Wyoming, the Tax-Friendly State

There are plenty of reasons to be thankful for owning a home in Jackson Hole, Wyoming: the mountains, the rivers, two national parks, three ski resorts, art galleries, restaurants, a charming Western-style downtown, and a close-knit, philanthropic-minded and fun-loving community.

As enviable as our lifestyle is here, reality does intrude occasionally, as it does with taxes. But even in that area, we as Wyoming residents are better off than most. After all, Wyoming has been cited by Bloomberg Wealth Management magazine as the most tax friendly state in the country. This is largely due to the State of Wyoming's budget surplus of nearly $1 billion.  Tax savings helps us stretch our hard-earned dollars farther, whether to buy real estate, leave property to our heirs or buy a new mountain bike.

Here are 10 good reasons offered by Brian Jones, a senior vice president at Bank of Jackson Hole, why it's good to own a home in Wyoming:

1. No state income tax: With no state tax on personal or corporate income, "you have more disposable income," Jones says.

2. Dynasty trusts: In Wyoming, you can shield your real estate from federal estate taxes for up to 1,000 years through a dynasty trust. "You can establish a trust in Wyoming for the benefit of your family or other beneficiaries," Jones says. "You can transfer your real estate into a limited liability company or family partnership and then put that into the 'dynasty trust,' which can continue for a thousand years." As a result, multiple generations can make use of and enjoy the property, without having to pay estate taxes or worse, having to sell the property in order to pay the taxes. A key point to remember: The trust must be administered in Wyoming.

3. No inheritance tax or estate tax: "Wyoming repealed its estate tax as of January 1, 005," Jones says.

4. No state gift tax: "Somebody who owns property in Wyoming can 'gift' that real estate to their heirs without having to worry about paying a state gift tax," Jones says.

5. No tax on out-of-state retirement income: "A lot of people in Jackson Hole use Wyoming as a second home," Jones says. "They have retirement income that comes from other states where they may be a resident. Wyoming doesn't tax that retirement income that's earned outside of Wyoming, which is certainly beneficial."

6. Low property taxes: "Wyoming has very low property taxes compared to other states," Jones says. "The taxes that you do pay here are based on the assessed value of the property." For Teton County, he says, the rate is 1.2 percent of a property's assessed value. The rate for the city of Jackson is 8/10 of one percent.

7. No excise taxes: When you fill up your car's gas tank or buy a bag of groceries in Wyoming, you won't pay any state tax on your gas or food.

8. No tax on mineral ownership. "A lot of states charge owners a tax on their mineral ownership, but Wyoming does not," Jones says. "If you own minerals, you won't pay a tax on it like you would your home.

9. No intangible taxes: Wyoming doesn't make you pay a tax on financial assets like stocks and bonds.

10. No tax on the sale of real estate.

Letter to Sotheby's from Bank of Jackson Hole Regarding Tax Benefits

BANK of JACKSON HOLE

July 17th, 2009

Tom Evans
Sotheby's International Realty
185 W. Broadway
P.O. Box 3281
Jackson, WY 83001

Dear Tom:

I enjoyed our recent discussion regarding the many advantages of calling Wyoming our home. Certainly one of the greatest advantages to being a Wyoming resident comes from our favorable tax status. Wyoming truly is a tax haven to affluent individuals. It is obvious the State's legislators appreciate the designation Bloomberg Wealth Manager Magazine has given to Wyoming as the most tax friendly state in the U.S. Other noted publications regularly list Wyoming as the most business-friendly tax system of any state. The legislature works to protect that status and by doing so attracts more business to the State. Wyoming's ability to provide such benefits to its residents is a product of a resilient economy which in large part is driven from its rich mineral revenue base. Our legislature rarely deals with fiscal problems due to an income source from mineral severance taxes that consistently exceed budget expenses and appropriations. It is not uncommon for Wyoming's budget surplus to approach $1 billion dollars per year. As such, the State allocates surplus funds most years to a permanent trust fund and other emergency accounts for periods when revenues may not be as strong. Our State is noted for budgetary conservatism in view of the volatility of the energy industry and the fact that severance tax revenues can fluctuate widely year to year.

Wyoming also offers some of the best asset protection laws of any state in the nation. These laws are designed to conserve individual and family assets from not only creditors but a Federal tax system that can deplete family wealth from one generation to the next.

Wyoming's Close LLC statute is widely considered the best combination of laws available to protect business owners from lawsuits. The statute is ideally suited to small business owners and family businesses which are a major part of the Wyoming economy. The rules enable the LLC interest owners to retain control under adverse circumstances and take advantage of valuation discounts when transferring ownership interest to others.

The State effectively did away with the rule against perpetuities. Wyoming will allow a trust to be established that can continue for up to 1,000 years, benefiting multiple family generations. Assets within the trust are not subject to Federal estate taxes and the income is not taxed by the State due to Wyoming having no individual income tax or business income tax. Additionally, Wyoming has no inheritance tax. Under the shelter of the trust, the assets are insulated from creditors and divorce and grow at a much faster rate due to the avoidance of the transfer taxes. Laws in Wyoming also allow individuals to establish other trusts, or amend existing trusts, for their immediate benefit, which will
protect the assets from potential lawsuits.

Wyoming residents are further rewarded with some of the lowest property taxes in the region, no state tax on retirement income earned and received from another state, no state gift taxes, no personal property tax on property held for personal use, no state capital gains tax, no tax on individual mineral interest ownership, and no excise tax or intangibles tax. What more could we ask for. It is in our best interest to preserve what we have for future generations. We are blessed to live in one of the most beautiful places in the world with benefits and opportunities such as these.

Sincerely,
 
Brian K. Jones
Senior Vice President
Trust Department Manager