Recent Jump in Residents Moving from New England to Florida Following Tax Reform
November 8, 2019
Since the Trump administration’s introduction of the Tax Cuts and Jobs Act in 2017, we have been regularly posting about the new legislation and the impact the tax reform has had on American taxpayers.
This week we continue our blog series with a look at how the new tax law may have affected moving trends, particularly of residents from the northeastern states where there are higher taxes, to states such as Florida, which has no state income tax and has lower property taxes.
New Census Data
According to the Associated Press, traditionally, New York State has been the source of many “new Floridians”.
However, new data released by the U.S. Census Bureau last week reveals that in the first few months of 2018, immediately following the new federal tax law being put into effect, there was a flood of residents moving from Connecticut and Massachusetts to Florida, a small year-to-year increase in resident moving from New Jersey and Pennsylvania to Florida, but no increase in residents moving from New York to Florida.
Differences in Taxes Across States
New York, Connecticut, and New Jersey are three of the states with the country’s highest tax rates, both in terms of state tax as well as local property tax. Conversely, Florida has much lower property taxes, and no state income tax.
Critically, the Tax Cuts and Jobs Act introduced a $10,000 limit on state and local tax deductions as well as a $750,000 limit on the amount of mortgage debt which can be written off, which may have resulted in taxpayers looking to move to a jurisdiction with lower tax rates in order to limit their tax burden.
In New York State, income tax rates range from 4% to 8.82%, depending on a taxpayers income bracket. In addition, New York City is one of the few cities in the country which has a separate personal income tax rate and any income-earning individual, estate, and/or trust that resides or is located in New York City must pay this additional tax.
Connecticut has seven marginal tax brackets, ranging from3% to 6.99%, making it the state with second highest tax burden, right behind New York State.
In New Jersey, income tax rates range from 1.4% to 8.97%, depending on a taxpayers income tax bracket.
Demographic Changes a Result of Tax Reform?
It remains unclear whether the recent migration changes are a direct result of the tax reform, but the changes are notable.
Another explanation could be the increased number of Boomers who are reaching retirement age and seeking to escape from cold New England winters to enjoy the sunshine. Experts say that the data does reflect that the largest portion of individuals who have been making the move from New York, Connecticut and New Jersey are 65 and up.
How Can Feigenbaum Law Help?
We will continue to follow the various impacts that the Tax Cuts and Jobs Act has had and will provide updates as they become available. In the interim, if you have questions about personal tax planning or corporate tax planning contact Mark Feigenbaum.
With professional accounting designations from both Canada and the U.S., coupled with being admitted to the bar in jurisdictions on both sides of the border, Mark Feigenbaum and his team are uniquely positioned to provide tax advice to clients on both sides of the border.
Due to our vast knowledge of both U.S. and Canadian tax systems, professionals in both countries, such as lawyers, accountants, financial planners, agents, and business managers, frequently refer complicated tax matters to our firm. We have developed a reputation for finding creative solutions to seemingly unsolvable problems and for the exceptional quality of our work.
We can help you reduce your overall tax burden, shield your business from liabilities, and remain compliant and avoid pitfalls that result from improper tax planning. Contact us at firstname.lastname@example.org, or call us at (905) 695-1269 or toll free at (877) 275-4792 to learn more about how we can help.