Invest in State Income Tax states vs. Non-State Income Tax states

[Charles Moore]

Hi, all!

Am seriously looking at buy-and-hold investing out-of-state due to more expensive markets here on the West Coast. Am located in Washington, which is one of only 7 states in the US that has no individual state income tax (the others are Alaska, Nevada, Wyoming, South Dakota, Texas, and Florida. Tennessee and New Hampshire are similar, but charge state income tax on dividends and interest income). Have narrowed my search down to Memphis and Dallas-Fort Worth, but have heard good things about Birmingham, Indianapolis, Ohio, and Kansas City as well.

So my questions: would state income taxes affect my annual bottom line, or would normal business expenses and depreciation wipe those out on paper so I would not have to pay them anyway? And if I owe nothing, would I still have to file in each state that requires state income taxes?