Financial Planning

Flash Report - What to Do When Your Doctor Has Bad News

It's what no one ever wants to hear. "The test results have come back positive."

And yet it's quite likely that you, a loved one or both will one day be given a serious health diagnosis that throws your world into uncertainty, confusion and fear. That means you have two choices:

  • Wish and hope that you or someone you care about never gets really bad news from a physician-and be forced to react quickly and emotionally if that does happen.

  • Be proactive and get a handle now on the best steps to take if you're faced with a major medical diagnosis.

You can likely guess which approach we recommend. With that in mind, we asked one of the nation's top concierge physicians-Dr. Dan Carlin of WorldClinic-for his best advice on what to do (and not do) when the news about your health is really bad. 

Get Grounded 

When faced with a shocking medical diagnosis, it's natural to let emotions-sadness, anger, depression-take over. Another common emotional response, fear, causes many people in these situations to want to immediately hit the ground running and take action for action's sake-for example, by starting whatever treatment is most readily available.

Carlin's advice: Slow down. Start by internalizing two foundational concepts that will help guide you through this process more successfully. 

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Flash Report - What to Do When Your Doctor Has Bad News

 

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.

 

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc.  The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles.  Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice.

 

Flash Report - Five Big Mistakes Executors Make—and How to Avoid Them

Being named the executor of a family member’s (or other loved one’s) estate is, in many ways, an honor. The decision shows that the person saw you as a highly trustworthy, capable person of integrity.

But it’s also a major responsibility that can quickly become a burden if you aren’t set up to do your job properly. The fact is, administering an estate comes with plenty of potential pitfalls that can threaten your loved one’s wealth—and your peace of mind. That goes double if the death is unexpected and leaves you reeling emotionally as you try to take on the legally required duties of an executor.

The good news: You can take steps to avoid some of the biggest mistakes that executors often make and to ensure that the process goes as smoothly as possible.

First, a few basics. At death, everything a person owns becomes part of his or her taxable estate. Estate administration is the process of managing the estate at this time—including paying off debts and any taxes due, and distributing the property to heirs in accordance with the deceased person’s wishes (or by state law if the deceased did not leave a will).

Click here to read more:

Five Big Mistakes Executors Make—and How to Avoid Them-Flash Report

 

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.

 

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc.  The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles.  Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice.

Flash Report - Want to Promote Family Entrepreneurship? Consider a Family Bank

A key objective among many single-family offices serving Super Rich families (those with a net worth of at least $500 million) is to enable future generations of family members to build their own wealth and create their own entrepreneurial legacies.

With that in mind, the Super Rich are embracing ways to develop the business acumen of inheritor family members—as well as ways to support them in forming new ventures of their own.

One way the Super Rich are making that happen is through family banks. And increasingly, families that aren’t as wealthy as the Super Rich are using these banks as well.

A way to generate family wealth—and family financial intelligence

A family bank is a formal legal entity a family sets up, with rules that govern how family members can access funds to start or support business ventures as well as how those family members are expected to pay back that money.

Family banks are designed to bring a level of structure, professionalism and accountability when providing money to family members to fund initiatives. As such, they can help instill financial intelligence, financial responsibility and financial values in family members—while also helping to avoid accusations of favoritism in families with multiple children.

Click here to read more:

Want to Promote Family Entrepreneurship Consider a Family Bank-Flash Report

 

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.

 

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc.  The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles.  Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice.

Sailing with the Tides

Embarking on a financial plan is like sailing around the world. The voyage won’t always go to plan, and there’ll be rough seas. But the odds of reaching your destination increase greatly if you are prepared, flexible, patient, and well-advised.

Click here to read more:

Sailing with the Tides

 

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.

 

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc.  The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles.  Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice.

10 Worst States To Live In For Taxes

Here is a nice article provided by Sandra Block of Kiplinger:

 

By Sandra Block, Senior Associate Editor | October 2016

 

Lots of people fret about how much they have to pay Uncle Sam, but he’s not the only tax man you have to worry about: Your state can squeeze you for plenty of taxes, too.

 

State income taxes or property taxes could cost you thousands of dollars every year. High sales taxes or gas taxes could slowly drain your funds every time you pull out your wallet.

 

Updated for 2016, here is our list of the 10 least tax-friendly states in the U.S., where you’ll pay above-average taxes on income, property, gas and almost everything you buy. The same states occupy the five “top” spots on our list as they did in 2015; Minnesota is the biggest mover on the list, now the No. 6 least-friendly state for taxes, in part due to a new top tax rate on the state’s highest earners. In many cases, taxes may rise even higher in the years ahead. Our review of states’ fiscal health reveals crippling deficits and pension liabilities that could lead to future tax hikes, service cuts or both.

 

Take a look. It’s not pretty.

 

Our calculation of each state’s effective tax rate is based on hypothetical individual and joint taxpayers with a variety of income sources. See last slide for a full explanation of our methodology.

 

1. California

State income tax: 1% (on income of up to $7,850/individual, $15,700/joint) - 13.3% (on income more than $1 million/individual, $1,052,886/joint)

Effective income tax rate: 3.2%/individual, 5.2%/joint

Average state and local sales tax: 8.48%

Gas taxes and fees: 38 cents per gallon (national average is 30 cents)

California tops our least-friendly list, thanks to a combination of high income taxes and hefty taxes on purchases and gas. California’s top income tax rate of 13.3% (the highest in the U.S.) doesn’t kick in until income exceeds $1 million; still, a married couple with earned income of $150,000 would pay about $7,500 a year in state income taxes.

California also has the highest statewide sales tax, at 7.5%. The average state and local combined rate is 8.48%; in some cities, the combined rate is as high as 10%, according to the Tax Foundation. Food and prescription drugs are exempt.

California’s gas taxes are down from a year ago, but they’re still the fifth-highest in the country. California also hits car owners with an annual vehicle license fee (VLF) of 0.65% of the purchase price of the vehicle (or the value when it was acquired) that’s reduced each year for the first 11 years of car ownership. For example, the VLF on a two-year-old vehicle purchased for $25,000 would be $147.

Californians pay lower property taxes than residents of other high-tax states, but in a state with some of the highest real estate prices in the U.S., they’re no bargain. The property tax on the state’s median home value of $412,700 is $3,160.

 

2. Hawaii

State income tax: 1.4% (on income of up to $2,400/individual, $4,800/joint) - 8.25% (on income of more than $48,000/individual, $96,000/joint)

Effective income tax rate: 6.5%/individual, 7.1%/joint

Average state and local sales tax: 4.35%

Gas taxes and fees: 44 cents per gallon (varies by county)

Hawaii has the highest effective income tax rate of all 50 states (only Washington, D.C., has a higher rate). A married couple with taxable income of $150,000 a year, two children, $5,000 in dividend income and mortgage interest of $10,000 would pay more than $9,300 a year in state income taxes. A single resident with $45,000 in earned income would pay more than $2,700.

Hawaii’s average combined state and local sales tax rate is 4.35%, among the lowest in the U.S. However, that’s misleading because few purchases, other than prescription drugs, are exempt from tax. Vehicles are subject to a 4% sales tax (technically an excise tax levied on businesses), even if they’re purchased on the mainland.

While property values are high, property taxes as a percentage of home value are the lowest in the U.S. The property tax on the state's median home value of $528,000 is $1,401, according to the Tax Foundation.

 

3. Connecticut

State income tax: 3% (on income of up to $10,000/individual, $20,000/joint) - 6.99% (on income of more than $500,000/individual, $1 million/joint)

Effective tax rate: 4.1%/individual, 5.2%/joint

State sales tax: 6.35%

Gas taxes and fees: 38 cents per gallon

The Constitution State is an expensive place to live. Connecticut’s property taxes are the fourth-highest in the U.S. The median property tax on the state’s median home value of $267,200 is $5,369.

There are no local sales taxes in Connecticut, so you’ll pay only the statewide rate of 6.35% on most of your purchases. Luxury items, such as cars valued at $50,000 or more or jewelry worth more than $5,000, are taxed at 7.75%, which means a $6,000 engagement ring would cost you $6,465. And if those baubles are a gift, keep in mind that Connecticut is the only state with a gift tax (the other is Minnesota), which applies to real and tangible personal property in Connecticut and intangible personal property anywhere for permanent residents.

Connecticut faces serious financial pressures that could force it to raise taxes even more. The state has more than $83 billion in unfunded pensions, and total liabilities exceed its assets by 34%, according to the Mercatus Center at George Mason University, which ranks Connecticut 50th in its analysis of states’ fiscal health.

 

4. New York

State income tax: 4.0% (on income of up to $8,450/individual, $17,050/joint) - 8.82% (on income of more than $1,070,350/individual, $2,140,900/joint). New York allows localities to impose their own income tax; the average levy is 2.11%, according to the Tax Foundation.

Effective income tax rate: 5.5%/individual, 6.4%/joint

Average state and local sales tax: 8.49%

Gas taxes and fees: 43 cents per gallon (varies by county)

The Empire State has a hefty effective income tax rate, and its average sales tax rate is the ninth-highest in the country, according to the Tax Foundation. Food and prescription and nonprescription drugs are exempt from taxes, as are greens fees, health club memberships, and most arts and entertainment tickets.

The property tax on the state's median home value of $279,100 is $4,703, the 10th-highest in the U.S.

The tax on cigarettes is $4.35 per pack, the highest in the U.S. New York City tacks on an additional $1.50 per pack.

 

5. New Jersey

State income tax: 1.4% (on income of up to $20,000) - 8.97% (on income of more than $500,000). New Jersey allows localities to impose their own income tax; the average levy is 0.5%, according to the Tax Foundation.

Effective income tax rate: 2.1% individual, 3.7%/joint

Average state and local sales tax: 6.97%

Gas taxes and fees: 38 cents per gallon

The effective tax rate for Garden State residents is relatively low compared with some other tax-unfriendly states. But while New Jersey gives residents a break on income taxes, it brings the hammer down when they buy a home. New Jersey’s property taxes are the highest in the U.S.; the property tax on the state’s median home value of $313,200 is $7,452.

Food, prescription and nonprescription drugs, clothing and footwear are exempt from the 7% state sales tax. Because some designated Urban Enterprise Zones, such as Newark, charge a reduced 3.5% sales tax on certain sales, New Jersey’s average state and local combined sales tax rate is actually 6.97%, according to the Tax Foundation.

Plus, with more than $188 billion in unfunded pension liabilities, the state’s long-term financial prospects are grim. A report by J.P. Morgan estimates that, in order to cover its massive debts, New Jersey would need to raise taxes by 26%, cut spending by 24% or increase pension plan participants’ contributions by 471%.

 

6. Minnesota

State income tax: 5.35% (on income of up to $25,180/individual, $36,820/joint) - 9.85% (on income of more than $155,650/individual, $259,420/joint)

Effective income tax rate: 5.8%/individual, 6.6%/joint

Average state and local sales tax: 7.27%

Gas taxes and fees: 29 cents per gallon

The North Star State added a new top income tax rate of 9.85% for high earners in 2015. But what makes Minnesota really stand out is its relatively high income tax rate of 5.35% even for the state’s lowest earners.

Food, clothing, and prescription and nonprescription drugs are exempt from the state sales tax of 6.875%. A few cities and counties add their own local sales tax. The average combined state and local sales tax rate is 7.27%, according to the Tax Foundation. The sales tax for vehicles is 6.5%, slightly lower than the overall state sales tax, and vehicles are not subject to local sales taxes.

The property tax on Minnesota's median home value of $188,300 is $2,148, the 20th-highest in the U.S.

Minnesota offers some property-tax relief for qualified homeowners. Homeowners whose property taxes are high relative to their incomes are eligible for a property tax refund.

 

7. Maine

State income tax: 5.8% (on income of up to $21,050/individual, $42,100/joint) - 7.15% (on income of more than $37,500/individual, $75,000/joint)

Effective income tax rate: 6.1%/individual, 6.6%/joint

State sales tax: 5.5%

Gas taxes and fees: 30 cents per gallon

Maine has been working to lower its income tax bite: In 2016, the top rate fell from 7.95% to 7.15%. However, the state’s “low” rate is 5.8% — higher than some other states’ top rate.

Maine is one of only a few states that prohibit local jurisdictions from imposing their own sales tax, so you won’t pay more than 5.5%, no matter where you live or shop. Food for home consumption and prescription drugs are exempt from sales taxes, but prepared foods in restaurants are taxed at 7%.

Maine imposes an annual excise tax on vehicles that’s based on the car’s age and value. The owner of a three-year-old car with a manufacturer’s suggested retail price of $19,500 would pay $263.25.

The property tax on Maine's median home value of $174,800 is $2,335, the 16th-highest in the country.

 

8. Vermont

State income tax: 3.55% (on income of up to $39,900/individual, $69,900/joint) - 8.95% (on income of more than $415,600/individual, $421,900/joint)

Effective income tax rate: 3.5%/individual, 5.2%/joint

Average state and local sales tax: 6.17%

Gas taxes and fees: 31 cents per gallon

Vermont’s effective tax rates are lower than those imposed in nearby New York, but it’s a pricey place to live if you’re wealthy. Vermont limits deductions to $15,500 for single residents and $31,000 for married couples — costing millionaires about $5,000 in additional state taxes every year.

The Green Mountain State is also an expensive place to own a home. The property tax on the state's median home value of $214,600 is $3,797, the eighth-highest in the U.S.

The average state and local combined sales tax rate is 6.17%, according to the Tax Foundation. Food, clothing, and prescription and nonprescription drugs are exempt from sales tax. Under a law that took effect in 2015, soft drinks aren’t exempt from sales tax. Restaurant meals are taxed at 9%; the tax on alcoholic beverages served in restaurants is 10%.

 

9. Illinois

State income tax: 3.75%

Average state and local sales tax: 8.64%

Gas taxes and fees: 34 cents per gallon

The Prairie State’s income tax dropped to a flat rate of 3.75% from 5% on Jan. 1, 2015.

The bad news is that taxes on just about everything else in Illinois are high and could go higher as lawmakers grapple with the largest state budget deficit in the U.S. And the low flat tax may not last: With total liabilities exceeding assets by 48%, the state needs to raise taxes by 17%, cut services by 16% or increase worker pension contributions by 400%, according to a report by J.P. Morgan.

Property taxes in Illinois are the second-highest in the nation. The property tax on the state’s median home value of $171,900 is $3,952.

And the combined average state and local sales tax is 8.64%, the 7th-highest rate in the U.S, according to the Tax Foundation. In some municipalities, combined state and local sales taxes are as high as 10%. Qualifying food and prescription and nonprescription drugs are taxed at 1%.

 

10. Rhode Island

State income tax: 3.75% (on income of up to $60,850) - 5.99% (on income of more than $138,300)

Effective income tax rate: 3.8%/individual, 4.3%/joint

State sales tax: 7%

Gas taxes and fees: 34 cents per gallon

The Ocean State’s 7% state sales tax rate is the second-highest in the U.S., but the state has no local sales taxes to add to it. Groceries, most clothing and footwear, and prescription drugs are exempt. Over-the-counter drugs, such as aspirin, are taxed unless you have a prescription. The tax also applies to the portion of any individual sale of clothing and footwear that exceeds $250. The sales tax on vehicles is 7%.

Rhode Island is expensive for homeowners. The property tax on the state’s median home value of $236,000 is $3,855, the 11th-highest in the U.S.

 

About our methodology

To create our rankings, we evaluated data and state tax-policy details from a wide range of sources. These include:

Income Taxes - We looked at each state's tax agency, plus this helpful document from the Tax Foundation. To help us rank the most- and least-friendly states, The Tax Institute at H&R Block prepared an analysis that determined the effective tax rate for two income scenarios: One for a single filer making $45,000 a year taking the standard deduction, and one for a more complex tax profile: a married couple filing jointly, with two dependent children, an earned income of $150,000, qualified dividends of $5,000, and $10,000 of mortgage interest to deduct.

Property Tax - Median income tax paid and median home values come from U.S. Census' American Community Survey and are 2014 data.

Sales Taxes - We also cite the Tax Foundation's figure for average sales tax, which is a a population-weighted average of local sales taxes. In states that let municipalities add sales taxes, this gives an estimate of what most people in a given state actually pay, as those rates can vary widely.

Fuel Tax - The American Petroleum Institute

Sin Taxes - Each state's tax agency as well at the Tax Foundation

Inheritance & Gift Taxes - Each state's tax agency.

Wireless Taxes - The Tax Foundation

Travel Taxes - Each state's tax agency, plus a lodging tax study published in 2015 by HVS Convention Sports and Entertainment Consulting.

Fiscal Stability - Each state's balance sheet gives an indication of what its tax future might look like. We drew on the study Ranking the States by Fiscal Condition by the Mercatus Center at George Mason University.

 

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail  info@diversifiedassetmanagement.com.

 

The views, opinion, information and content provided here are solely those of the respective authors, and may not represent the views or opinions of Diversified Asset Management, Inc. The selection of any posts or articles should not be regarded as an explicit or implicit endorsement or recommendation of any such posts or articles, or services provided or referenced and statements made by the authors of such posts or articles. Diversified Asset Management, Inc. cannot guarantee the accuracy or currency of any such third party information or content, and does not undertake to verify or update such information or content. Any such information or other content should not be construed as investment, legal, accounting or tax advice.

5 States Where Taxes Are Going Up in 2017

Here is a nice article provided by Sandra Block of Kiplinger:

 

By Sandra Block, Senior Associate Editor | January 2017

 

Although President-elect Donald Trump has pledged to cut federal taxes, state taxes are rising across the U.S. as financially strapped states search for funds to repair deteriorating infrastructure and close widening budget shortfalls. In their search for revenue, states have targeted everything from e-cigarettes to lottery winnings.

 

Even Alaska, long a low-tax haven and one of our 10 most tax-friendly states, is feeling the heat. Alaska currently has no income or state sales tax. But to offset a sharp decline in oil revenues, Gov. Bill Walker has proposed a 3% statewide sales tax, which he says is needed to close the state’s $3.2 billion budget deficit.

 

Raising existing state taxes or imposing new ones could backfire if they lead to fewer taxpayers. Technology has made it easier for individuals and businesses to move to states—or countries—with lower tax rates, says Joe Henchman, vice president of legal and state projects for the Tax Foundation, a policy research organization based in Washington, D.C. “Everybody is under the gun to be more competitive, whether it’s government or the private sector,” he says.

 

Here are five states—including three already on our list of the 10 Least Tax-Friendly States in the U.S.—where residents will pay higher taxes in 2017. Take a look.

 

1. Maine

Kiplinger’s tax rating: One of the 10 least tax-friendly states in the U.S.

Income tax: 5.8% (on taxable income of less than $21,050 for single filers; less than $42,100 for joint filers) - 10.15% (on taxable income of $37,500 or more for single filers; $75,000 or more for joint filers)

State sales tax: 5.5%

What’s changing in 2017: Higher income taxes on top earners

In November, Maine residents narrowly approved a 3% income tax surcharge on residents with income of more than $200,000. The tax hike, which will be used to fund public education, raises Maine’s top tax rate in 2017 to 10.15%, the second-highest in the U.S. (California’s top tax rate of 13.3% is the highest.) The surcharge will raise an estimated $142 million in the first year, according to the state’s Office of Fiscal and Program Review.

 

2. California

Kiplinger’s tax rating: One of the 10 least tax-friendly states in the U.S.

Income tax: 1% (on taxable income of less than $7,850 for single filers; less than $15,700 for joint filers) - 13.3% (on taxable income of $1 million or more for single filers; $1,052,886 or more for joint filers)

State sales tax: 7.25% (as of Jan. 1, 2017)

What’s changing in 2017: Higher taxes for smokers

Californians voted in November to increase the state tax on cigarettes from 87 cents to $2.87 a pack, effective April 1, 2017. The tax will also apply to e-cigarettes. The first year, the tax will raise an estimated $1.4 billion, which is expected to be used for health care and smoking-cessation programs.

Californians also approved a measure to extend higher income tax rates for the state’s top earners through 2030. The three highest tax rates, which start at 10.3% and top out at 13.3%, were originally scheduled to expire in 2018.

 

3. New Jersey

Kiplinger’s tax rating: One of the 10 least tax-friendly states in the U.S.

Income tax: 1.4% (on taxable income of less than $20,000) - 8.97% (on taxable income of $500,000 or more)

State sales tax: 7%

What’s changing in 2017: Higher gas taxes

In October, Gov. Chris Christie signed legislation that raised New Jersey’s gas tax from 14.5 cents to 37.5 cents a gallon. Overnight, the state’s gas tax jumped from the second-lowest in the country to the seventh-highest. Funds from the tax hike will be used to shore up the state’s deteriorating roads and bridges.

Although the state’s budget deal will increase the cost of gassing up in the Garden State, it also includes some generous tax reductions. The state will gradually increase the amount of retirement income that’s sheltered from tax through 2020, when a married couple will be able to exclude as much as $100,000. In addition, the amount of assets excluded from the state’s estate tax will rise from $675,000 to $2 million on January 1, and the tax will disappear in 2018.

 

4. Pennsylvania

Kiplinger’s tax rating: Mixed tax picture

Income tax: 3.07%

State sales tax: 6%

What’s changing in 2017: New taxes on digital content, higher taxes on smokers

The 2016-17 budget bill approved by Pennsylvania lawmakers in August extended the state’s 6% sales tax to digital streaming services and downloads. The tax package also hiked taxes on cigarettes by $1, for a total tax of $2.60 per pack, and extended the tax to e-cigarettes and smokeless tobacco.

The budget package also took a bite out of residents’ lottery winnings. Previously, Pennsylvania was one of only two states (California was the other one) that exempted lottery winnings from state taxes. The budget package scrapped that exemption, retroactive to Jan. 1, 2016.

 

5. Louisiana

Kiplinger’s tax rating: One of the 10 most tax-friendly states in the U.S.

Income tax: 2% (on taxable income of less than $12,500 for single filers; less than $25,000 for joint filers) - 6% (on taxable income of $50,000 or more for single filers; $100,000 or more for joint filers)

State sales tax: 5%

What’s changing in 2017: Higher sales taxes

In April, Louisiana increased its state sales tax by one percentage point, to 5% from 4%. The change boosted the average state and local sales tax rate to 9.99%, the highest in the U.S. The increase is scheduled to expire on June 30, 2018. Lawmakers also voted to extend the sales tax to a number of items that had been exempt, including Mardi Gras beads.

Smokers in the Big Easy will pay more, too. The April tax package hiked the tax on a pack of cigarettes to $1.08 from 86 cents.

 

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail  info@diversifiedassetmanagement.com.

 

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