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Many Americans see state income tax as just another part of life. All but 3 states use income tax as a way to pay for roads and city services. The three exceptions are South Dakota, Florida, and Texas. Residents of these states still have to pay national income tax but have a state rate of 0%. While this may seem irrelevant to citizens who live outside of these states, there are actually hundreds of thousands of American's who can qualify for residence in these states – saving them that entire yearly tax.
The kinds of people eligible for switching residency to South Dakota are those who travel for work or live on the road full-time. Even if you own property, you can gain South Dakota residency if you don't use that property for permanent residence. Traveling nurses, RV'er's, oil technicians, and military personnel can all start paying nothing in state income tax.
Exactly how much money someone would save by switching depends on which state and tax bracket they are currently in. Luckily, there are free calculators online such as this on – SD State Tax Savings Calculator. Enter your current state, ...
... your income each year, and click “calculate”. This will output your exact income tax – which equals the amount of money you would save by switching your state. It might seem crazy that people can save thousands or even tens of thousands of dollars every year for almost 0 work – but it's true.
So what work is required to switch your residency to South Dakota? The first step is to get a legal SD address. Your Best Address provides these addresses for $12 per month. While not everyone rents in year terms, people who are claiming residency in SD must do so. The next step is to fill out the paperwork. This can be done through mail, or online. Your Best Address provides this online paperwork for free. The final step is to spend one night in SD and bring the receipt along with any other paperwork to an SD DMV.
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