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RD
RD, Certified Public Accountant (CPA)
Category: Tax
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Experience:  CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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State Income Tax Comparison DC, VA, MD

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If I'm earning 750,000 per year working in Washington, D.C., how would my state income tax bill compare if I reside in Virginia versus D.C., versus Maryland. I'm married with a family with 2 children. Assume $250K mortgage at 6% interest. Would residency in one state versus the other have implications for my Federal Taxes.

I can provide you an estimate of tax liability in each of the States.

Can you provide information regarding your property on the house?

I mean property taxes paid by you on your house..

RD and 3 other Tax Specialists are ready to help you
Customer: replied 10 years ago.
Reply to Renu V's Post: I currently live in Manhattan, NYC and own an apartment with a $250,000 mortgage. If I move to DC I would eventually sell the apartment and buy a similar property in VA, MD, or DC.

I did a comparison of the state tax tables for the 3 locations. Assuming I had the rate tables, I applied them to 750K (ignoring deductions etc), I got DC = $66.7K, VA = $42.9K, and MD = $35.6

We would prefer to live in DC and are wondering if there are any factors mitigating the relatively high tax rates---e.g. lower property taxes; greater offset to Federal taxes?
Customer: replied 10 years ago.
Reply to Renu V's Post: MY NYC apt is appraised at $780K. I can't recall offhand what the NY property taxes are (around $4-6K, I think). It would be useful if you could do hypothetical on a, say, $800K property in those various states.

Thanks, David

You calculations for DC, VA and MD are almost close to what I have in State taxes.

Property tax will be able to offset the excess tax liability. Also, I think the Cost of living also will be higher in DC as compared to other state.

Approximate Property tax rates-

DC - The tax rate for residential properties will be upto appx. $0.88 for each $100 of assessed value.

MD - The tax rate for residential properties will be maximum upto appx. $1.082 for each $100 of assessed value.

VA - The tax rate for residential properties will be upto appx. $1.04 for each $100 of assessed value.

Let me know if you have any question. Bonus and Feedback will be highly appreciated!!!

 

[email protected]

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases.

 

Also residence in one State compared to the other State might affect your federal taxes a little as you get the State taxes paid as an itemized deduction. So if you stay in DC, you will have a lower federal tax liability as compared to if you stay in MD.

I.e you will owe $215000 in Federal tax if you stay in DC vs. $225500 if you stay in MD.

Let me know if you have any question. Bonus and Feedback will be highly appreciated!!!

 

[email protected]

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases.

 

RD and 3 other Tax Specialists are ready to help you