For people who make $650,000, moving to Miami from New York can save nearly $200,000 a year thanks to lower taxes and a cheaper cost of living.
That’s according to a new study from financial information provider SmartAsset, which looked at how much people with six-figure salaries in New York, San Francisco and Chicago can save on taxes and other costs if they decamp to the South Florida city.
For people with a $650,000 salary who leave San Francisco for Miami, the savings is estimated at more than $150,000, the study found. It’s a different story in Chicago, where the savings was about $10,500, mostly because the cost of living in the Windy City is cheaper and that offsets the tax benefits in Florida.
Florida has long been a destination for retirees from the Northeast, who flocked south for the better weather and lower taxes. But the exodus from high-cost states including New York and California to the Sunshine State accelerated during the pandemic. That’s helped pushed housing prices higher, especially in Miami.
The real estate surge has cut into the economic benefits of moving to Florida, at least a bit, and billionaire tech investor Peter Thiel recently said relocating from Silicon Valley to Miami didn’t make sense.
SmartAsset looked at single tax filers earning between $150,000 and $650,000 annually in New York, San Francisco and Chicago and they took into account federal, state and local tax data. They used downtown areas of each city to account for housing expenses and cost of living.
Not surprisingly, the study found that the savings slide along with income, but people making $200,000 a year in San Francisco and New York would still see significant benefits from the Miami move.
Manhattan and Miami have the most drastic differences in cost of living, according to the report. Costs are 138% higher than the US average in Manhattan, but only 23% higher than the average in Miami.
That difference is heavily influenced by Florida’s lack of state income taxes: While people making $650,000 a year face an effective tax rate of 45% in New York, that drops to 35% in Miami.
The effective tax rate for people in San Francisco making $650,000 a year is 46%, with the city costing 83% more than the US average.
In Chicago, meanwhile, the cost of living is just 17% more than the national average and the effective tax rate on people making $650,000 a year is about 40%, according to the study.
— With assistance by Amanda Albright