Where we work usually plays a major role in where we live. That could mean choosing a house near public transportation or packing up to another state because it’s a hotbed for hiring in your field.
But COVID-19 lockdowns have transformed the way we think about work and living. A third of Americans are now working remotely full time, according to a Gallup poll. Compare that to five years ago when just of Americans worked remotely full-time.
Maybe you’re considering making a move out of state now that you aren't tethered from a physical office space. Perhaps that’s because you want to save money, live closer to family, or move into a bigger space. Whatever the reason, here are some of the factors you should consider before relocating to another state.
Cost of living
Saving money on housing, taxes, and even food are some of the major reasons that people might consider pulling up stakes and moving out of state.
But there are also ways that you might lose money by making the move. For example, your employer might reduce your salary if you’re moving to an area with a lower cost of living. That’s exactly what major companies like have done.
Also think about any new expenses you’ll have after the move. Will you need a car where you didn’t before? Will you be expected to make trips into your office on occasion? Extra expenses or a lower salary might easily be offset by cost of living savings, but it’s good to know before you go.
Lower tax living might hold a lot of appeal. For example, there are — Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming — that have no income tax at all. (New Hampshire and Tennessee will join that list by 2024.)
But income taxes can get tricky when you work in one state and live in another. In some cases, you will get taxed twice — once where you live and once where you work — on the same income.
Many states offer tax credits to mostly eliminate that double taxation. But — Connecticut, Delaware, Massachusetts, Nebraska, New York and Pennsylvania — don’t. There are also some states, like Illinois and Wisconsin, that make things easier if you live in one state, but work in another by having . In those cases, you only pay income taxes in the state where you live.
“There’s been an exodus from higher tax places like New York and New Jersey to places with lower income taxes, but in some of those places you’ll pay higher property insurance or property taxes,” said Clark Kendall, a certified financial planner and owner of Kendall Capital in Rockville, Maryland.
Right now, working remotely full time might feel like no big deal, especially if most of the people you work with are also remote. That could change as more people shift back to in-person office work.
“Will you miss that collaboration and socialization?” Kendall said. “Once our economy is going full speed, there also could be employers who are less tolerant about full remote work unless you have very marketable, in-demand skills.”
There can also be career advancement obstacles for people who primarily work remotely. found that people who aren’t in the office much aren’t promoted as often or as high up as people who work in the office. However, COVID-19 has certainly made remote work more acceptable, Kendall said.
Local job market
If you’re happy and secure in your current job, you might not worry much about the job market of the area where you’re relocating. But you should. You need a plan in case you lose the job you have or want a new one.
The people who have the least to be concerned about are “those with unique skills and talents who work for companies where remote work is more acceptable,” Kendall said. For example, moving to a small town in the middle of nowhere might not be a big deal for a talented software engineer who can easily get another job working remotely.
But if your job is remote more because your company allows that work arrangement —and not because of your field — you might find it harder to get another position depending on the local job market.
One other area where relocating out of state can cause a few wrinkles is estate planning. You might need to like your will to match the laws of the new state you’re living in. Marital property rules also might change. For example, some states are community property states — where spouses equally own almost anything they acquire while married — while in other states, a spouse owns whatever is in his or her name.
You don’t have to let any of these issues stop you from moving to greener — or bigger — pastures, but it pays to be prepared before you go.
Read more information and tips in our Advice section