Here’s How Much Money LA and Silicon Valley High-Earners Can Save By Trading California for Miami
While high-end beach living always comes at a premium, wealthy Californians who move to Miami can get a five-figure boost by swapping the Golden State’s high state income tax rate for Florida’s 0% tax haven.
Kevin Rutoisluxury real estate consultant Rutois International Realty who specializes in high-end clients looking to live 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 the Magic City.
Rutois’ calculations, set out in a LinkedIn post over the weekend, assume a minimum tax rate of 10.3% on an annual income of $500,000, but it could be as high as 11.3%.
In fact, California has the highest state income tax rate, with a top rate of 13.3% reserved for high earners.
On the other hand, Florida is one of only nine states with no federal income tax on wages. The others are Alaska, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.
For wealthy Californians with flexible work arrangements, Miami’s financial argument becomes undeniable.
“Income tax is such a big burden in California and Florida that the tax rate is pretty much zero,” said Realtor.com®’s chief economist. Joel Berner. “For those who can work where they want, living and earning in Florida is a huge advantage.”
Rutois points out that the LA-to-Miami move isn’t just about this year’s taxes. He writes that what many people tend to overlook is what he calls the “joint effect.”
According to the consultant, a Miami transplant that saves more than $51,000 a year in federal taxes over 10 years could grow that shortfall by 7%, bringing in more than $750,000 in additional wealth.
“That’s a lower salary in the second place. That’s accelerated early retirement,” Rutois wrote.
West Coast vs. East Coast
When comparing the real estate markets of LA, San Francisco, and Miami, it’s clear that the bustling Florida area is a budget-friendly option.
In February, the median listing price in Miami was $499,999, less than half of Los Angeles’ median and more than $400,000 cheaper than San Francisco’s, according to Realtor.com’s latest monthly real estate report.
Miami has been on the radar of Californians since the days of the pandemic, but Rutois says the West Coast repurchase profile for real estate in the Sunshine State has already emerged.
“In the beginning, there were opportunistic and curious people, exploring Miami and taking advantage of the freedom,” Rutois told Realtor.com. “Now it’s more intentional. People are making long-term commitments, moving companies, and building real infrastructure here.”
Rutois says Miami’s pro-business climate and the metro’s rapid growth and momentum are factors that are a big draw, especially for startups.
“A lot of people see what’s happening in Miami and feel FOMO, and those who can move from California do,” he adds.
From 2022 to 2023, Florida was the leading recipient of total adjusted income in the US, with $20.65 billion inflows. At the same time, California and New York led the way in lost revenue.
“Capital is leaving the high-tax areas that defined the 20th century,” Ana Bozovica Miami-based real estate agent and founder of Analytics Miami and Miami Deal Sheet, tells Realtor.com. “Businesses are the power that built America, and they are flowing in the direction 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 the median price.
Berner points out that while prices and days on the market are soft in the middle of the market, the high end is full of buyers clamoring for trophy properties.
Another major threat to this elite migration is the looming threat of California’s proposed “wealth tax.” If passed, the plan would require the state’s billionaires to pay a one-time tax equal to 5% of their assets.
Although it is far from certain that the controversial tax will be accepted, and California Gov. Gavin Newsom fighting to block it, Rutois says it may have moved some of the Golden State’s wealthiest citizens, including the Meta’s. Mark Zuckerberg and Google Sergey Brintaking homes in Miami.
“Seeing these names just convinced me as a real estate consultant that Miami is no longer seen as a ‘second’ option. For many people including many of my clients, it is becoming the main base,” said Rutois.
Bozovic says the prospect of a “wealth tax” has introduced a new level of uncertainty about future taxation.
“What matters is not just the policy itself, but how it changes behavior,” he says. “High-net-worth individuals plan further, and even the possibility of new taxes can influence where they choose to obtain a residence permit.”
Lifestyle benefits
Aside from the obvious tax benefits, Miami real estate experts say that while Californians may initially be drawn to Miami for financial considerations, many quickly discover the lifestyle benefits, with Rutois citing waterfront living, new luxury apartment buildings, premium amenities, more space, and faster commute times compared to grid-locked LA.
“High earners are more knowledgeable than ever,” Rutois said. “They are running the numbers and making decisions that will not only improve their take home value, but improve their lifestyle as well. Miami checks a lot of boxes for HNWI [high-net-worth individuals].”
Pointing to Rutois, Bozovic says that for high-end buyers, Miami offers a combination that is very difficult to replicate.
“You’re effectively improving your quality of life while reducing your tax burden, and that’s a very powerful combination,” he concluded.
