like Scanlin who are sick and tired of paying high state taxes -- so much so, they're looking for a low- or no-tax state option to plant their mailbox.
A brand new Gallup study shows the number of Americans looking to move from a high-tax state to a lower one is substantial. For instance, 46% of residents in high-tax states like Connecticut and New Jersey "would like to leave their state if they had the opportunity." But in low-tax states like Montana, only 13% say the same thing.
Actual "move out of the state" numbers are hard to come by, but Gallup does say that 12% of Connecticut taxpayers will move to another state due to high taxes in the next year.
If you're in that demographic, no matter what state you live in, the savings can actually be substantial over the course of a lifetime.
"If you can make as much money in a low-tax state, the savings can add up to a small fortune over time," says Benjamin Sullivan, certified financial planner and portfolio manager with Palisades Hudson Financial Group in Scarsdale, N.Y. Sullivan, who has walked the walk by recently moved to Texas, says that if you're planning on fleeing a high-tax state, make sure to crunch the numbers before you go.
"Evaluate your income potential and cost of living in your proposed new state, not only its tax rates," he says. "Use estimates specific to your lifestyle instead of general cost-of-living metrics. Consider both one-time and recurring costs that you might incur as a result of the move."
The list of states with no statewide personal income taxes is a short one - including three "warm" ones (Florida, Nevada and Texas) and four that are "a tad cooler" (Alaska, South Dakota, Washington and Wyoming.) Meanwhile, 35 states, along with Washington, D.C. have a graduated income tax, while eight states have a flat tax, Sullivan notes.
But there is no shortage of qualifiers that you'll need to know about if you're mulling a move. For example, Sullivan adds that many states do not tax Social Security benefits; some don't tax pension income or retirement plan distributions. For example, New Hampshire and Tennessee tax only dividend and interest income. Meanwhile, cities, counties, or municipalities in fourteen states add their own income tax.
But there's an app for that. "It's not too hard, especially if you have tax software, to estimate your income taxes in your new state," Sullivan says. Plus, when you plan a move, you better go all in, experts say. "I have had many clients move to lower/no tax states like Florida and Texas," notes Vincenzo Villamena, managing partner of the certified public accountant firm Online Taxman, which specializes in tax preparation for entrepreneurs, U.S. expats and other tax consumers in special situations. The first thing Villamena tells his clients is this -- they must actually move. "Having a second home in that state does not constitute actually moving to that state," he points out. "They must be physically present in the state for more than 183 days to be considered a tax resident."
Americans considering moving out of the country entirely need to be especially careful, but they do get great tax benefits. "I have many expat clients that work remotely and have moved outside of the U.S. all together in order to save both state and federal taxes," Villamena adds. "By not residing in any state, one does not need to pay state taxes. For the federal government, though, if someone is claiming a bonafide residence in another country or living outside the U.S. for 330 days in a 365-day period, they are allowed up to $100,800 of tax free income and potentially more depending on their situation."
You don't even have to sell your home in your old, high-tax state to reap lower tax benefits in your new state, other experts say. "The main key is to cut ties with one state and form new ties in the second state," advises Crystal Stranger, president of 1st tax, and author of The Small Business Tax Guide. When you do that, you don't necessarily have to sell your home in the high tax state, but having it rented out is better than keeping it vacant as a second home, Stranger says. "It's best to get a driver's license in the new state, and transfer your car registrations and insurance," she says. "This isn't always enough, though. If a large portion of your business is still in the high tax state they may still label you a resident, especially if you spend extended time there."
"There's a great deal of gray area, and tax issues can get complex in a state-to-state tax move," Stranger adds.
It does help to be creative to gain great tax advantages. Bill Seavey, a current California resident, recently built a Mexico house in northern Baja, along the Sea of Cortez (it cost $25,000, with expenses of $700 per year.) "Out of that, I only paid $200 in taxes," Seavey says.
Or, you can save on taxes by not moving at all. "I once lived in Washington state, right across from the border with Oregon," he adds. "Oregon has no sales tax so I did my shopping there, and Washington state had no personal income tax. It was a good combination," he says.
No matter how you slice it, many Americans are wearying of high state taxes. Nowadays, many, in their minds, are voting with their feet, and doing something about it.