Taxes--Md v. VA

[Anonymous]

Anonymous wrote:
what is your house assessed for and what was your real property rate? what kind of car do you drive?

My guess is I'd pay $23K less in income tax in Virginia, but real estate and car taxes would be a total of $5K higher. Still a big delta in Virginia.

I just reported on our income tax. For property tax, it's roughly 1% of assessed value so we pay $13k on a $1.3mln house, and we drive nice cars. We also have some complicated foreign tax situations, so I think our MD tax is higher than most people in the same income bracket. Our fed tax the same year was only $2,300 and the taxable was $400k.

http://www.marylandtaxes.com/ has the actual tax information.

As others have said, for most people the difference will not be sufficient to choose one place over the other just based on taxes. We could easily up and move to Florida or Texas (no state income tax) and save a bundle, but our deicsion to live where we do isn't based on taxes. It's about liking the location, commute, proximity to family, etc.

[Anonymous]

We have a similar income and have lived in both Fairfax and MoCo. When we moved from VA to MD, our income tax did go up. Enough that I noticed it on our paystubs, not enough to be even remotely a difficulty.

I was happy to lose the car tax, though I wouldn't say that the biennial car registration in MD is especially cheap.

I can't speak to property tax comparisons, as we rented in VA. I will say that our MD property tax is not nearly as high as when we owned a house in Texas.

I agree with others: the more important factors are location and commute.

[Anonymous]

Anonymous wrote:

Either you included this information only for MD, which is unfair. Or you included it for VA, but used either a statewide average or a particular jurisdiction, neither of which is helpful in answering the question.

And anyhow, income tax is only one portion of the tax burden. You need to factor in other taxes, and the savings from home ownership.

So no, I don't think these are semantic distinctions.

NP here - Virginia (at least in the NOVA area) does NOT HAVE local (county) income tax. So the 5% income tax at the state level is all there is.

Last time I looked, Arlington had the lowest tax burden in the metro area, mostly due to lower real estate tax rates than Fairfax, etc. . DC's studies (at least in the past) conveniently left Arlington out of their comparisons. However, in recent years the property tax rate has gone up, so I'm not sure if that holds true any longer.

[Anonymous]

Anonymous wrote:

Anonymous wrote:MD Income tax is about 8 1/2%
VA Income tax is about 4 3/4%

VA car tax is about $300/yr per vehicle.

I have no idea where you are coming up with these numbers. Maryland doesn't have a fixed percentage rate, but a $250,000 income in MD would currently be taxed at around 5.1%.

The state taxes are somewhat irrelevant, anyhow, because you need to factor in county taxes, tax deductions, and other aspects of the tax burden.

The latest decent study I've seen on this says that for a maried couple with two children that own a home, taxes are highest in Prince George's county followed by Montgomery County. DC, amazingly, has the lowest taxes, though the difference between DC and Fairfax and Arlington are relatively trivial. All three are a good bit lower than Prince George's, and moderately lower than MoCo.

To be clear though, for all of these, we're talking about a few thousand dollars a year, so I wouldn't personally choose where to live based on tax burden.

We pay a lot less in taxes in Virginia than we did in DC, even though we have one brand new car with a $700 tax bill.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Either you included this information only for MD, which is unfair. Or you included it for VA, but used either a statewide average or a particular jurisdiction, neither of which is helpful in answering the question.

And anyhow, income tax is only one portion of the tax burden. You need to factor in other taxes, and the savings from home ownership.

So no, I don't think these are semantic distinctions.

NP here - Virginia (at least in the NOVA area) does NOT HAVE local (county) income tax. So the 5% income tax at the state level is all there is.

Last time I looked, Arlington had the lowest tax burden in the metro area, mostly due to lower real estate tax rates than Fairfax, etc. . DC's studies (at least in the past) conveniently left Arlington out of their comparisons. However, in recent years the property tax rate has gone up, so I'm not sure if that holds true any longer.

DC's last study included Arlington. It still reported that DC was cheaper than Arlington, though the difference between the two was trivial compared to either of them and Prince George's/Montgomery (though I kind of think the differences between any of them are trivial in the grand scheme of things; I wouldn't choose where to live based on a $150/mo tax savings unless I had basically reached a deadlock deciding between two places).

[Anonymous]

DC's property taxes are so low it's a joke.

[Anonymous]

well considering that you have to pay 1.5 million to get a decent house in DC vs 1 million in VA the tax idea is kind of a wash because everything is more expensive in DC.

[Anonymous]

Anonymous wrote:well considering that you have to pay 1.5 million to get a decent house in DC vs 1 million in VA the tax idea is kind of a wash because everything is more expensive in DC.

I'm not very familiar with VA prices, but when we were looking at houses on both sides of the DC/MD line, we encountered two houses that were literally across the street from each other but in different states. The MD one was priced just enough more that the PITI was almost exactly the PITI of the DC house plus the income tax savings from being on the MD side of the line. I think people's perceptions of the tax savings get built into housing prices. But in any event, DC houses are cheaper than their MD equivalent, not more expensive. It is harder to make this comparison with VA because there are no VA houses that are exactly as convenient to downtown DC as a DC equivalent.

[Anonymous]

I was surprised that our county taxes in Virginia did not cover trash removal or water. These are separate bills.

Maybe that's common. I was a first time homeowner, so I didn't know what to expect.

[Anonymous]

Anonymous wrote:I was surprised that our county taxes in Virginia did not cover trash removal or water. These are separate bills.

Maybe that's common. I was a first time homeowner, so I didn't know what to expect.

some places include that but you are going to save money by using a private company.

My relative pays fairfax county trash 350 a year
I pay a private trash company 276 a year

Oh and they won't let you deduct the trash cost from your federal taxes which removes any other savings.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I was surprised that our county taxes in Virginia did not cover trash removal or water. These are separate bills.

Maybe that's common. I was a first time homeowner, so I didn't know what to expect.

some places include that but you are going to save money by using a private company.

My relative pays fairfax county trash 350 a year
I pay a private trash company 276 a year

Oh and they won't let you deduct the trash cost from your federal taxes which removes any other savings.

well in MoCo it's part of your property tax so at least there's no separate bill and it's deductible

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I was surprised that our county taxes in Virginia did not cover trash removal or water. These are separate bills.

Maybe that's common. I was a first time homeowner, so I didn't know what to expect.

some places include that but you are going to save money by using a private company.

My relative pays fairfax county trash 350 a year
I pay a private trash company 276 a year

Oh and they won't let you deduct the trash cost from your federal taxes which removes any other savings.

well in MoCo it's part of your property tax so at least there's no separate bill and it's deductible

Incorrect, you can only deduct the portion that says taxes minus the homestead. They break it down for that reason.

[Anonymous]

Anonymous wrote:well considering that you have to pay 1.5 million to get a decent house in DC vs 1 million in VA the tax idea is kind of a wash because everything is more expensive in DC.

Not if you bought a decade ago like we did. Our property taxes on our currently valued $900,000 house are $4,000. Unlike VA and MD, property taxes can only be raised 10% a year. Given that our property value has far outpaced the 10% annual increase, we have a tax bargain.

[Anonymous]

The max income tax rate in VA is 5.75%. In MD, you have state and county tax which usually works out to be in the 8% range. I'm in Arlington, and there is no local tax.