Question about State Income Tax
 

I've been living in Florida for the past 14 years, and FL is one of the few states that doesn't collect a State income tax. I'm toying with the idea of moving to Colorado where they have a state income tax. My question is, is state income tax fully deductible from your federal tax return?

I'm over the heat, humidity and bug's (amongst other things) of Florida, and would like to move somewhere with less humidity and that actually has 4 seasons. I've spent time in CO and really liked it, but would consider other states too, but my OH keeps banging on about this state tax thing. I need a good argument to put to him to try and persuade him to consider a move.

Thanks for any help.

Re: Question about State Income Tax
 

Until your total deductions (state income tax, property tax, mortgage interest, etc.) exceeds the standard deduction, the deductions are worthless. However if you plan to have more than enough deductions to exceed the standard deduction without the state income tax deduction, then adding the state income tax deduction will be a tax savings at your highest federal marginal tax bracket. It is a deduction from income and not tax.

Re: Question about State Income Tax
 

Also worth noting that there are limits on the amount of your itemized deductions so, if you already have very high income you may not get the full benefit of deducting state taxes and that state taxes are not deductible for AMT purposes so, once again, if you are close to having to pay AMT, state taxes will not help.

Re: Question about State Income Tax
 

Have you considered New Hampshire?

Re: Question about State Income Tax
 

Good idea, they have five seasons over there!

Re: Question about State Income Tax
 

You realise that state taxes are a deduction from your gross income, not a credit against federal taxes, don't you?

If you have income of $100,000 and state income tax of $5,000 your adjusted gross income for federal income would be $95,000. I.e. you don't just knock $5,000 off the money you owe the Feds.

Re: Question about State Income Tax
 

Thanks for the info everyone. Nun, New Hampshire is too far north, the OH thinks Orlando is north. :/

Re: Question about State Income Tax
 

CO is also long way north of Orlando you know.

Re: Question about State Income Tax
 

Perhaps try Scotland so you can pay Scottish income tax?

Re: Question about State Income Tax
 

That's a very pertinent question. I might well move from the US to Scotland and if the Scots vote for independence what happens about the tax treaty. Would the current UK treaty be adopted? According to the SNP there would be no immigration issues for UK citizens, but how would Scotland tax US investments and retirement accounts?

Re: Question about State Income Tax
 

State tax is probably the last thing I would consider when deciding where to move to.

Re: Question about State Income Tax
 

Yes Sally, totally agree, but OH is one of the "all tax is theft" brigade ... (please don't say it, believe me I know it backwards, forwards and upside down), there's no telling him :blink:

Re: Question about State Income Tax
 

6 weeks ago I was packing and making plans to move back to the UK until I had the rug pulled from under me. Believe me I'd opt for Scotland in a heartbeat:nod:

Re: Question about State Income Tax
 

Wesley Snipes?

Re: Question about State Income Tax
 

lol... he's not gone so far as to refuse to pay yet, but jeez he's a nightmare from New Years through to April