Changing State Residency: Tax Considerations When Moving to Florida

With the influx of new and younger residents migrating to the state, and the inflow of hedge funds and private equity firms in recent years, South Florida is on its way to becoming a financial hub — as it also strengthens its position as the gateway to Latin America.

While Florida was traditionally seen as a place to move after retirement, many
individuals and businesses are moving during their high earnings years to take advantage of the significant state income tax advantages. As shown below, these savings could be as much as 13.30% on taxable income — on top of lower property and estate taxes.

Comparison of key tax rates
Specifically, the information below will focus on key personal, estate and property tax rates in certain states compared with Florida.

 

Key tax considerations in Florida

  • No state or local income taxes. The introduction of such taxes would require amendments to the Constitution of the State of Florida.
  • No state estate tax. The state estate tax for family inheritance in the Northeast can be significant, compared with the lack of state estate tax in Florida.
  • Lower property tax. Home and property values are generally lower in Florida, which could result in a $2,000,000 assessed value being a bargain from a property tax perspective.

Ending tax residency in a state
In the current environment, we’re seeing additional scrutiny in high-tax states that have lost population, especially in the case of high-income leavers. It is critical to ensure that you properly end tax residency in the state you’re leaving.

There are several objective and subjective residency criteria that should be taken into account in light of your specific circumstances. In order to ensure a smooth move to another state, certain elements must be carefully considered:

  • Keeping a residence in the state you’re leaving
  • Time spent in the state you’re leaving
  • Voting rights
  • Driver’s license
  • Children’s school
  • Updating wills and trusts
  • Changes in lifestyle
  • Business environment: lower cost of operations, business taxes

 

ABOUT CAROPRESE & COMPANY

Caroprese & Company is a certified public accounting firm that provides innovative and strategic services to a diverse client base of individuals, families, small and medium size businesses, government entities, non-profits and multi-national corporations. Our dynamic professionals perform at a high intensity and are laser focused on providing excellence to our global clientele.

 

CONTACTING CAROPRESE & COMPANY

This publication is provided by Caroprese & Company as a service to its clients and colleagues.  The information and content included in this publication should not be construed as technical advice.  Questions regarding any matters discussed in this publication should be directed to Brandon Caroprese whose contact information is listed below:

Brandon Caroprese, CPA, MST
Tel. (973)-475-8090
Email. bcaroprese@caroprese.co

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