Tax Savings When Moving from Maryland to Virginia?

[Anonymous]

If you have moved from Maryland to Virginia recently, I would love to hear how much you saved in taxes. Obviously HHI and value of your house will affect the answer, so if you are willing to share that would be helpful. It seems like the state of Maryland and Montgomery County will be raising our taxes again this year, so it is time to consider a move.

[Anonymous]

Only very high earners will notice much of a difference (Virginia is better for the rich than Maryland in terms of tax burden). Otherwise the overall differences are minimal, assuming you own a home and at least one car:

https://eliresidential.com/blog/most-favorable-taxes

Renters who do not have cars are much better off in Virginia as far as tax burden is concerned, however.

[Anonymous]

I moved from DC to VA. Much higher property taxes in VA relative to DC, plus car is taxed as property (our cars are old, but this would hit you on newer, fancier cars). Lower income tax so we took home maybe an extra $50/paycheck each, at around $250k combined HHI.

I don't know how we netted out in the end, frankly. I don't think it's that different between MD and VA.

[Anonymous]

I haven’t done the math, but DH who is a cpa swears by the tax savings of living in VA. We have very old inexpensive cars, though—so don’t take a big hit there.

[Anonymous]

If you own your home, the transaction costs associated with selling and buying are brutal (realtor fees, title insurance, recording costs, loan fees, etc.), and it's even worse if you are locked in at a low interest rate. If you're moving to save a few thousand per year in taxes, the breakeven point on your move could be 20 years or more.

[Anonymous]

The only savings I could see is the 3.25% MoCo tax. While the 4% car tax is pricey, your home is way more expensive than your car.

The state income tax band is wider in VA than MD, but that might not matter for very high income earners.

IMO property taxes aren't that different.

-MoCo resident.

[Anonymous]

If you like brand new expensive cars, you will pay significantly more in personal property taxes in VA.

[Anonymous]

See this chart from 2019: it depends where you spend your money.
https://www.reddit.com/r/washingtondc/comments/1b4py2t/according_to_this_comparison_from_2019_dc/

Maryland has higher income taxes, but lower real estate taxes than VA.

Virginia taxes food purchases, but MD doesn't; Maryland gas taxes are higher, but there is no personal property tax on vehicles.

[Anonymous]

Anonymous wrote:I haven’t done the math, but DH who is a cpa swears by the tax savings of living in VA. We have very old inexpensive cars, though—so don’t take a big hit there.

Virginia is cheaper tax wise. It's cleaner and better schools too.

[Anonymous]

Anonymous wrote:If you like brand new expensive cars, you will pay significantly more in personal property taxes in VA.

This, but if your income is high enough, you’ll make up for it in state income tax. I’d rather pay 4% on my $100k car than 3.25% on $1m income.

[Anonymous]

OP here. Thanks for the input. Seven or eight years ago we asked our CPA this question. She told us that we would save about $5k a year in income taxes in VA and a bit more when you add in all the fees that MoCo/MD charges. Property taxes are about the same, and car tax is not a factor for us since we drive old cars. Since then our HHI has increased, so I assume the amount we would save with a move would increase.

Moving would be expensive, but also seems to be getting more expensive as time marches on (raising the recordation tax, which is paid when you sell your home, seems to be a favored way to raise taxes in MoCo). Now Moore is proposing a 1% capital gains surcharge that will supposedly only last for 4 years, but Maryland almost never gets rid of taxes. And the kicker is that Moore wants the Maryland estate tax to now apply to estates valued at $2 million or more. So if we want to retire in the area and avoid the estate tax, it seems like moving will only get more expensive if we wait.

The economy in Maryland and MoCo is really struggling, so it also is hard to believe that this latest round of tax hikes is the last. Meanwhile Virginia's economy is doing really well. . .. I don't take any joy in writing the above because we actually like our MD neighborhood.

[Anonymous]

Anonymous wrote:I moved from DC to VA. Much higher property taxes in VA relative to DC, plus car is taxed as property (our cars are old, but this would hit you on newer, fancier cars). Lower income tax so we took home maybe an extra $50/paycheck each, at around $250k combined HHI.

I don't know how we netted out in the end, frankly. I don't think it's that different between MD and VA.

This really bites you if you have owned in DC for a long time. DC property taxes are very low and my assessed value is a good 50% less than market value.

At my same income, my tax burden would be much higher in VA if buying a home similar in price to the one I sell in DC just because the new property tax rate is higher and adjusts to the new market price.

[Anonymous]

There is no free lunch. You will be taxed wherever you go, OP

[Anonymous]

Anonymous wrote:OP here. Thanks for the input. Seven or eight years ago we asked our CPA this question. She told us that we would save about $5k a year in income taxes in VA and a bit more when you add in all the fees that MoCo/MD charges. Property taxes are about the same, and car tax is not a factor for us since we drive old cars. Since then our HHI has increased, so I assume the amount we would save with a move would increase.

Moving would be expensive, but also seems to be getting more expensive as time marches on (raising the recordation tax, which is paid when you sell your home, seems to be a favored way to raise taxes in MoCo). Now Moore is proposing a 1% capital gains surcharge that will supposedly only last for 4 years, but Maryland almost never gets rid of taxes. And the kicker is that Moore wants the Maryland estate tax to now apply to estates valued at $2 million or more. So if we want to retire in the area and avoid the estate tax, it seems like moving will only get more expensive if we wait.

The economy in Maryland and MoCo is really struggling, so it also is hard to believe that this latest round of tax hikes is the last. Meanwhile Virginia's economy is doing really well. . .. I don't take any joy in writing the above because we actually like our MD neighborhood.

Well, looks like we will definitely be moving out of MD as soon as we can. Our estate is worth $5mil. I grew up lower income, and lived frugally. I want to be able to pass on what I worked hard for to my kids.

[Anonymous]

whatever