Trump's decision to become a Florida resident could be a huge tax-saver for him and his family
- After the New York Times reported that President Donald Trump had switched his residency from Florida to New York, he said the Empire State's taxes factored into his decision.
- Setting aside the claims of political victimization, Trump likely stands to reap benefits from Florida's lenient tax climate for two key reasons.
- There are no separate state income or inheritance taxes, the latter being used to tax the transfer of wealth and property of the deceased to designated heirs.
- The Tax Foundation, a nonpartisan research organization, has ranked Florida's overall tax burden as among the lowest in the nation.
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After the New York Times reported that President Donald Trump had switched his residency from Florida to New York, he said that the Empire State's taxes factored into his decision.
"I cherish New York, and the people of New York, and always will, but unfortunately, despite the fact that I pay millions of dollars in city, state and local taxes each year, I have been treated very badly by the political leaders of both the city and state," Trump said.
Setting aside the claims of political victimization, Trump likely stands to reap benefits from Florida's lenient tax climate for two key reasons: There are no separate state income or estate taxes, the latter being used to tax the transfer of wealth and property of the deceased to designated heirs.
The Tax Foundation, a nonpartisan research organization, has ranked Florida's overall tax burden as among the lowest in the nation.
"It's an absolute no brainer," tax attorney Joseph Callahan told USA Today of Trump's move. "It's an excellent as a tax saving decision."
That becomes clearer when you compare some of the tax rates between Florida and New York:
- State tax rates: 4% to 8.2% income tax rate in New York vs. none in Florida
- Estate taxes: 3% to 16% in New York vs. none in Florida
According to the Gibbs Law Office, a Florida-based estate planning firm, a big draw for older residents in particular is the state tax landscape.
"When combined with the warm climate, the friendly tax policy that allows for no income taxes and no Florida estate and inheritance taxes makes Florida an immensely popular retirement destination," it says.
Last year, Fox Business reported that a couple or individual making $650,000 a year that moves from New York to Florida could save as much as $69,719 per year on their tax bills. This highlights some of the financial windfalls awaiting new residents moving from states with higher tax burdens.
Florida has experienced an influx of hundreds of thousands of new residents in recent years. Data from the Census Bureau shows 566,476 people moved into the Sunshine State last year, the highest inflow of any state. And New York contributed the most to that figure.
Florida is one of seven states that doesn't levy a separate income tax, which ranges from a low 4.5% rate in Arizona to a high of 13.3% in California. In New York, the income tax rate stands at 8.8%. The state income tax is separate from the federal income taxes Americans pay every year, levied to cover a wide range of government programs.
Still, the extent to which Trump would save on his tax bill remains unclear, given he's never released his tax returns.
His family would also garner financial rewards from the Florida lack of estate taxes as well. That means upon the time of his death, Trump's family won't have to pay a tax on the property they inherit in Florida but would still be on the hook to the federal government. The 40% federal rate becomes applicable for estates valued at $22.8 million for a married couple.
For estates larger than $10.1 million, New York imposes a top estate tax rate of 16% as referenced above.