Three tax types vary dramatically by state
State tax burden combines income tax, sales tax, and property tax. Some states like Texas and Florida have no income tax but higher property taxes. Others like California have steep income tax but moderate property taxes. The total effective rate can vary by 2x or 3x depending on the state.
A household earning $100k in one state might owe $8,000 in state and local taxes, while the same income in another state costs $15,000 or more.
Migration and residence planning
Tax differences alone influence relocation decisions, especially for retirees, freelancers, and remote workers. Some states offer favorable tax treatment for retirement income or recent arrivals. Others tax capital gains or investment income at lower rates.
The complexity arises from establishing residency and avoiding dual-state taxation claims. Moving household items and spending more than half the year in the new state are common factors determining residency for tax purposes.