- Florida's population grew at the fastest rate of any state in 2022.
- Some Americans think moving to a state without an income tax is a way to get ahead financially.
Americans are moving to Florida for better weather and lower taxes.
While they can likely count on warm temperatures in the years ahead, not everyone will find themselves better off financially.
From July 2021 to July 2022, Florida's population grew to over 22 million people, according to new Census Bureau data. The 1.9% increase was the largest of any US state over this period.
Ample job opportunities — evidenced by one of the lowest unemployment rates in the nation — and the growth of remote work have made it possible for many Americans to move to the Sunshine State. Many have also been drawn there because it's one of nine states with no state income tax, which could potentially save them thousands of dollars per year.
When you look at the full picture, however, it's unclear if moving to Florida will prove to be a smart financial decision in the years to come. It all depends on where you work, which city you live in, and how much risk you're willing to take when it comes to homeownership, insurance, and healthcare.
Florida's home and rent costs are rising at some of the fastest rates in the US, and wages aren't keeping up
A 2019 Joblist study that compared wages to cost of living in the US ranked Florida last out of all 50 states in terms of affordability. That was before Americans flocked to the state over the last few years and caused home and rent prices to surge.
In 2022, five of the 20 most competitive US rental markets were in Florida, per RentCafe, with Miami-Dade county and Orlando at number one and three respectively. As of October, the cost of a one-bedroom apartment in the state had increased 36% since the start of the pandemic, per Apartment List, with only New Mexico and Idaho seeing a higher uptick. At roughly $1,420, only five states charged a higher monthly rent for the typical one-bedroom as of October.
For homebuyers, prices grew nearly 30% in Florida between the second quarter of 2021 and 2022, the most of any state. Its median home value, however, remains in the middle of the pack compared to the rest of the country.
"There's just no way for people living here to afford it — the salaries that they pay here don't add up to the cost of rent," Nicole Panesso, a millennial who lived in Florida her whole life before moving to Tennessee last year, previously told Insider.
Per the Census Bureau, the median household income in Florida was roughly $62,000 in 2021, below the median US household income of roughly $71,000. A September ADP report, however, found that Florida's wage growth had outpaced the national inflation rate — if not the state's cost of living — over the prior 12 months.
Insurance and healthcare are high, while overall taxes are low
Due in part to weather concerns, the average Florida resident pays more than almost anyone else in the country for property insurance and car insurance. The total cost of car ownership, which includes gas prices and repair costs, is slightly above the national average.
Additionally, a November Forbes analysis using data from the Kaiser Family Foundation found Florida to be the fourth most expensive state for healthcare in the country, adding that residents with employer-provided family health coverage pay over $7,000 annually, the highest premium of any state. The elevated health insurance rates are in part because Florida's employers generally don't cover as much of the healthcare costs as those in other states do.
Despite the lack of an income tax, Florida has higher sales and property taxes than some of its peers, and due to Florida law, some newcomers are seeing higher property tax increases than longstanding residents. The state's overall tax burden, however, remains among the lowest in the nation, and is among the reasons so many retirees move there.
What to consider before moving to Florida
While Florida might not be the single most affordable state in the country, contrary to the Joblist study's claim, it's likely not the least affordable either.
Among the most expensive states to live in, "Florida's not even in the top 10," University of Illinois economics professor David Albouy to The Associated Press last October.
University of Wisconsin economics professor Steven Deller agreed.
"Florida is above the national average, but it's not even close to the most expensive place to live," he said.
These comments were consistent with a 2022 CNBC analysis, which said Florida was the 27th best state in terms of cost of living.
Before moving to the Sunshine State, it's worth considering how Florida's cost of living compares to where you live now, and to your potential employment opportunities. In 2019, New York and Georgia saw the most residents move to Florida. Those from New York, which CNBC's analysis named the second most expensive state in terms of cost of living, might have benefitted from the move. However, those coming from Georgia — the 4th least expensive state — might have found themselves worse off financially.
Some people may ultimately choose to move to Florida, but keep their remote job in a higher paying state. They may avoid the most competitive rental markets like Miami-Dade and Orlando. Others might choose to forego a car purchase or look for areas of Florida with more moderate property taxes or insurance costs.
Indeed, the lack of an income tax is a major financial perk for Floridians. But it alone is not enough to justify a move to Florida — at least from a financial perspective.