Should I stay or should I go?

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Q. I was planning to move to Florida, but with the estate tax change I want to stay in N.J. My wife still wants to leave. What other advantages are there for staying here? Help me win this battle!
— Looking for allies

A. Deciding where to live should be about more than taxes.

Many New Jerseyans like the state for its change of seasons, cultural diversity, shopping, dining and entertainment options. You can live in a city, in the country or a suburb, anywhere in the state and still be only an hour or two from the beach, a lake, the mountains, a farm, New York City or Philadelphia.

“Being the most populated state per square mile, it can be a bit crowded, but there are a lot of job opportunities,” said lifelong New Jersey resident Andrew Novick, a certified financial planner and estate planning attorney with The Investment Connection and Brookner Law Offices in Bridgewater. “Additionally, N.J. public schools rank very high nationally, which is important if you have school-age children.”

But we also know New Jersey is among the most expensive places to live in the country.

And people have been leaving the state.

According to the United Van Lines’ 40th annual National Movers Study, the Garden State has led the nation in outward migration for the last three years, Novick said.

According to the Bureau of Economic Analysis, the purchasing of power of a dollar is higher in every other state except Washington D.C., California and New York, Novick said.

The poor ranking is mostly due to real estate costs, Novick said. Not only are real estate values high in N.J., especially in desirable areas, but real estate taxes are the highest in the country, Novick said.

Other taxes are a mixed bag. After the passage of the gax tax bill, they’re no longer the worst, but they’re not the best either.

Let’s start with the state income tax.

“Due to tiered rates based on your income, it generally averages less than 4 percent of gross income for most taxpayers,” Novick said. “It’s definitely better for retirees, as Social Security benefits and some income from retirement accounts and pensions may not be taxed if you qualify.”

Additionally, the amount of income that can be excluded from retirement accounts and pensions is increasing over the next few years, he said.

Then there’s the sales tax, which was recently lowered from 7 percent to 6.875 percent and will drop to 6.625 percent in 2018 and thereafter. Purchases made in “Urban Enterprise Zones” only pay 50 percent of the state’s sales tax, Novick said, and the state exempts certain grocery items, prescription drugs and clothes.

The estate tax was a big negative for dying in New Jersey, but that’s changing.

“Transferring assets at death in N.J. prior to 2016 could be costly without properly estate planning, but a recent change to the N.J. estate tax makes this much less of an issue,” Novick said.

The exemption amount increased from $675,000 per person to $2 million for 2017 and is scheduled to be completely eliminated for 2018 and thereafter.

But New Jersey still has an inheritance tax, which is imposed on death transfers to someone other than a spouse — including a domestic or civil union partner — parent, grandparent, child, stepchild or grandchild.

The gas tax can’t be ignored.

In exchange for eliminating the estate tax, the NJ legislature raised the gas tax from 14.5 cents per gallon to 37.5 cents per gallon, Novick said.

“The result is that N.J. went from having the second lowest gas tax in the country to the seventh highest,” he said.

While many cheered the death of the estate tax, only a small percentage of the state’s population was impacted, but everyone who drives will feel the sting of the higher gas tax, Novick said, noting he’s not sure the swap was as good as advertised.

So should you stay or should you go?

That’s a personal decision, but now you and your wife have all the numbers to consider. Let us know what you decide, and good luck!

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This post was first published in January 2017. presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.