Since the current form of the question asks about moving to another state, yes, that's really probably your best option, provided that state is not something like California or Massachusetts.
States with No State Income Tax
There are several U.S. states that have no state individual income tax on salaries and wages. Currently, those are:
- New Hampshire
- South Dakota
You will, however, still be required to pay federal individual income taxes in any state. These apply equally to every state.
Cost of Living
However, there's an even better reason for moving to another state to make financial sense, especially for someone who works remotely and, therefore doesn't have to live in a particular place: cost of living.
It turns out that the effective value of a dollar in New York ranks 49 out of the 50 states, with only Hawaii being worse (the District of Columbia is also a bit worse, but, obviously, it is not a state.)
You may already be familiar with the concept of Purchasing Power Parity (PPP), which is used to adjust nominal money figures (such as nominal incomes or GDP) according to the amount of goods and services that amount of money can actually purchase in an area. This is used to allow for more apples-to-apples comparison on figures like incomes and GDP from one place to another. Typically, these are assigned by country with the U.S. being customarily defined as having a conversion factor of 1. However, the U.S. is very large and cost-of-living can vary dramatically within the U.S., too. As a result, the U.S. Bureau of Economic Analysis has begun publishing Regional Price Parity (RPP) information to allow for more accurate comparison between different states or regions within the U.S.
The BEA's Regional Price Parity figures assign a value of 100 for the average over the whole United States. The cost of living in a given region is then the region's RPP value percent of the national average. For example, New York State's value of 115.3 means that the cost of living is around 15.3% above the national average. For the New York City/Newark Metropolitan Statistical Area, the number is 121.9 (i.e. 21.9% higher than the national average.) Now, let's compare how that stacks up vs. the states mentioned earlier:
- Alaska RPP = 105.6 (13.4% less than NYC)
- Florida RPP = 99.5 (18.4% less than NYC)
- Nevada RPP = 98.0 (19.6% less than NYC)
- New Hampshire RPP = 105.0 (13.9% less than NYC)
- South Dakota RPP = 88.2 (26.6% less than NYC)
- Tennessee RPP = 89.9 (26.3% less than NYC)
- Texas RPP = 96.8 (20.6% less than NYC)
- Washington RPP = 104.8 (14.0% less than NYC)
- Wyoming RPP = 96.2 (20.1% less than NYC)
RPPs by State
RPPs by Metropolitan Statistical Area
So, if you were to move from NYC to, say, Tennessee, in addition to not paying state income taxes, the money you keep would be worth about 35.6% more than that same number of dollars would have been worth in New York, even if you had been allowed to keep that much. This turns out to make the economic benefit of leaving NY much larger than the tax rate difference alone would make it seem.