New tax laws have millionaires heading south

Florida attracted more new residents and more new income in 2018 than any other state while New York was the biggest loser. CNBC's Robert Frank reports on why.

Blame it on brutal winters, high taxes or the New Jersey Turnpike: The Garden State is the last place where people want to be.

More than two-thirds of all New Jersey moves were outbound in 2019, according to an analysis from United Van Lines.

About a third of people leaving the state cited retirement as a primary reason for relocating, the moving service found.

United Van Lines analyzed 182,186 shipments last year through Dec. 18. New Jersey had a total of 4,059 shipments, of which 2,779 were sent out of state.

This is the second year in a row that the Garden State led the country in the percentage of departures.

“The economics in that state are a little bit uncertain, so we see people leaving,” said Eily Cummings, director of corporate communications at United Van Lines.

Illinois and New York round out the top three states experiencing the highest percentage of outbound traffic, United Van Lines found.

Leaving New Jersey can make good financial sense for some people, particularly if they’re thinking of retirement.

More than 230,000 residents left the state in 2018, according to Census data.

Consider that the Garden State has an effective property tax rate of 2.13%, and state and local property tax collections per capita are $3,127, according to the Tax Foundation.

That’s the top property tax rate and the per-capita property tax collection in the nation.

Taxes on individual income are also among the highest in the country: New Jersey has a top rate of 10.75%, according to the Tax Foundation.

It’s now harder to get a write-off on your federal return for these state and local levies, too.

The Tax Cuts and Jobs Act roughly doubled the standard deduction, such that it’s now $12,400 for singles and $24,800 for married couples filing jointly.

This means taxpayers are more likely to claim the standard deduction, instead of taking itemized deductions on federal returns.

Even those who itemize are less likely to claim steep state and local taxes, or SALT, they paid throughout the year. The tax overhaul capped so-called SALT deductions at $10,000.

Retirement-minded movers are heading for points west and south, United Van Lines found.

Idaho was the most popular destination in 2019, the company found. Nearly two-thirds of all moves in the Gem State were inbound, and more than a third of households coming in cited retirement as a primary reason.

Indeed, Idaho doesn’t tax Social Security income. It also has no estate taxes.

Meanwhile, Florida was the top destination for movers weighing retirement. Four out of 10 people who moved there cited their golden years as a chief driver of their decision, the mover found.

The Sunshine State boasts 0% tax rates on individual income, making it an attractive destination for retirees hoping to hold onto more of their money. It also has no estate or inheritance tax.

“This is the first time Florida has been in the top 10 inbound states in the last several years,” said Cummings, attributing its surge in popularity to northeastern residents looking for a change in pace.

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