Top Earners Flock to Florida
While Florida has been steadily gaining population for decades, the pace of in-migration has quickened in the last several years. And those newer arrivals are more than in the past from the higher income classes. Why?
In recent years, states such as California, New York, New Jersey, Illinois, Connecticut, etc. have been raising state and local taxes on both individuals and corporations. Additionally, the heavy regulatory environment in those tax-heavy states has become more difficult to traverse, forcing businesses to hire additional accountants. tax attorneys, and compliance specialists to navigate the labyrinth of more and more regulations – and this can make it very expensive to conduct business and maintain profit levels.
Florida offers the affluent classes a beneficial tax environment - low taxes make the state’s cost of living more attractive to wealthier folks (and middle-class families, as well).
Florida is one of nine states with no income tax, which makes it especially attractive to upper-income households from states like New York and New Jersey, which have top individual income tax rates of 10.9% and 10.75%, respectively. But it’s also attractive to middle-class families, who say their move to Florida has been influenced by the tax environment and the affordable cost of living. And this is unlikely to change, as the state’s constitution prohibits the state government from imposing an income tax. Levying any new taxes or dues of any magnitude requires a two-thirds supermajority of both the state House and Senate.
Another reason for the influx of wealthy residents is that there is no inheritance tax. Wealth can be passed on generationally, without the state taking a share.
Florida’s other taxes are also low. The sales tax is 6% (Localities can add to this, meaning the real average is closer to 7%.) This is still well below the national average.
The corporate tax is only 5.5% - also well below the national average. This corporate rate serves to drive companies to the Sunshine State. And more companies – more jobs and more economic growth. Indeed, it’s common sense that people move to where the jobs are, and the taxes are low.
As of 2024, Florida's gross state product (GSP) is approximately $1.647 trillion – the nation’s fourth largest economy.
At one time, years ago, Florida was seen as a great place to retire, but now it is much more than that. The economic policies put in place (enumerated above) and the state’s investment in quality education and new industries have combined to make Florida an economic powerhouse that attracts wealth and business.
According to smartAsset.com, the number of high-earning American households continues to grow. In 2021, 8.68 million tax returns indicated annual earnings exceeding $200,000 – up from 8.57 million returns just a year earlier. The migration of these high earning households can have significant effects on a state’s tax base and finances.