(The Center Square) – An average New Jersey family will pay $11,872 annually in state and local taxes – or about 14.3 percent of their income, according to a recent report by Moneygeek.
The Garden State has the third-highest tax burden in the country according to the statistics, which considered the “average family” as a married couple with one dependent, an average income of $82,852 and a home valued at 349,400.
Wyoming has the lowest state and local tax burden at $3,279 annually for the average family, which is about 4 percent. The highest state and local tax burdens are in Connecticut, with a $12,545 tax burden and Illinois, with $13,894.
Moneygeek compared how much money a New Jersey family could save by moving to Virginia. The tax burden for the same family in Virginia is 9.8 percent of their annual income, which would save a family more than $3,700 in taxes, according to the analysis.
New Jersey lost about 0.1 percent of its population in 2020. According to United Van Lines, New Jersey was the highest state in the nation in terms of outbound moves vs. inbound – about 70% of all residential moves in 2020 were outbound, according to the company’s 44th Annual National Migration Study, released this year. Thirty-two percent of the residents cited “retirement” as their reason for leaving the state, while 23 percent said they moved out of New Jersey because of a job. About 28% cited “family” as the reason for their move.
Before anyone picks up and moves with the hopes of saving on taxes, there are some things to consider, according to Henry Grzes, lead manager for tax practice & ethics at the American Institute of CPAs.
“This may impact a federal return, especially if moving from a high-tax state to a low/no tax state which may allow for full deductibility of other (i.e., property) taxes without bumping up against the $10,000 state and local tax deduction limit on the federal return,” Grzes said. “Also, you may be subject to income taxes in a state where you work but don’t actually live. For example, if you are living in Connecticut but working in New York, you are subject to tax in New York on the money that you earn in New York.”
And if you move in the middle of the year, you may have to pay income taxes in both states for that year, according to Grzes.
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