Here’s how much high earners from LA and Silicon Valley can save by swapping California for Miami
While luxurious coastal living always commands a premium, wealthy Californians moving to Miami could effectively give themselves a five-figure pay raise by trading the Golden State’s top income tax rate for Florida’s 0% tax climate.
Kevin Rutoisa luxury real estate advisor Rutois International Real Estate specializing in executive clients looking to locate in Miami, recently crunched the numbers and discovered that a Californian making $500,000 could earn more than $51,000 in annual tax savings by moving from Los Angeles or San Francisco to Magic City.
Rutois’ calculation, made over a weekend LinkedIn messageassumes a minimum tax rate of 10.3% for a salary of $500,000 per year, but this can be as high as 11.3%.
In fact, California has the highest income tax rate in the country, with an upper margin of 13.3% reserved for the highest earners.
On the other hand, Florida is one of only nine states that do not impose an income tax on wages. The others are Alaska, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming.
For affluent Californians with flexible work arrangements, the financial case for Miami becomes undeniable.
“Income tax is a huge burden in California and in Florida the tax rate is a nice round zero,” says Realtor.com® senior economist Joel Berner. “For those who can work where they want, living and earning in Florida is a great advantage.”
Rutois points out that moving from LA to Miami isn’t just about this year’s tax bill. He writes that what most people often overlook is what he calls “the compound effect.”
According to the consultant, a Miami transplant who saves more than $51,000 a year in state taxes over 10 years could invest that windfall at 7%, creating more than $750,000 in additional wealth.
“That is a down payment for a second home. That is an acceleration of early retirement,” Rutois writes.
West Coast vs. East Coast
Comparing the housing markets of LA, San Francisco and Miami, it’s clear that bustling central Florida is the more budget-friendly option.
In February, the median sales price in Miami was $499,999, less than half the Los Angeles median and more than $400,000 cheaper than San Francisco, according to Realtor.com’s latest monthly housing report.
Miami has been on Californians’ radar since the days of the pandemic, but Rutois says the profile of West Coast transplant shops for homes in the Sunshine State has evolved.
“In the beginning there were more opportunistic and curious people, who tested Miami and took advantage of its freedom,” Rutois tells Realtor.com. “Now it is much more conscious. People are committing for the long term, moving companies and building real infrastructure here.”
Rutois says Miami’s business climate and the metro’s rapid growth and momentum are big draws, especially for business founders.
“A lot of people see what’s happening in Miami and feel FOMO, and those who can leave California are doing so,” he adds.
From 2022 to 2023, Florida was the largest recipient of adjusted gross income in the U.S., with income of $20.65 billion. At the same time, California and New York led the way in lost revenue.
“Capital is moving away from the high-tax jurisdictions that defined the 20th century,” Ana Bozovica miami-based real estate agent and founder of Analysis Miami And Miami Deal Magazinetells Realtor.com. “Entrepreneurship is a force that America has built, and flows toward the path of least resistance.”
Both Bozovic and Berner agree that the influx of wealth into Miami is directly reflected in the strength of the city’s luxury housing market compared to mid-market offerings.
Berner points out that while prices and days on market are low in the middle of the market, the top tier is flooded with buyers clamoring for trophy properties.
Another major catalyst for this elite migration is the looming threat of California’s proposed “wealth tax.” If the initiative is passed, the state’s billionaires would have to pay a one-time tax equivalent of 5% of their assets.
While it is far from certain that the controversial tax would pass, California’s governor Gavin Newsom Rutois is trying to block this, saying that the very possibility has led to some of the Golden State’s wealthiest residents, including Meta’s Mark Zuckerberg and Google’s Sergei Brinto fix up houses in Miami.
“Seeing these names reassures me as a real estate advisor that Miami is no longer seen as a ‘secondary’ option. For many people, including many of my clients, Miami is becoming the primary base,” says Rutois.
Bozovic argues that the prospect of the “wealth tax” has introduced a new level of uncertainty around future taxes.
“It’s not just about the policy itself, but also about the way behavior changes,” she says. “High-net-worth individuals plan proactively, and even the possibility of new taxes could impact where they establish residency.”
Lifestyle benefits
Besides the obvious tax benefits, Miami real estate experts say that while Californians may initially be drawn to Miami due to financial considerations, many are quickly discovering its lifestyle benefits, with Rutois citing waterfront living, newer luxury condo buildings, top-notch amenities, more space and faster commute times compared to notoriously gridlocked LA.
“High earners are better informed than ever,” says Rutois. “They’re running the numbers and making decisions that will not only improve their net worth, but also improve their lifestyles. Miami checks off a lot of boxes for HNWIs [high-net-worth individuals].”
Echoing Rutois, Bozovic says that for elite homebuyers, Miami offers a combination that is very difficult to replicate.
“You are effectively improving your quality of life and reducing your tax burden at the same time, and that is a very powerful combination,” she concludes.
