Wealthy property owners are fleeing high-tax states like New York, New Jersey, and Connecticut for the Sunshine State, which has no state income or estate tax
Wall Street Journal, by Beth DeCarbo
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Taxprof Blog, by Paul Caron
There’s a way for rich homeowners to potentially shave tens of thousands of dollars from their tax bills. They can get that same savings the next year and the following years as well. They can cut their taxes even further after they die. What’s the secret?
Moving to Florida, a state with no income tax or estate tax.
Plenty of millionaires and billionaires have been happy to ditch high-tax states like New York, New Jersey, Connecticut and California. President Donald Trump and Carl Icahn both announced in the fall that they’ll be making Florida their primary residence, joining other high-profile executives like financiers Barry Sternlicht, Eddie Lampert and Paul Tudor Jones.
A New York couple filing jointly with $5 million in taxable income would save $394,931 in state income taxes by moving to Florida, according to Taryn Goldstein, head of Florida’s state and local tax practice for BDO USA, an accounting firm that provides tax services and financial advice. If they had moved from Boston, they’d save $252,500; from Greenwich, Conn., they’d knock $342,700 off their tax bill.
Escaping state income taxes is a big part of the reason, but the federal Tax Cuts and Jobs Act of 2017 also plays a role. The law limits deductions on state and local taxes as well as the mortgage-interest deduction on federal tax returns. Factor in Florida’s lower cost of living relative to high-tax states, and the decision to move gets even easier.