Lower Taxes When Moving to Las Vegas from California
Moving to Las Vegas from anywhere in California seems to be a relocation trend especially in the past few years. We all know the cost of living, more affordable real estate, and quality of life are just a few examples of why Californians continue to relocate to Nevada. One primary reason to move to Las Vegas is the remarkable tax benefits. Let’s dissect these tax benefits to help your transition into Nevada more seamlessly. Here are the Top 5 Nevada and California Tax differences to know and understand:
Nevada State Income Tax
Nevada doesn’t have state income tax. This makes for significant tax savings and is probably the main reason Californians choose to head east to Las Vegas. Funny enough, you can also deduct gambling losses from your federal taxable income on your Federal Income Tax return. California is notorious for having the highest income tax bracket in the nation, with a top marginal income rate tax of 12.3%. However, this rate does not include an additional 1% surcharge for taxpayers with incomes over $1 million per year, making their top marginal tax rate 13.3%.
Nevada Property Tax
Nevada residents can expect to pay between 0.5% and 0.75% in property taxes annually.
Nevada’s average state property tax is 0.69%. Although the property tax rates in California are comparable to Nevada, the homes in California are typically much more expensive. The higher property values means homeowners will pay much larger total taxes in California.
Nevada Capital Gains Tax
Nevada does not have a state tax on capital gains, meaning the Nevada taxpayers will only pay the federal long-term capital gains tax of 20 %. If a homeowner lives in the property as their primary residence for 2 years of the past five years, you can receive some profit tax-free. Married couples do not pay tax on the first $500,000 in profit from the sale of their home while single filers do not pay on the first $250,000.
California has no special provisions for long-term gains on assets. If a California resident sells a property at a profit they will pay taxes at their personal income tax rate. And for some residents who fall in the top tax bracket when combined with the federal long term capital gains tax of 20 % the tax rate combined is 33.3%, making it one of the highest capital gains tax in the world.
Nevada Taxes on Retirement Accounts and Pensions
Another major tax benefit for Nevada resident retirees is Nevada does not tax retirement income. This makes Nevada one of the most desirable places in the nation to retire. Nevada also offers veterans property tax exemptions. California residents must pay taxes on all income including retirement and pensions. Also all private, local state and federal pensions are fully taxed in California and there is an additional 2.5% tax penalty on early distributions and qualified pensions.
Nevada Excise Tax/Use Tax
Excise taxes are imposed on various goods such as fuel, cigarettes and alcohol. One example of this tax is Nevada gasoline tax is $.23 per gallon which is less than half of the tax per gallon in California.This makes gas prices at least $1 more than in California.
Overall, tax benefits in Nevada clearly outweigh those in California. The absence of income tax combined with the lower median home prices are two specific reasons alone why Californians are making their way east to relocate to retire in the Silver State. Relocating from California is a wise money choice, not just for retirees but also for families, retirees, investors and entrepreneurs.