There’s new evidence to help show that many Northerners are packing their belongings -- and bank accounts -- and heading to Florida and other zero income-tax states.
Newly released IRS data for 2018 shows Florida -- which has no personal income tax -- had a 3 percent increase over 2017 in the migration of net personal income -- the dollars coming into the county versus what’s going out.
Americans are taking a closer look at how much they’re paying in taxes and moving to a lower-tax state like Florida can make a big difference come Tax Day.
“We’ve definitely seen it: Waves of people coming in,” said Tim Devlin, a partner and CPA for Daszkal Bolton accounting firm in Boca Raton. “A lot of it is state-income-tax driven."
Business owners also are driving moves to Florida, Devlin said. Companies can move their management or headquarters to Florida while still operating in other states.
“Someone who runs warehouses around the country could still have a corporate headquarters here and allocate the profit to Florida, which has a lower tax rate,” he said.
In South Florida, the largest increase in new personal income has been in Palm Beach County, where President Donald J. Trump, a lifelong New Yorker, recently applied for the Mar-a-Lago resort on Palm Beach to be his permanent residence. He’s not the only billionaire to do so.
High taxes are one reason wealthy New Yorkers are moving, experts say. New York State’s top tax rate is nearly 9 percent and New York City’s top rate is nearly 4 percent, for single taxpayers with income above $1 million.
The IRS data shows that New York lost $9.6 billion in net personal income that migrated elsewhere in 2018.
Villamil said the federal Tax Reform Act of 2018 “increased our competitive advantage” and has boosted Florida’s economy. But it’s not just millionaires and billionaires who want to reduce their taxes, he said. Those in middle-income tax brackets also are concerned about their tax bite, he said.
That makes lower-tax Florida even more attractive than it already is for its warm weather and beaches.
After the federal tax changes took effect in 2018, new IRS figures are the first data showing how it has affected states and counties.
“Every hour of every day, we have over $1 million of income moving to Florida,” said Mark Wilson, president of the Florida Chamber of Commerce, on Thursday in presenting economist Jerry Parrish’s 2020 forecast. Parrish says Florida will continue adding to its population, as much as 900 people a day.
“As New York, Illinois, New Jersey and California are raising taxes, they’re losing populations ... and people are moving to Florida,” Wilson said.
As Florida residents, why should we care about having greater personal income numbers?
“It is a major positive, increasing the purchasing power of the region,” said J. Antonio Villamil, economist and founder of The Washington Economics Group in Coral Gables. Consumer spending has “a ripple effect throughout the economy. ... It means you have a vibrant consumer market and market for real estate and businesses that come here.”
And that attracts businesses and creates jobs, he says.
Florida saw personal income gains of nearly $16 billion from new residents in 2018, a 3 percent increase from $15.5 billion in 2017. Many were six-figure-plus earners, with 25 percent reporting income of $100,000 to about $150,000, and 36 percent with income of $150,000 or more, according to the IRS.
The state added the largest number of new residents from New York, Georgia, Texas, New Jersey, California, Pennsylvania, Virginia and Illinois, according to IRS data on personal exemptions claimed. Florida gained more than $4 billion in net personal income from former New York residents alone in 2018.
Thousands of new residents also are coming from counties in New York, New Jersey, Pennsylvania, Massachusetts, Connecticut, Virginia, Illinois, California and Georgia -- among the states with the highest income tax rates in the nation.
They’re coming in large part from wealthy counties, such as hedge-fund capital Fairfield County, Conn.; and Manhattan counties including New York and Queens, as well as Westchester and Nassau in New York state.
Top destination for movers
Moving company data may be another indication of the popularity of Florida for those relocating.
Florida was No. 1 on do-it-yourself mover U-Haul’s top growth states of 2019, moving up from No. 2 in 2018.
Allied Van Lines said Florida has been its top destination for consumers moving for six years.
Florida was new to United Van Lines’ list of top destinations for 2018. United said 58 percent percent of its moves to Florida were inbound, compared with 42 percent outbound.
More residents flocked to Florida for retirement, nearly 41 percent, and for a lifestyle change, 23 percent, than any other state, United says. Another 29 percent moved to Florida for a job, according to the study.
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