Sunshine, Strategy, and State Taxes

by Jozef Maston

Some U.S. states offer remarkable tax advantages — and Florida continues to be one of the most attractive for high earners, retirees, and entrepreneurs alike. With no state income tax, residents here keep more of what they earn, and enjoy a lifestyle that’s hard to beat. Texas offers similar benefits, and places like Alaska, Wyoming, and Tennessee also boast some of the lowest overall tax burdens in the country — often less than half of what’s paid in higher-tax states like New York, New Jersey, Connecticut, or California.

At a recent NYRAC event in New York City, the CEOs of two of the largest brokerages made an interesting point. Despite leading legacy firms based in NYC, both are now proud Florida residents — and they shared this openly with a room full of New York agents who shoulder the city’s heavy tax load. While the effective local tax rate in Florida is around 9.1%, it reaches nearly 16% in New York (2022).

No state is truly “tax free.” All impose sales taxes, property taxes, fees, tolls, etc. The biggest differences lie in how income, capital gains, and estates are taxed — and those differences often have the greatest impact on higher earners. Many affluent individuals have the flexibility to live where they choose, earning income from elsewhere while optimizing their tax strategy. That’s simply the world we live in now.

New York’s higher tax rates are tied to its larger investments in infrastructure, education, healthcare, and long-term government obligations — not to mention high operating costs and public-sector pensions. But as more taxpayers — especially wealthier ones — leave, those who remain are left with a heavier lift, or face service cuts. That’s a challenge.