Approximately 7.5 million people move between states every year, relocating for jobs, to be closer to family, to continue their education, or just because they’re looking for a change.1 It can be an exciting and hectic process as you pack up everything you own for a new life somewhere else, and taxes are likely the last thing on your mind. However, it’s important to consider the tax implications when you relocate, especially for mid-career families and those nearing retirement. State tax laws and regulations can significantly impact your financial strategy.
That’s because state taxes vary enormously. Consider that California taxes income at a top rate of 13.3%, while eight states (Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming) have no state income tax.2 Property taxes on a median-priced home in Hawaii will run $1,912 a year, while in New Jersey homeowners would pay more than four times more, or $8,928, in annual property taxes on a mid-priced home.3 Residents in Tennessee pay a whopping 9.55% sales tax on most purchases, while people who live in New Hampshire pay no sales tax.4 To further complicate the picture, many municipalities levy their own taxes.
The bottom line: moving from a high-tax state to a low-tax one, or vice versa, can have a real impact on your after-tax income, purchasing power, and long-term financial security.
Here are 10 key tax considerations to keep in mind when you’re moving between states. To illustrate each, we’ll use an example of moving between low-tax Florida to a higher tax New York, and vice versa.
Before you move, check the income tax rates in your new state.
If you’re moving from New York state to Florida, you could go from paying between 4% and 10.9% in state income tax (depending on your income) to 0%, since Florida has no income tax.5 When moving out of New York City, you’ll also eliminate a municipal income tax of between 3% and 4%.6
If you’re making the opposite move, however, you’ll be paying significantly more in taxes.
And remember, it’s not just income tax. You’ll also have to pay more taxes on dividends and capital gains. Ask your financial professional about timing any sales of appreciated stocks or bonds so you realize gains in the lower tax area.
Sales tax rates vary across states. New York City residents pay a combined state, city, and municipal sales tax of 8.875% on most purchases (food and clothing purchases under $110 are excluded). Florida’s state sales tax is 6%, with many counties and municipalities adding a surcharge of 0.25% to 0.5%.7
A higher sales tax will make almost everything you buy more expensive, so incorporate those increased costs into your budget. You may also want to time major purchases like a car or appliances so that they occur when you live in the lower tax state.
Differences in property taxes can also dramatically affect your financial picture, especially since states with higher property taxes like New York, New Jersey, and California tend to have more expensive housing as well. Property taxes also vary from location to location within states, so look at rates specific to the county or town you’re moving to. In Florida, Miami County has property tax rates of about 2% of home value, while Sarasota County’s rate is half that at about 1%.8
Keep in mind tax reform has significantly reduced your ability to deduct property taxes, as well as state and local taxes. As an individual, your deduction is capped at $10,000 ($5,000 if married filing separately)9, and you have to itemize in order to take it.
Not all states levy their own estate taxes, so you may want to factor that into your financial strategy, especially if you’ve accumulated substantial wealth. New York levies a tax of up to 16% on estates valued at more than $6.58 million. In contrast, Florida has no estate tax.10
If you're retired or planning retirement, you’ll need to understand how your new state taxes retirement income. This is crucial when moving from a state like Florida, which doesn't tax pensions, to one that does. New York taxes most pension income at its regular income tax rates of up to 10.9%, though it exempts the first $20,000 in income, while Florida lets you keep the whole amount.11
Good news, though. Only 10 states tax social security benefits (Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, and Utah), and the taxation occurs primarily on higher incomes.
Find out about the tax credits and deductions unique to your new home state. These may include credits for education expenses or energy-efficient home improvements.
You might need to update your withholding or change your residency status in order to file in your new state. Check the state’s tax website for details about what they require.
If you work at home, you will most likely have to pay taxes in the state where you reside, especially if you are self-employed. (If you are classified as an employee, you may have to pay taxes in the state where the company does business, even if you do your work somewhere else.)
In addition, if you travel to another state for work, you may have to pay taxes in that state for the work you do there, depending on the length of your stay. If you work in New York for more than 14 days in any given year, you are required to file a tax return there. Residency rules can be quite complicated, so contact your tax professional if you have questions.
Since the COVID-19 pandemic, the number of people working from home in one state for a company that’s located in another state has skyrocketed. In 2021, the Census Bureau counted 4.5 million people who worked outside their state of residence.12 To make the situation even more complicated, some people work at home in one state some days and in the office in another on others, and allocating their income between states would require very complex recordkeeping.
Some states have eased this reporting burden with reciprocity agreements that allow people to continue paying taxes in one state even though they work all or part of the time in another. If you’re moving and your state has one of these agreements in place, it may allow you to pay taxes in the lower tax-rate state.
Tax reciprocity agreements can be either bilateral or unilateral. Bilateral agreements —where two states mutually agree to exempt certain income, usually wages—from taxation in the work state are the most common. Some states also have unilateral reciprocity provisions, which extend the same tax treatment to residents of any state that provides similar relief to their own residents. Indiana, Minnesota, and Wisconsin are commonly cited examples of states that offer this type of reciprocal treatment.12
The timing of your move can affect tax liabilities, especially if you're considered a part-year resident in both states. As a result, if you’re expecting a large influx of income, such as a year-end bonus or a large capital gain, you may want to schedule your move so that it happens in the lower tax location. If you move from New York to Florida in September, all the capital gains and dividend payments you receive on your investments in December can be reported on your Florida tax return, allowing you to avoid New York taxes.
Moving to a new state is a lot of work. You probably don’t want to think about taxes along with everything else you’re responsible for managing during a relocation. But by understanding the differences between tax laws in your old state and your new one, you can get a better handle on your financial situation, and you might even save some money. Before you pull up stakes, schedule a meeting with your tax professional. They can guide you on what to expect and how to fine-tune your tax strategy for the new location.
1 “ Which States Had the Highest Shares of Newcomers?,” United States Census Bureau – April 29, 2025
2 “States with the lowest Taxes and the highest taxes,” Intuit TurboTax
3 “Property taxes by state 2024: ranked lowest to highest,” Belong
4 “States with the lowest Taxes and the highest taxes,” Intuit TurboTax
5 Ibid
6 “NYC Blended Tax Rates,” CCH Answer Connect
7 “States with the lowest Taxes and the highest taxes,” Intuit TurboTax
8 Ibid
9 “Topic No. 503, Deductible Taxes,” Internal Revenue Service, January 5, 2026
10 “States with the lowest Taxes and the highest taxes,” Intuit TurboTax
11 “States with the lowest Taxes and the highest taxes,” Intuit TurboTax
12 State Tax Reciprocity Chart: Which States Have Agreements? - LegalClarity – January 29, 2026
This article is provided for general informational purposes only. Neither New York Life Insurance Company, nor its agents, provides tax, legal, or accounting advice. Please consult your own tax, legal, or accounting professional before making any decisions.
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