Californians Looking For Florida Homes Due To New Tax Law

By now you probably know that the 2017 Tax Act significantly limited the deduction of state and local taxes against your federal income.  For most Americans — particularly ones in low-tax states or states with no income taxes — these new rules will have little effect on your life.  For high-income individuals in high-tax states, they will suffer dearly from this policy.  There has been speculation of how many will relocate.  How bad will the impact be to the states they are leaving?  That is another question.

We do not know how many people will leave states like New York, Connecticut or California.  We do know that the states they will potentially leave will be severely impacted because the high-earning taxpayers pay a significantly high percentage of the income taxes in these states.

This question hit me square on when I had a chance to interact with a hedge fund operator in a semi-business occasion.  He found out I was a CPA specializing in taxes and he immediately launched into a discussion about how the tax law was going to hit him. He is getting hit two ways because his federal income is going to be taxed at higher tax rates due to the new carried interest rules.  Also, the voluminous taxes he pays the state of California will no longer be deductible. He told me everyone he knew spent their Christmas break looking for houses in Florida – a no income tax state. …

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