Moving to any of the states that don’t have state income tax may sound nice — Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Wyoming — but what you save on state income taxes could have other impacts, financial and otherwise. Which is why in this three-part series we’re tackling the many factors that go into deciding to move for tax purposes.
Money aside, your quality of life is just as important, if not moreso, when deciding where to move. For families with children, considering the quality of education within a state is essential.
Evaluating School Quality
The No Child Left Behind (NCLB) Act was enacted in 2002 with the hope to broaden opportunities for children who needed additional support, including intervention programs developed by states and access to high-quality preschools. The Every Student Succeeds Act (ESSA), signed in 2015, replaced NLCB and continues to strive to provide equal opportunity for students.
As part of the ESSA, each state has implemented its own accountability system, including reporting on the performance of schools. These systems look at issues like student achievement gaps and whether there need to be additional measures in place. Most states look at whether students are ready for college or careers before graduation.
Of course, not all states are equal when it comes to providing quality education. When deciding where to move, even to an area with no state income tax, looking at school reputation is key.
There are several data points one can look at. The NAEP, or National Assessment of Educational Progress, has been tracking student performance across various subjects since 1969. Using this data you can see how some states perform compared to others. GreatSchools, a 501(c)(3) not-for-profit organization, is another source that looks at data from the federal government and state departments of education to come up with school quality ratings.
Several states with no state income tax, like Florida, Texas and Nevada, are ranked in the top 10 for educational quality, according to the NAEP. Others, like Texas and South Dakota, also have test scores higher than national averages.
Here’s how no-tax states compare to the national average, according to NAEP data:
Significantly higher: Florida
Average: Alaska, South Dakota, Tennessee, Texas, Wyoming
Slightly lower: Nevada
Some of these places also rank high in terms of school choice — where parents and guardians can opt to put their children, whether that means charter schools or public schools outside of their neighborhood. Guardians who opt for school choice may need to provide their own transportation to and from school, which could add to your overall expenses.
Looking at graduation rates may give you an insight as to whether states have mandates or programs in place to help students meet education standards. According to the National Center for Education Statistics, all states have graduation rates close to the national average—87 percent in 2019–20—with the exception of Texas, where there is no data available.
That’s not to say each part of these states has great schools. You’ll still need to look at the neighborhood you want to move to and do some research. In general, the better the school, the more public resources it takes to maintain them. Schools tend to be funded by property taxes, so living in a place with good schools may mean housing costs more.
Parents who choose to homeschool their children will still want to look at the state’s requirements around, say, completing state testing or teaching state mandated subjects. Comparatively, states with no income tax have, on average, looser regulations when it comes to homeschooling — meaning you may not have as many reporting requirements.
What About Special Educational Needs?
Parents of students with special needs will need to do ample research to determine what types of programs are available. You may have to look at what types of schools offer special education needs and speak with educators there if necessary. The U.S. Department of Education’s Individuals with Disabilities Education Act website posts reports on how students with special needs fare overall and how each state implements certain programs. Reading these may be able to give you an insight as to what services your child may receive.
What About College?
Parents of high schoolers (or dependents who are applying to post-secondary schools) can consider in-state program options. Think about what programs are available and take the time to tour colleges to see what the school quality is like. For example, if there are specialist programs your child is interested in, it may be worth considering a move, especially if there are educational incentives to help lower the cost of tuition.
In late 2022, the Foundation for Research on Equal Opportunity published a study that ranked all 50 states’ public university systems based on prices and outcomes — return on investment, essentially. Florida, South Dakota and Texas had some of the highest median returns — $216,927, $123,420 and $159,475 lifetime return, respectively. The remaining no-tax states were, however, below the national median of $118,182.
States may also have implemented college readiness programs to help students prepare academically, such as career plans, dual enrollment and career pathway programs.
Here’s what the seven no income tax states offer:
Offers dual enrollment and Early College High School: Florida, Tennessee, Texas
Offers dual enrollment only: Nevada, Wyoming
Offers Early College High School only: Alaska, South Dakota
Additionally, you and your child may even want to talk about their desired field of study to see what their job prospects may be in the state after graduation to decide whether a move is worth it.
Next Installment: Quality of Life
Still convinced that the juice is worth the squeeze? Join us next week for our third and final installment covering quality of life on "So You're Moving for Tax Reasons?”
Missed the first installment? Catch up on how to get started with your move.
