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Texas also has no state income tax, though. And property taxes are based on the value of the home, so lower values means lower property taxes.
by cestith 9y ago
Texas also has no state income tax, though. And property taxes are based on the value of the home, so lower values means lower property taxes.
- Joof 9y agoMy understanding is that state income tax can be deducted from federal income tax. Retirement income is usually pretty low as well.
- cestith 9y agoVery few things are directly deductible from federal income tax. Most deductions are from the taxable income. So if you pay X in state income taxes, you'd deduct X from your overall federally taxed income. You end up only saving your federal tax rate times X, not X in federal taxes. So if you're taxed at 13% state and 35% federally, you'd pay 13% to the state. Then you'd still pay (barring other deductions) your federal taxes on 87% of your income. Federal taxes don't work as a bare percentage, though. You pay a lower percentage on everything up to some number, then progressively higher percentages on brackets of your income up to your maximum tax rate. https://taxfoundation.org/2017-tax-brackets/ https://taxfoundation.org/2017-tax-brackets/
- nwah1 9y agoAnd land values are based on expected net income attainable from the location (whether imputed rent or actual rent). Higher property taxes thus reduce land values, making homes more affordable upfront.