Money Management

You’ll still pay taxes in other ways. 

It’s getting close to that time of year again — the dreaded tax season! No one enjoys paying taxes, so why not move to one of the nine states in the U.S. without an income tax? That’s right, you read correctly — there are nine states that don’t have a state income tax. They just might be perfect for those looking to escape the burden of income taxes to keep more money in your bank account.

Which states don’t have income tax?

There are currently nine states with no income tax:

AlaskaFloridaNevadaNew HampshireSouth DakotaTennesseeTexasWashingtonWyoming

Each of these nine states have their own unique benefits that make them attractive for residents looking to get away from filing state taxes every year.

RELATED: Best Tax Software

Take Alaska, for example. This beautiful state has some of the most breathtaking landscapes in the country and is home to some incredible wildlife, like whales and bald eagles. For those who love nature but still want access to city life, Washington State is another great option without any form of personal income tax.

Tennessee offers access to the booming country music scene and has a low cost of living — the average cost of living in Tennessee is more than 10% lower than the national average. Want more entertainment? Florida has no state personal income tax and is home to world-famous attractions like Disneyworld and Universal Studios Orlando. Moving to a state with no income taxes may sound great, especially if you’re moving from a high-tax state like California, where the top marginal rate is 13.3%, the highest in the country.

How these states generate revenue

It’s important to note that states still need to generate revenue, and states without income taxes find other ways to pay for roads, schools, and other infrastructure. New Hampshire currently only taxes interest and dividend income, and Washington levies an income tax on capital gains only for certain high earners.Washington also has the highest estate tax in the country, at 20%. The bulk of Florida’s general revenue (75% to 80%), comes from the state’s 6% sales tax, and Tennessee has the highest sales tax in the nation at 9.55%.

Gas tax is another revenue stream. For example, Washington imposes a $0.494 per gallon tax on gasoline, one of the highest in the nation. Other states generate their income from property taxes. The property tax rate in New Hampshire is 1.89%, the third highest in the country. All of these different types of taxes levied by state and local governments may mean that your projected tax savings may not be as much as you hoped for. So you will need to do your own research before taking the leap to moving to one of these states.

Overall, if you’re tired of paying too much in taxes each year, then moving to a new state may be a good bet. Each state offers something unique that can appeal to different people looking for a change in scenery or a more affordable cost of living. However, since states still need to generate revenue, learn more to see how your tax costs will be impacted in other ways. Be sure to consider all factors when taking a look at what these nine states have to offer.

Our picks for best tax software

Our independent analysts pored over the perks and user reviews for the most popular tax provider services to land on the best-in-class picks to file your taxes. Get started by reviewing our list of the best tax software.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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What happenedOn Jan. 19, Netflix sent out a letter to shareholders highlighting the company’s 2022 Q4 profit growth and plans for the future. The company discussed how it continues to work to give members more pricing options and control over their accounts. Netflix referenced the recent launch of its more affordable ad-supported plan, which brought in more paid subscribers.Netflix also discussed its plans to allow members to upgrade their membership for an additional fee to enable them to share their accounts with people outside of their households. This change is expected later in Q1 of 2023 and will allow members to share their accounts without breaching the company’s terms of service and will serve as another revenue boost for the streaming company.So whatIn its Q4 2022 letter to shareholders, Netflix reported having 231 million paid subscribers. However, the brand noted that more than 100 million households are sharing accounts, which goes against the brand’s terms of use.In the letter, Netflix said, “While our terms of use limit use of Netflix to a household, we recognize this is a change for members who share their account more broadly.” The letter continued, “As we roll out paid sharing, members in many countries will also have the option to pay extra if they want to share Netflix with people they don’t live with.”Now whatThis is important news as many members may currently share their accounts with friends and family outside of their households, despite it being against the rules. The upcoming introduction of paid share plans could be a win for members who want to share access legally.But this isn’t necessarily bad news. This paid upgrade could offer an excellent way for friends and family to share the cost of their favorite streaming services with their loved ones. Overall, it could be a win for everyone’s checking accounts, including Netflix.If more streaming companies roll out shared plans, it could reduce the number of streaming services each household has to pay for without limiting their entertainment options. Wouldn’t it be nice to only pay for one or two streaming services instead of three or more?Alert: highest cash back card we’ve seen now has 0% intro APR until 2024If you’re using the wrong credit or debit card, it could be costing you serious money. Our expert loves this top pick, which features a 0% intro APR until 2024, an insane cash back rate of up to 5%, and all somehow for no annual fee. In fact, this card is so good that our expert even uses it personally. Click here to read our full review for free and apply in just 2 minutes. Read our free reviewWe’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Natasha Gabrielle has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix. The Motley Fool has a disclosure policy. 

What happened

On Jan. 19, Netflix sent out a letter to shareholders highlighting the company’s 2022 Q4 profit growth and plans for the future. The company discussed how it continues to work to give members more pricing options and control over their accounts. Netflix referenced the recent launch of its more affordable ad-supported plan, which brought in more paid subscribers.

Netflix also discussed its plans to allow members to upgrade their membership for an additional fee to enable them to share their accounts with people outside of their households. This change is expected later in Q1 of 2023 and will allow members to share their accounts without breaching the company’s terms of service and will serve as another revenue boost for the streaming company.

So what

In its Q4 2022 letter to shareholders, Netflix reported having 231 million paid subscribers. However, the brand noted that more than 100 million households are sharing accounts, which goes against the brand’s terms of use.

In the letter, Netflix said, “While our terms of use limit use of Netflix to a household, we recognize this is a change for members who share their account more broadly.” The letter continued, “As we roll out paid sharing, members in many countries will also have the option to pay extra if they want to share Netflix with people they don’t live with.”

Now what

This is important news as many members may currently share their accounts with friends and family outside of their households, despite it being against the rules. The upcoming introduction of paid share plans could be a win for members who want to share access legally.

But this isn’t necessarily bad news. This paid upgrade could offer an excellent way for friends and family to share the cost of their favorite streaming services with their loved ones. Overall, it could be a win for everyone’s checking accounts, including Netflix.

If more streaming companies roll out shared plans, it could reduce the number of streaming services each household has to pay for without limiting their entertainment options. Wouldn’t it be nice to only pay for one or two streaming services instead of three or more?

Alert: highest cash back card we’ve seen now has 0% intro APR until 2024

If you’re using the wrong credit or debit card, it could be costing you serious money. Our expert loves this top pick, which features a 0% intro APR until 2024, an insane cash back rate of up to 5%, and all somehow for no annual fee.

In fact, this card is so good that our expert even uses it personally. Click here to read our full review for free and apply in just 2 minutes.

Read our free review

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Natasha Gabrielle has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix. The Motley Fool has a disclosure policy.

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What happenedNew Speaker of the House Kevin McCarthy has reportedly proposed a vote on the Fair Tax Act, according to the National Review. The bill would abolish the current income taxes, payroll taxes, and estate and gift taxes. In their place, it would impose a 30% national sales tax. Rep. Earl L. “Buddy” Carter, who introduced the bill, said that it will “eliminate the need for [ the IRS ] entirely by simplifying the tax code with provisions that work for the American people and encourage growth and innovation” in a press release.The bill refers to the sales tax as a 23% tax, because it would make up 23% of the final cost. Most people would likely consider it a 30% tax, because it would add 30% to the pre-tax price. For example, a $100 product would cost $130 with the national sales tax.
Discover: Find the best tax software for your situation hereSave: We researched free tax software and put together a list of the best here
It’s unlikely that the Fair Tax Act will be approved. Even if it passes the House and the Senate, the Biden administration has already released a statement that “if the President were presented with H.R. 23 — or any other bill that enables the wealthiest Americans and largest corporations to cheat on their taxes, while honest and hard-working Americans are left to pay the tab — he would veto it.”So whatProponents of the Fair Tax Act argue that it would simplify the U.S. tax system. Americans would no longer need to spend time or money on tax preparation and could focus on other personal finance concerns. The elimination of the IRS could also reduce government spending.Critics, on the other hand, argue that the proposed tax is regressive, because it disproportionality affects those with lower incomes. A study by William G. Gale of the Brookings Institution claims that the Fair Tax Act would cause taxes to rise for 90% of households. Only households with incomes in the top 10% would get a tax cut, and the top 1% would save over $75,000, on average.Now whatSince the odds of the Fair Tax Act passing are low, the current tax system probably isn’t going anywhere. And while tax filing can be laborious, it’s important to know how to do it and how to reduce your tax burden. Here are a few tips to help:Pick a quality tax software. Make sure to find one you’re comfortable with, because doing your taxes is easier if you use the same software every year. If you want to keep costs down, there’s some good free tax software for filers with simple tax returns.Maximize your tax deductions. Contribute to a 401(k), individual retirement account (IRA), or both, as these allow you to reduce your taxable income.Get tax help if you need it. For example, if you have a complex tax return, or you just want to save time, you could outsource taxes to an accountant.Our picks for best tax softwareOur independent analysts pored over the perks and user reviews for the most popular tax provider services to land on the best-in-class picks to file your taxes. Get started by reviewing our list of the best tax software.We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy. 

What happened

New Speaker of the House Kevin McCarthy has reportedly proposed a vote on the Fair Tax Act, according to the National Review. The bill would abolish the current income taxes, payroll taxes, and estate and gift taxes. In their place, it would impose a 30% national sales tax. Rep. Earl L. “Buddy” Carter, who introduced the bill, said that it will “eliminate the need for [ the IRS ] entirely by simplifying the tax code with provisions that work for the American people and encourage growth and innovation” in a press release.

The bill refers to the sales tax as a 23% tax, because it would make up 23% of the final cost. Most people would likely consider it a 30% tax, because it would add 30% to the pre-tax price. For example, a $100 product would cost $130 with the national sales tax.

It’s unlikely that the Fair Tax Act will be approved. Even if it passes the House and the Senate, the Biden administration has already released a statement that “if the President were presented with H.R. 23 — or any other bill that enables the wealthiest Americans and largest corporations to cheat on their taxes, while honest and hard-working Americans are left to pay the tab — he would veto it.”

So what

Proponents of the Fair Tax Act argue that it would simplify the U.S. tax system. Americans would no longer need to spend time or money on tax preparation and could focus on other personal finance concerns. The elimination of the IRS could also reduce government spending.

Critics, on the other hand, argue that the proposed tax is regressive, because it disproportionality affects those with lower incomes. A study by William G. Gale of the Brookings Institution claims that the Fair Tax Act would cause taxes to rise for 90% of households. Only households with incomes in the top 10% would get a tax cut, and the top 1% would save over $75,000, on average.

Now what

Since the odds of the Fair Tax Act passing are low, the current tax system probably isn’t going anywhere. And while tax filing can be laborious, it’s important to know how to do it and how to reduce your tax burden. Here are a few tips to help:

Pick a quality tax software. Make sure to find one you’re comfortable with, because doing your taxes is easier if you use the same software every year. If you want to keep costs down, there’s some good free tax software for filers with simple tax returns.Maximize your tax deductions. Contribute to a 401(k), individual retirement account (IRA), or both, as these allow you to reduce your taxable income.Get tax help if you need it. For example, if you have a complex tax return, or you just want to save time, you could outsource taxes to an accountant.

Our picks for best tax software

Our independent analysts pored over the perks and user reviews for the most popular tax provider services to land on the best-in-class picks to file your taxes. Get started by reviewing our list of the best tax software.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

 Read More 

You may want to take these off your Costco shopping list. 

The great thing about shopping at Costco is that you can find a wide range of products at affordable prices, from produce to dairy items to paper goods to apparel. In fact, you’ll often end up with a lower credit card tab at Costco than you will at other stores, even when they have sales going on.

But Costco doesn’t always have the lowest prices available. And even when it does, there are certain items the average consumer likely won’t need to buy in bulk. With that in mind, here are a few products to stop buying at Costco this year.

1. Baking supplies

If you’re someone who likes to bake, you may be in the habit of buying things like flour in bulk. But even if you seal your flour in airtight containers (and you’ll need a number of them to accommodate a Costco-sized sack), over time, it can go bad on you.

Now if you’re the type who genuinely bakes cookies by the dozen on a biweekly basis, then buying baking supplies at Costco might work out for you. But if you’re the type who makes a cake every six to eight weeks for special occasions, you may want to look out for sales at your regular supermarket and stop buying baking supplies in mass quantities.

2. Condiments

You might use condiments on a regular basis. But that doesn’t mean you’ll snag the best deals on them at Costco. Supermarkets often discount condiments during the summer and at different times of the year, at which point your cost per ounce might be significantly lower.

And also, condiments, by nature, tend to sit out a lot. How often do you leave a bottle of ketchup out on the table while you and your family are eating? That’s the sort of thing you don’t want to do with a large-sized bottle. So in this case, smaller quantities may be a much better call.

3. Toys

Costco commonly offers great deals on toys. But in many cases, you’ll find even deeper discounts on sites like Amazon, or at big-box retailers like Walmart and Target.

If you happen to stumble across a great toy deal in the course of your Costco shopping, by all means, scoop it up. But you probably don’t want to make special trips to Costco for the express purpose of loading your cart with toy purchases.

4. Canned goods

You can find a host of canned goods at Costco, from vegetables to tuna fish. But you may not want to scoop them up.

Like condiments, it’s common for supermarkets to offer sizable discounts on canned goods throughout the year. So waiting for those sales to hit could save you more money than a Costco stock-up.

Costco can be a great source for groceries, household supplies, and even electronics and gifts. But these four items are things you should look to buy in smaller quantities or at other stores. So if they normally have a place on your Costco shopping list, it may be time to remove them.

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In fact, this card is so good that our expert even uses it personally. Click here to read our full review for free and apply in just 2 minutes.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Maurie Backman has positions in Amazon.com and Target. The Motley Fool has positions in and recommends Amazon.com, Costco Wholesale, Target, and Walmart. The Motley Fool has a disclosure policy.

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It’s important to make the right call. 

When family members pass away, they sometimes manage to leave behind a modest inheritance that helps their loved ones get on their feet or meet different financial goals. But what if your inheritance is something worth a lot more than a $10,000 check? What if you’re actually in a position where you’re inheriting a paid-off home?

In many regards, it’s an enviable position to be in. But it’s important to navigate your options carefully.

Occupy, rent, or sell?

If you’re inheriting a home, you generally have three options:

Move in and make it your homeKeep it and rent it outSell it and pocket the money

You’ll need to consider each option carefully before moving forward.

If you’re inclined to move into your inherited home, you’ll need to make sure you can keep up with the costs involved. Even if you’re not required to pay a mortgage, you may find that the cost of property taxes, homeowners insurance, maintenance, and repairs is beyond what you can swing on an ongoing basis.

In fact, as a general rule, your total housing costs should not exceed 30% of your take-home pay. So you’ll need to make sure you can stay within that limit in the course of moving into your inherited home.

If you’re not sure you can afford to live in the home you’ve inherited, or you simply don’t want to (say, because it’s in a different neighborhood or even part of the country), then you do have the option to hang onto it and rent it out. But there are considerations to account for there, too.

For one thing, do you have the time and capacity to be a landlord? And are you willing to take on that responsibility? Also, do you even live in close enough proximity to manage that role? If not, you can outsource the job to a property management company. But you’ll pay a fee that will eat into your rental income.

And also, if you keep your inherited home and rent it out, you’ll ultimately be responsible for expenses like property taxes, homeowners insurance, maintenance, and repairs. You’ll need to make sure you’re okay with that.

Finally, you may decide you’re better off selling an inherited home and using that money for other purposes. There may be tax implications involved, so it’s best to sit down with an accountant or financial professional and see what you’re looking at.

A big decision to make

Inheriting a home might put you in a position where you have some difficult choices to make. The good news, though, is that all of the above choices have some upside.

If you decide to keep your inherited home and live in it, you’ve just gained a roof over your head. If you decide to keep that property as a rental, you’ll have ongoing income to look forward to. And if you decide to sell, you could end up with a heaping pile of cash, even if you end up losing some of that money to taxes and a real estate agent’s fee. So all told, you stand to come out a winner no matter which route you take.

Our picks for the best credit cards

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

 Read More