Key insights

• State income tax doesn’t tell the whole story—state and local income, sales, property, estate and capital gains taxes all factor into your true tax burden.
• Lifestyle considerations, including your support network, daily amenities and access to healthcare, can be just as influential as tax policy in a relocation decision.
• Lower taxes may be offset by higher costs of living, insurance premiums in disaster-prone areas or other expenses, so a complete financial analysis is essential.
• Establishing residency requires more than just moving—it involves legal and administrative steps that vary by state.
• If you split time between two states, be vigilant about day-count rules in the higher-tax state, as spending too much time there could expose you to taxation in both.

With millionaire, billionaire and pied-à-terre taxes on the rise, many high-net-worth and ultra-high-net-worth families are relocating to states with lower taxes, or contemplating establishing their main residence in a more tax-friendly state.

“Many of our clients look at the issue of taxes, right now especially in Washington state, where a new millionaire tax of 9.9 percent on households with income over $1 million is supposed to take effect in 2028,” says Cyndy Ranzau, a wealth strategist at RBC Wealth Management–U.S. “Washington doesn’t have a state income tax, so this is a big shock. But the capital gains tax here for the sale of assets, such as stocks and bonds, starts at seven percent and is 9.9 percent for gains over $1 million.”

Tax migration is accelerating, but it’s complicated

While taxes are not the only impetus for moving, Tax Foundation research published in April 2026 identified a clear pattern: not only are high-tax states such as California, New York, New Jersey, Illinois and Massachusetts losing population, they are also losing a disproportionate share of higher-income households to locations with lower taxes. Population gains were highest in states with no income tax or a lower overall tax burden, such as Florida, Texas, South Carolina, North Carolina and Tennessee.

“It’s easier for the clients who already have more than one home to consider establishing residency in a state with lower taxes, but we often get questions from clients about fully relocating to a lower-tax state and have a list of a few places they’re thinking about,” Ranzau says. “There are multiple factors to consider, even when discussing taxes alone, because you need to look at both state and local income, sales, property and estate taxes to get a true picture of the tax burden and how it will affect individual clients.”

For example, Oregon doesn’t have sales taxes, but they have higher income taxes and a low threshold for estate taxes, Ranzau notes.

“Many counties and cities have layers of sales taxes, so once a client thinks they’re willing to move, we often connect them with a real estate agent or someone who knows local nuances such as special tax districts for schools,” she says. “Financial advisors can provide macro-level insights about the financial implications of moving out of state, but we always recommend they work with a tax advisor.”

Five factors to consider—beyond taxes—if you’re thinking of moving to a different state

When weighing an interstate move, lifestyle factors can have just as much influence as tax policies.

“The thought of moving across the country permanently is a big lift for a lot of people, unless they’re already flying back and forth to a second home with minimal luggage,” Ranzau says.

Here are five important questions to ask before making a relocation decision:

1. Where is your support system?

Think about the family, friends and community that make up your day-to-day support network, and how a move might affect those relationships. For example, if you relocate somewhere that requires multiple connecting flights, you may see those people less. This often has a big impact on the decision for those with young grandchildren or a tight-knit social circle nearby.

“Every situation is different: sometimes people tell me that their kids are so busy that they hardly see them, so moving several states away might actually mean they get more quality time during longer visits,” Ranzau says.

2. Does the new location fit your lifestyle?

It’s worth asking whether a different destination can replicate what you value most about where you currently live, such as a walkable neighborhood, easy access to restaurants and cultural centers, transportation infrastructure, or a community where it’s realistic to build a new social network.

People accustomed to city or suburban living, for example, often underestimate how different daily life can feel in a small town or rural area.

3. Will you have easy access to quality healthcare?

The availability and proximity of hospitals and other healthcare facilities is an important consideration, especially as you age. But even if you’re young and healthy, it’s a mistake to leave healthcare access as an afterthought.

“A lot of people cross their fingers and hope they won’t need a specialist or assisted living, or say they’ll move again if they need that kind of care,” Ranzau says. “Some people plan to fly back to their original home to see their doctors, but that may be a problem if you live in a more isolated location and need care quickly.”

4. Have you considered the full cost of living?

A lower tax bill may look attractive on paper, but the cost of living varies dramatically from state to state, and those differences add up quickly. For example, insurance can be significantly more expensive in states prone to natural disasters like wildfires or hurricanes, which can meaningfully affect your overall housing costs.

Factoring in the full range of expenses—not just taxes—gives you a more accurate picture of what a move would mean for your overall finances.

5. What are the residency requirements?

Rules for establishing residency vary by state, but common requirements include:

• Owning or renting a home
• Obtaining a driver’s license or state identification card
• Changing your vehicle registration
• Updating your address with the IRS and financial institutions
• Registering to vote

Most states also have a day-count thresholdfor the minimum number of days you must be physically present in the state to be considered a resident—typically 183 days or more in a tax year.

“If you split time between two locations, it might make sense to spend more time in the lower-tax state and make it your primary residence,” Ranzau says. “But you’ll need to be especially vigilant about day-count rules in the other state—spending too much time there could result in being audited by the higher tax state and subject to income taxes there.”

Advisors can help you see the full picture

Relocating to a different state is a major decision, and taxes are just one part of the equation. Your financial and tax advisors can help you evaluate all the pros and cons of moving to a lower-tax state.

“Clients tend to focus on the tax savings, but we are there to remind them to consider their overall expenses, their community, their healthcare and their network of friends and family,” Ranzau says.