One Percenters across the nation have been moving to Florida to take advantage of the lower taxes on the Sunshine State. For those who are unfamiliar, Florida doesn’t have a state income tax on business or personal earnings.
SmartAsset, a financial technology firm, did a study to determine exactly how much money higher wage earners would save if they moved south. I get a lot of questions about this subject, so I’d like to present the findings.
New Yorkers, earning $650K annually would save almost $200K per year if they moved to Miami. Their cost of living would decrease 115% with the move
San Francisican’s with the same annual earnings would save 60%. That would turn into about another $150K per year.
But Chicagoans would only save $10,500 annually. Why so little? If we’d save 5% in income taxes alone, why wouldn’t we save a lot more?
It’s because the cost of living in Miami is higher than here.
South Florida has seen significant problems in their cost of living in the past decade. The weather problems they’ve had with hurricanes have tripled most insurance and HOA fees.
Those costs are fundamental building block expenses that affect everything you buy in Miami from the cost of a haircut to a cup of coffee. The question of whether or not a One Percenter should move takes on a different complexion when you get past the income tax questions and look at the overall cost of living.
Wherever you go, there are going to be taxes at the Federal, State, County, and Municipal Level. Maintaining those governments takes a certain amount of money, no matter what anyone does or what laws are in place.
They have to keep the light bill paid and pick up the garbage among many other things. My point is that whether they get you with a higher property tax, or other fees like license plate stickers, they’re going to get that money somewhere.
When you also factor in the general costs like insurance and HOA fees, that move might not be terribly attractive other than thinking about the weather. As a matter of fact, a couple of my clients who made permanent moves to Florida are now in the process moving somewhere else.
Let me leave you with this.
Republican and Democratic negotiators are still trying to fine tune their demands to find suitable legislation that would actually pass and be signed into law before the new year. But the prospect of a near term Congressional Taxation Package passing either of the Houses is somewhere between slim and nil.
Members of The House Ways and Means Committee held a meeting to consider tax code changes for family and worker related issues that would promote economic growth. Also leaders in both chambers released discussion drafts addressing technical and clerical changes to last year’s SECURE Act 2.0.
But all of this jockeying and talk doesn’t look like it’s going anywhere. Keep your eyes peeled, but the tax laws we currently have in place are probably what we’ll have for the 2023 filing season.
I’ll remind all of my clients to get their work into us as soon as possible. It’s difficult if not impossible for me to do tax planning without a nailed down set of November Financials
If you are a current client, and would like to come into the office for tax planning, we’d love to have you. Also, if you’re one of my readers and plan on being in the neighborhood, we’d love for you to stop by so that we can meet you and get to know your business. We might even be able to do some complimentary tax planning.
As is our custom during the Holidays, I’ll have a bottle of homemade wine waiting for you. Just let us know what date and time will work into your calendar. We’d love to receive you.
We’re all going to get through this. Let’s get through it together.
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