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Tax-free States
American Middle Class

Rich Americans Continue Moving to Tax-free States

The estimated reading time for this post is 346 seconds

The American tax system is a complex federal, state, and local tax web. They can significantly burden wealthy Americans, so many choose to move to tax-free states to reduce their tax liabilities. Rich Americans continue moving to Florida, Texas, Nevada, and other tax-free states four years after the Tax Cuts and Jobs Act capped state and local taxes (SALT).

Depending on the high-earners primary residence, the state and local taxes (SALT) they pay can significantly impact their overall tax burden. For example, According to data from the Internal Revenue Service (IRS), taxpayers earning more than $1 million per year in New York, New Jersey, and Connecticut saw an average tax increase of $121,000 due to the SALT deduction cap.  

The migration of wealthy Americans from high-tax states to tax-free states is still trending. This phenomenon is mainly due to the State and Local Tax (SALT) deductions.   This article will explore the reasons behind this trend and provide specific examples to illustrate our point.


The Tax Cuts and Jobs Act of 2017 (TCJA), also known as the Trump Tax Cuts, implemented a $10,000 cap on SALT deductions, which means that taxpayers can only deduct up to $10,000 in state and local income, sales, and property taxes from their federal income tax. 

This change disproportionately affects residents of high-tax states like California, New York, and New Jersey, where state and local taxes can easily exceed $10,000 for many households.

As a result, many wealthy Americans are considering relocating to states with little to no income tax. These states include Texas, Florida, Nevada, and Wyoming. In addition to lower tax burdens, these states often offer other incentives such as warm weather, access to beaches, and lower cost of living.

Reasons for Moving to Tax-Free States

There are several reasons why wealthy Americans are moving to tax-free states. Some of the main reasons include:

  1. Lower Taxes: The primary reason for moving to tax-free states is to lower the tax burden. Wealthy Americans living in high-tax states can save significant money by moving to states with little income tax. For example, California’s top marginal income tax rate is 13.3%, while Texas has no state income tax.
  2. Better Quality of Life: Many tax-free states offer a better quality of life, including warm weather, access to beaches, and a lower cost of living. For example, in Florida, retirees can enjoy warm weather, beautiful beaches, and lower housing costs compared to states like California and New York.
  3. Business Friendly: Tax-free states are often business-friendly, with lower regulations and lower costs of doing business. This can attract wealthy entrepreneurs and business owners who want to maximize profits.
  4. Estate Planning: Wealthy Americans concerned about estate planning can benefit from moving to tax-free states. Some states, like Florida, have no estate tax, while others, like Wyoming, have low estate taxes and favorable trust laws.

Examples of Uber-rich Americans Moving to Tax-Free States

There are many examples of wealthy Americans moving to tax-free states. Here are a few notable examples:

  1. Elon Musk: Elon Musk, the billionaire CEO of Tesla and SpaceX, moved from California to Texas in 2020. Musk cited California’s high taxes and regulations as reasons for the move. In addition to lower taxes, Musk also praised Texas for its business-friendly environment.
  2. Carl Icahn: Carl Icahn, the billionaire investor, moved from New York to Florida in 2020. Icahn cited Florida’s lack of state income tax as a significant factor in his decision. In addition to lower taxes, Icahn praised Florida’s warm weather and high quality of life.
  3. Paul Tudor Jones: Paul Tudor Jones, the billionaire hedge fund manager, moved from New York to Florida in 2020. Jones cited Florida’s lack of state income tax as a significant factor in his decision. In addition to lower taxes, Jones also praised Florida’s business-friendly environment.
  4. David Tepper: The billionaire hedge fund manager, David Tepper, moved from New Jersey to Florida in 2015. Tepper cited New Jersey’s high taxes as a significant factor in his decision. In addition to lower taxes, Tepper praised Florida’s business-friendly environment and quality of life.
  5. Thomas Peterffy: Thomas Peterffy, the billionaire founder of Interactive Brokers, moved from Connecticut to Florida in 2019. Peterffy cited Connecticut’s high taxes and business regulations as reasons for the move. In addition to lower taxes, Peterffy praised Florida’s warm weather and beach access.

These are just a few examples of wealthy Americans who have moved to tax-free states in recent years. While different factors may drive each individual’s decision to move, the common thread is the desire to lower the tax burden and improve quality of life.

The Mass Affluent Is Also Leaving

Following the footsteps of the uber-rich, the upper-middle class and the mass affluent are also leaving high-tax states.

Florida, Texas, and Nevada are some of the most popular tax-free states for wealthy Americans. In fact, between 2018 and 2019, Florida gained a net influx of 33,400 millionaires, while Texas gained 31,300. This trend is expected to continue in the coming years as more high earners seek to reduce their tax burden.

The migration of wealthy Americans from high-tax states to tax-free states has also impacted the real estate market. 

In Florida, for example, the luxury real estate market has seen a significant increase in demand, with many wealthy Americans purchasing multi-million-dollar homes in places like Miami,  Palm Beach, and West Palm Beach.

Impact on High-Tax States

The trend of wealthy Americans moving to tax-free states has significant implications for high-tax states. When wealthy individuals move to tax-free states, they take their tax dollars, leaving high-tax states with a smaller tax base. This can lead to budget shortfalls and a need to raise taxes on remaining residents to make up for the lost revenue.

In addition to the loss of tax revenue, high-tax states may also experience a brain drain as talented individuals and entrepreneurs move to tax-free states. This can impact the state’s economy and innovation potential, as high-tax states may struggle to attract and retain top talent.

High-tax states may also see a decline in property values as wealthy individuals move out of state. This can impact the state’s real estate market and decrease property tax revenue.


The trend of wealthy Americans moving to tax-free states will likely continue in the coming years. While different factors may drive each individual’s decision to move, the desire to lower the tax burden and improve quality of life is a common thread. 

High-tax states must adapt to this trend by attracting and retaining top talent while addressing budget shortfalls and declining property values.

It remains to be seen how this trend will impact the overall economy of the United States. While tax-free states may witness a boost in their economies, high-tax states may struggle to maintain their tax base and attract top talent. 

As the country continues to navigate these changes, it will be essential to consider the long-term implications of this trend on the overall economic landscape.

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