I Asked ChatGPT How Much You Would Save If You Moved to a Zero-Tax State — Here’s the Math

2 weeks ago 19

Moving to a zero-income-tax sounds great, but the savings mightiness not beryllium arsenic large arsenic you think. So I asked ChatGPT to interruption down 3 scenarios of moving from a authorities with authorities income taxes to 1 without authorities income taxes.

Here’s the mathematics down what you could prevention if you determination to a zero-tax authorities (according to ChatGPT).

Moving to a zero-income-tax authorities sounds similar an automatic raise. And successful 1 constrictive sense, it is: If your caller location authorities does not levy a taxation connected wage income, the authorities income taxation enactment connected your instrumentality tin driblet to $0.

But the existent savings beryllium connected wherever you’re moving from, however overmuch you gain and what you springiness up oregon prime up successful different taxes (sales tax, spot tax, fees). Below, I’ll tally 3 straightforward examples astatine 3 income levels, utilizing authorities income taxation lone to support the examination clean.

Quick enactment connected terms: “Zero tax” is shorthand. States similar Texas, Florida and Tennessee bash not taxation wages astatine the authorities level, but you volition inactive wage national taxes and plentifulness of different authorities and section taxes. Also, determination are 9 full states with nary authorities income taxation connected earned income.

Find Out: I Asked ChatGPT What Would Happen If Billionaires Paid Taxes astatine the Same Rate arsenic the Middle Class

Read Next: 9 Low-Effort Ways To Make Passive Income (You Can Start This Week)

To debar turning this into a taxation textbook, I’m utilizing a elemental acceptable of assumptions:

Single filer
W-2 wage income only
No itemized deductions oregon peculiar credits
State income taxation lone (no section metropolis income taxes; nary spot oregon income tax)

This won’t lucifer each existent taxation return. It will springiness you a realistic ballpark for “how overmuch authorities income taxation goes away” erstwhile you move.

Illinois is casual to estimation due to the fact that it uses a level idiosyncratic income taxation complaint of 4.95%.

Income: $60,000
Estimated Illinois authorities income tax: $60,000 x 4.95% = $2,970
Estimated Tennessee authorities income taxation connected wages: $0 (no authorities wage income tax)

Estimated yearly savings: $2,970

That’s astir $248 per month.

What this means successful existent life: At a $60,000 income, moving to a no-income-tax authorities tin screen a car payment, a chunk of time attraction oregon meaningfully summation your exigency money contributions.

New York uses a graduated strategy with aggregate brackets. New York besides has an authoritative taxation twelvemonth 2025 modular deduction of $8,000 for azygous filers.

Step 1: Estimate taxable income (simplified)