While high-end coastal living always commands a premium, wealthy Californians moving to Miami could effectively give themselves a five-figure raise by swapping the Golden State's peak state income tax rate for Florida's 0% tax environment.
Kevin Rutois, a luxury real estate adviser at Rutois International Realty specializing in executive clientele looking to settle in Miami, recently crunched the numbers, finding that a Californian earning $500,000 could pocket more than $51,000 in annual tax savings by moving from Los Angeles or San Francisco to Magic City.
Rutois’ calculation, laid out in a weekend LinkedIn post, assumes a minimum tax rate of 10.3% for a $500,000-a-year salary, but it could be as high as 11.3%.
In fact, California has the nation's highest state income tax rate, with a top margin of 13.3% reserved for the highest earners.
On the other hand, Florida is one of just nine states that have no state 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 argument for Miami becomes undeniable.
"Income tax is a huge burden in California and in Florida that tax rate is a nice round zero," says Realtor.com® senior economist Joel Berner. "For those who are able to work where they want, living and earning in Florida is a major advantage."
Rutois points out that an L.A.-to-Miami move is not just about this year’s tax bill. He writes that what most people tend to overlook is what he calls "the compound effect."
According to the adviser, a Miami transplant saving over $51,000 a year on state taxes over 10 years could invest that windfall at 7%, raking in over $750,000 in additional wealth.
"That's a down payment on a second property. That's early retirement acceleration," writes Rutois.
West Coast vs. East Coast
Comparing the housing markets of L.A., San Francisco, and Miami, it is apparent that the bustling Florida hub is the more budget-friendly option.
In February, the median listing price in Miami was $499,999, less than half of Los Angeles' median and over $400,000 cheaper than San Francisco's, according to the latest Realtor.com monthly housing report.
Miami has been on Californians' radar since the days of the pandemic, but Rutois says the profile of the West Coast transplant shopping for homes in the Sunshine State has evolved.
"Early on, there were more opportunistic and curious people, testing Miami and taking advantage of the freedom," Rutois tells Realtor.com. "Now it’s much more intentional. People are committing long term, moving companies, and building real infrastructure here."
Rutois says Miami's pro-business climate and the metro's rapid growth and momentum are major draws, especially for company founders.
"A lot of people see what is happening in Miami and feel FOMO, and the ones who can leave California are doing so," he adds.
From 2022 to 2023, Florida was the top recipient of adjusted gross income in the U.S., with $20.65 billion moving in. At the same time, California and New York led in lost income.
"Capital is moving away from high-tax jurisdictions that defined the 20th century," Ana Bozovic, a Miami-based real estate agent and founder of Analytics Miami and Miami Deal Sheet, tells Realtor.com. "Entrepreneurship is a force that built America, and it flows towards the path of least resistance."
Both Bozovic and Berner agree that the inflow of wealth into Miami is directly reflected in the strength of the city's luxury housing market compared with its midrange inventory.
Berner points out that while prices and days on market are soft in the middle of the market, the top tier is overrun with buyers clamoring for trophy properties.
Another major catalyst for this elite migration is the looming threat of California's proposed "wealth tax." If passed, the initiative would require the state's billionaires to pay a one-time tax equivalent of 5% of their assets.
While it's far from certain that the controversial tax would be adopted, with California Gov. Gavin Newsom fighting to block it, Rutois says the mere possibility has prompted some of the Golden State's wealthiest residents, including Meta's Mark Zuckerberg and Google's Sergey Brin, to snap up homes in Miami.
"Seeing these names just reassures me as a real estate adviser that Miami is no longer seen as a 'secondary' option. For many people including many of my clients, it’s becoming the primary base," says Rutois.
Bozovic argues that the prospect of the "wealth tax" has introduced a new level of uncertainty around future taxation.
"What matters is not just the policy itself, but how it changes behavior," she says. "High-net-worth individuals plan proactively, and even the possibility of new taxes can influence where they choose to establish residency."
Lifestyle advantages
Besides the obvious tax advantages, Miami real estate experts say that while Californians might be initially drawn to Miami for financial considerations, many quickly come to discover its lifestyle advantages, with Rutois citing waterfront living, newer luxury condo buildings, premium amenities, more space, and faster commute times compared with the notoriously gridlocked L.A.
"High-earners are more informed than ever," says Rutois. "They’re running the numbers and making decisions that not only will improve their take-home amounts, but improve their lifestyle as well. Miami checks a lot of boxes for HNWI [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 while also reducing your tax burden, and that is a very powerful combination," she concludes.
