How to avoid state taxes?

Brad Barrett offers several strategies for avoiding or reducing state taxes:

1. Relocation to Tax-Friendly States: Moving to states with zero income tax like Texas can significantly reduce your tax burden. However, it's essential to consider other taxes like property and sales taxes, as well as the overall cost of living in your new state 1.

2. Maximizing Pre-Tax Buckets: Contributing to pre-tax retirement accounts can lower both federal and state tax liabilities. By optimizing these contributions, you effectively reduce your taxable income, which can minimize your overall tax payment 2.

3. Leveraging Tax Credits: Look for specific tax credits that can reduce your state tax liability. For example, certain credits are available for foster care and adoption that can dramatically reduce your state tax payments 2.

4. Tax Optimization by State Selection: Choose a state that aligns with your financial goals in terms of income tax, capital gains tax, and property tax. For instance, if you live off capital gains, consider a state that doesn't tax capital gains. This strategy can significantly increase your effective income 3.

   • 

     1

     Tax Arbitrage Insights

     00:05:41
     
   • 

     2

     Tax Strategies Uncovered

     00:48:19
     
   • 

     3

     Tax Optimization Strategies

     00:10:30
     

Implementing these tax optimization strategies involves thorough research into the tax benefits and drawbacks of each option to ensure you maximize your savings legally and effectively.