Quote from @Ken M.:
As you can see from the numbers below, the states that carry the highest penalty for making a profit are also the ones, generally, with the highest cost of housing. They also tend to be the states that are either "sanctuary" states or "sanctuary" cities that welcome illegals which drives up taxes to care for them.
Because of the higher cost burdens of paying for people who aren't contributing their tax share, those that are actually paying taxes (you) have a higher tax burden. That tax burden is calculated into what is needed to purchase and maintain a house. More taxes equates to less disposable income.
Your price for buying that investment property is/should be a "profit motive". Property taxes play a huge role as well. Some states have a burdensome "real estate transfer tax".
If it isn't profitable, why are you investing there? If you can make considerable more by investing in the state next door, why wouldn't you?
| State |
Code |
2000 Top Rate |
2025 Top Rate |
Change |
Cost up/down |
|
|
|
|
|
|
| California |
CA |
9.3 |
13.3 |
4.00 |
up |
| Hawaii |
HI |
8.8 |
11 |
2.25 |
up |
| New York |
NY |
6.9 |
10.9 |
4.05 |
up |
| New Jersey |
NJ |
6.4 |
10.8 |
4.38 |
up |
| Minnesota |
MN |
8 |
9.9 |
1.85 |
up |
| Oregon |
OR |
9 |
9.9 |
0.90 |
up |
| Massachusetts |
MA |
12 |
9 |
(3.00) |
Down |
| Vermont |
VT |
% of federal liability |
8.75 |
n/a |
not available |
| Wisconsin |
WI |
6.8 |
7.7 |
0.88 |
up |
| Maine |
ME |
8.5 |
7.2 |
(1.35) |
Down |
| Connecticut |
CT |
4.5 |
7 |
2.50 |
up |
| Washington |
WA |
0 |
7 |
7.00 |
up |
| Delaware |
DE |
6.4 |
6.6 |
0.20 |
up |
| South Carolina |
SC |
7 |
6.2 |
(0.80) |
Down |
| Rhode Island |
RI |
% of federal liability |
5.99 |
n/a |
not available |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Montana |
MT |
11 |
5.9 |
(5.10) |
Down |
| New Mexico |
NM |
8.2 |
5.9 |
(2.30) |
Down |
| Maryland |
MD |
4.8 |
5.8 |
0.90 |
up |
| Virginia |
VA |
5.8 |
5.8 |
No change |
No change |
| Idaho |
ID |
8.2 |
5.7 |
(2.50) |
Down |
| Kansas |
KS |
6.5 |
5.6 |
(0.85) |
Down |
| Georgia |
GA |
6 |
5.4 |
(0.61) |
Down |
| Nebraska |
NE |
6.7 |
5.2 |
(1.48) |
Down |
| Alabama |
AL |
5 |
5 |
No change |
No change |
| Illinois |
IL |
3 |
5 |
1.95 |
Down |
| Oklahoma |
OK |
6.8 |
4.8 |
(2.00) |
Down |
| West Virginia |
WV |
6.5 |
4.8 |
(1.68) |
Down |
| Missouri |
MO |
6 |
4.7 |
(1.30) |
Down |
| Utah |
UT |
7 |
4.6 |
(2.45) |
Down |
| Colorado |
CO |
% of federal liability |
4.4 |
n/a |
not available |
| Mississii |
MS |
5 |
4.4 |
(0.60) |
Down |
| Michigan |
MI |
4.4 |
4.3 |
(1.10) |
Down |
| North Carolina |
NC |
7.8 |
4.3 |
(3.50) |
Down |
| Kentucky |
KY |
6 |
4 |
(2.00) |
Down |
| Arkansas |
AR |
7 |
3.9 |
(3.10) |
Down |
| Iowa |
IA |
9 |
3.8 |
(5.18) |
Down |
| Ohio |
OH |
7.2 |
3.5 |
(3.70) |
Down |
| Pennsylvania |
PA |
2.8 |
3.1 |
0.27 |
up |
| Indiana |
IN |
3.4 |
3 |
(0.40) |
Down |
| Louisiana |
LA |
6 |
3 |
(3.00) |
Down |
| Arizona |
AZ |
5 |
2.5 |
(2.54) |
Down |
| North Dakota |
ND |
% of federal liability |
2.5 |
n/a |
not available |
| Alaska |
AK |
0 |
0 |
No income tax |
| Florida |
FL |
0 |
0 |
No income tax |
| Nevada |
NV |
0 |
0 |
No income tax |
| New Hampshire |
NH |
5 |
0 |
No income tax |
| South Dakota |
SD |
0 |
0 |
No income tax |
| Tennessee |
TN |
6 |
0 |
No income tax |
| Texas |
TX |
0 |
0 |
No income tax |
| Wyoming |
WY |
0 |
0 |
No income tax |
This is a gross over simplification and a correlation=causation fallacy when it comes to Minnesota.
Minnesota has one of the highest INCOMES in the Nation. Both individual and household.
Minnesota is also founded, built and in large part still operates as a Scandinavian Culture.
This is why Minnesota has more parks, trails, and assorted outdoor venues than ANYWHERE in the Nation. It's a social expectation in Minnesota that there is jogging/walking trails, ample sidewalks, well lit streets, playgrounds and parks in EVERY neighborhood, free zoo's, free beaches galore.......
There is a reason why Minnesota is a TOP tourism state, and Minnesota invests wisely into it very heavily.
THIS is one of the reasons for high incomes. It's not a byproduct of tax's, it's a byproduct of the industry that's driven from the investments made via the tax's.
Minnesota also has one of the highest residencies of millionaires. And a significant volume of 2nd, 3rd homes.
Is there plenty of "dumb" in Minnesota from CITIES of stupidity, dang-right there is. But don't get it twisted, in a State nearly the size of Texas a handful of moronic cities is to be expected. Just ask Texas, they have some "red-headed step-children" too.
Minnesota is "the" capitol of assorted engineering, medical and agricultural fields.
Do you eat? Do you get medical care? Do you use anything built via engineering? Yeah, that's a recession buffered basis I'd say.
6 figure income tenants is such the norm it's an expectation for well over 50% of my portfolio. INDIVIDUAL income. Household income all but has to be 6 figures in the vast majority of units.
Do you know what comes with such tenants?
Ambition.
CARE of things like there credit, of not getting in bad with a Landlord who can readily garnish wages etc..
Tenant nightmares here are the ever so rare exception UNLESS your playing in a sandbox that is designed for such, like C/D class "poverty" income levels.
Look it up, what we define as Poverty in Minnesota is MORE than the median income for some other States..... Yeah, think on that for a moment.
