Best States for Residency/Domicile for Full Time Travelers
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Benefits of changing your residency
When you think of a residence, you probably think of the place you live. A house or apartment, maybe which city you live in, or even which state.
So what are full-time travelers supposed to do for residency?
That's where things start to get a bit more complicated. Let me introduce you to a couple other important terms so this makes more sense. I know, super exciting.
First, let me define residence.
According to the Oxford dictionary, a residence is the place in which a person lives. This can be a house, apartment, trailer etc. Some people have multiple residences. Maybe a house up North for the summer and a house down South for “snowbirding” in the winter. Or they live in an RV for 6 months then return to their house for the remainder of the year. It is completely legal to have multiple residences.
However, you can only have one domicile. That’s probably a new word for you. I definitely didn’t hear of this word until I started figuring all this out on my own.
A domicile is your legal address and where you pay taxes, but you don’t necessarily have to physically live there.
This is how travelers can have RV residency. They reside in their RV, but pay taxes to and have an address or mailbox in one specific state.
When filling out paperwork, you’ll find that these two terms (residence and domicile) are interchangeable and most people simply refer to this process as gaining residency.
While Matthew and I were doing all our paperwork, everything we came across was for gaining residency. We didn’t come across anything that was specific for claiming domicile and no problems arose from us claiming residency over domicile.
Why does any of this choosing a new state even matter?
Benefits of Changing Your State Residency
For full time travelers, life is a lot different than it is for non-travelers. Our house is always moving and we are not physically tied to our domicile. There are a lot of benefits to being picky about which state you choose to claim you domicile/residency in.
First off, lower taxes. Matthew and I are from Washington state, so we're used to incredibly high sales taxes and endless other taxes that we don't even know what they're for. So finding another state that has little to none in the way of taxes is going to make our life so much easier and cheaper.
Another reason that you should be picky is vehicle registration. Don’t even get me started on how expensive car tabs are in Washington. It is absolutely unbelievable. Turns out that some states offer reasonable rates for registration, car tabs, and insurance. Sounds good to me!
And since you’re going to be gaining residency in a different state (unless you already are residents of an ideal state for this), you’re going to want to find one that makes this whole process easy for you. And you’ll find that some states do this really well.
Some states offer mail forwarding services and make the process simple for full-time travelers. This type of service makes it so you can receive your mail from anywhere in the country. Not all states offer this and some don’t even allow it. If you are expecting mail on the road, then be sure to choose a state that does offer this.
There are three states that are most common for this. Today, I want to lay out some information on these different states, walk you through the pros and cons of each one, and of course share which state we chose.
The first state that I’d like to talk about is the Lone Star State.
-6.25% sales tax on vehicle purchases
-no state income tax
-costs $51.75 for vehicle registration
-drivers licenses are good for 8 years with a $25 renewal fee
-good health insurance options for travelers
-home of the Escapees RV Club (15,000 plus members)
-better chances of jury duty exemption if part of the Escapees RV Club group
-can renew drivers license by mail
-below the top 12 states for dynasty trust laws
-annual vehicle inspection required (this means trekking back to Texas every year)
-could take up to a full year of living in Texas to qualify
-you will need a special driver license if your RV or bus is past a certain weight limit
Overall, I would say Texas is a good option for you if you are willing to live in Texas for a year before you hit the road. For RVers, being a part of the Escapee RV Club is a great option and community to connect with. However, with stricter laws regarding your vehicles (including your bus or RV), you’ll have to take extra precautions and make annual return trips back to Texas.
Next up to discuss is the Sunshine State.
-ranked #12 in the nation for dynasty trust laws
-6% sales tax on vehicle purchases
-could take as little as 183 days of living in Florida to qualify for residency/domicile
-drivers licenses are good for 8 years
-more health insurance options available
-a regular driver's license will cover your RV or bus regardless of weight
-discounts for some locations (such as state parks) for residents
-needs a vehicle inspection for any vehicles purchases outside of Florida
-could take up to a full year of living in Florida to qualify for residency/domicile
-$50 renewal fee for drivers licence
-little to no options for license plates
-not exempt from jury duty
-charges a personal property tax
Aside from the fact that you have to live in Florida for at least 183 days, Florida is a great option and comes with a lot of perks. Of the three states I am highlighting today, Florida has the longest lasting driver’s licenses. They also offer discounts to residents and have a relatively low sales tax.
Lastly, let’s look at the Home of Mount Rushmore.
-No state income tax
-No pension tax
-Low vehicle license fees
-4% excise tax on vehicle purchases
-Low vehicle insurance rates
-No personal Property tax (applies to household items, furniture, cars, and your RV or bus)
-No Intangible tax on investments
-No state income tax on social security
-Best Dynasty trust laws in the nation
-no needed vehicle inspections
-only need one night stay
-have multiple companies that help with the process
-limited health care options
-drivers licences need to be renewed after 5 years in person
-only two license plate options
-not exempt from jury duty
South Dakota has the shortest required stay time of all the states by far. Only one night! They have very low taxes, vehicle registration costs, and have great systems to help make the process easier. However, they have fewer options for health care if that is a concern for you.
Other States that did not make the top three List
There are four other states that some full-time travelers will consider since they don’t have a state income tax. However, they have some serious down sides so they did not make my top three list. If you happen to already have a physical residence in one of these states, then keeping that state as your residency could work for you. You can eliminate the process of having to transfer everything to a different state. If you don't have a physical location in one of these states, then you will probably want to stick to Texas, Florida, or South Dakota.
- Wyoming: They do not allow mail forwarding services. You also need to have a physical location in order to vote, register a vehicle, insure your vehicle, and get your driver's license.
- Nevada: You need a physical address to register to vote.
- Washington: You need to have a physical address for vehicle registration, and sales tax is high in relation to other states.
- Alaska: Since this state has limited accessibility, mail forwarding could be less reliable and traveling there for any reason related to your residency can be difficult. You also have to live in Alaska for a full year to qualify for residency along with other strict measures.
Tennessee and New Hampshire have an income tax that only applies to dividends and interest. Other than that, they don’t have a regular income tax.
What We Chose and Why
The state we decided to get our residency in is South Dakota. Since we are looking to start our traveling as soon as possible, we needed to get our residency as fast as possible. And considering South Dakota only needs a one night stay, it was the obvious answer for us. It is crazy to think that the next best option requires you to live there for over half a year. One night sounds pretty good to me. The taxes are less than half that of Washington’s taxes like we are used to and getting insurance for our skoolie is way cheaper as well.
To top things off, the process was incredibly easy because of one business in particular.
Stay tuned to see what that business was and what the process of becoming a South Dakota state resident looks like! In my next blog, I’ll walk you through all the steps of gaining your residency along with the tips-and-tricks we learned along the way.