Residents: a map you should know

[Old_Mil]

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I never received any training on contracts, malpractice, or choosing a job in residency. This map lets you quickly compare state tax rates for different places. Although this isn't the only thing you should consider when choosing a job, it makes a big difference if you chose a job in South Dakota with no state tax or Medicaid expansion and nearby Iowa which has both. Other states like Washington and and Wyoming have no state tax but are legal hell holes for docs. Washington also levys a special 1099 doc tax - important given the degree to which CMGs dominate. Others like Oregon, Illinois and Pennsylvania give you the Trifecta: a state tax, Medicaid expansion, and the chance to get sued a lot.

Good luck.

 

[Vandalia]

Yes and no.

There are a lot of variables in play. A universal law is that the state government is going to get their money somehow or other. If there is no income tax, there usually is a very high property tax rate. A state may have a low/no income tax rate, but the insurance costs can take a big bite out of that. It can all depend on your specific situation. In West Virginia for example, military pay is not subject to income tax, so if you are a military physician, WV is a good place to have as your state of residence. As another example, if your kids are close to college, how good are the state universities and how much of an in-state tuition advantage is there? This can make a place like Michigan suddenly desirable. (For a demented few who would be willing to consider such a thing.)

Also keep in mind the "unhappy tax": If you - or perhaps more specifically your 'significant other' - is not happy, that can be taxed at up to 300% of your income. As my Mom has on her kitchen wall "If Momma ain't happy, ain't no one happy."

These are definitely things you need to be aware of. Beware though that there are no simple answers. Be aware even more than having a "good" job and a happy family can cancel out just about any financial disadvantage (or in the reverse wipe out any advantage.)

 

[The White Coat Investor]

While I agree with the general premise that you should look at cost of living including state income tax prior to deciding where you will settle down to practice, there is a lot more to it than this map might indicate.

For example, in my state of Utah we have a flat tax. So high income folks pay 5% and low income folks pay 5%. As a doc in Utah, you'll pay 5%. In California, however, it would be a very rare doc who paid 13.3%. Most emergency docs would be paying 9.3-11.3%. Still high, of course, but not 13.3%. This also ignores sales tax, property tax etc. So Texas looks awesome on this map with its "none" but it also generally has a fairly high property tax rate and sales taxes up to 8.25%.

http://www.chron.com/homes/article/Texas-property-taxes-among-the-nation-s-highest-6181429.php

Now income taxes will matter a lot more to you than property or sales taxes since they are higher and are less in your control than what you purchase/live in.

I know I took a very serious look at Reno instead of Salt Lake due to the tax issue. Unfortunately, the year I needed a job Salt Lake was hiring and the group I was interested in in Reno was not. Made the decision easy. Now I'm glad I'm here but it costs me $20K+ a year over that job in Reno. That's something like 10 shifts, not insignificant.

 

[Birdstrike]

Yes and no.

There are a lot of variables in play. A universal law is that the state government is going to get their money somehow or other. If there is no income tax, there usually is a very high property tax rate.

Yessss! My state has a mod-high income tax but very low property tax and low cost of living. The triple whammy of financial-pain and financial-death spiral is the high income tax, high property tax and high cost of living, state or city, i.e., Manhattan, California, etc.

Some take their pay in culture, sunshine or proximity to family, and suck up the rest. Just do what's right for you.