The Financial Impact of Relocating to a Different State

State Income Taxes: A Major Difference-Maker

One of the first questions people ask when relocating is, “Will I pay more or less in taxes?” And the answer depends entirely on where you’re going.

Some states—like Florida, Texas, and Tennessee—don’t tax income at all. That can be a huge win for retirees pulling from pensions, Social Security, or IRAs, or for remote workers with high earnings.

Other states, like California and New York, impose higher income tax rates, particularly for top earners. If you’re relocating from a high-tax state to a low-tax one, the difference could be tens of thousands annually.

Real-life example: A client moved from New Jersey to Florida after retirement. With no state income tax, they saved over $12,000 a year—money they now use for travel and gifting to grandkids.



Before you pack up, run the numbers. And make sure your new state truly qualifies as your domicile to avoid double taxation.

Property Taxes and Real Estate Costs

The second big item to consider: housing. A move might bring cheaper real estate—but not always cheaper taxes.

For example:

• Texas has no income tax but high property taxes
• California has steep real estate prices but property taxes are capped under Prop 13
• Some states offer property tax breaks for retirees or veterans



Don’t just look at sticker prices. Consider the total cost of ownership—mortgage, insurance, HOA fees, maintenance, and of course, local tax rates.

Retirement Accounts and State Tax Treatment

How your new state treats retirement income matters. Some states fully tax distributions from IRAs, 401(k)s, or pensions. Others partially exclude them or offer specific breaks for seniors.



If you’re retired or getting close, this is worth a deeper dive. Look into:

• Whether Social Security is taxed (some states still do)
• How traditional retirement account withdrawals are handled
• State-specific exemptions for retirement income

Pro tip: Work with an advisor to strategically time withdrawals if you’re relocating mid-year. A little planning can prevent unwanted tax surprises.

Health Insurance and Cost of Care

Healthcare costs vary significantly by state. If you're under 65 and rely on the ACA marketplace, premiums and subsidies change based on your zip code.



And for retirees:

• Supplemental Medicare plans may cost more or offer fewer options
• Long-term care facility rates vary widely between states

If your move is for the long haul, factor in how your new state ranks for healthcare quality and affordability. Especially if you have existing conditions or are nearing retirement age.

Estate Planning: New State, New Rules

Many people don’t realize this, but estate planning laws can change when you cross state lines. Each state sets its own rules around wills, trusts, probate, and powers of attorney.



After a move, it’s smart to:

• Update your will and trust documents to comply with state laws
• Revisit powers of attorney and advance directives
• Confirm your new state’s stance on estate or inheritance tax (yes, they’re different!)

If you’ve moved from a state with estate tax to one without, you may be able to simplify your plan. Or at least breathe a little easier.

Cost of Living: The Hidden Multiplier

A lower tax burden doesn’t always equal lower expenses. States vary dramatically in cost of living—everything from groceries to gas to auto insurance.



When comparing states, check:

• Housing affordability
• Utility costs
• Transportation and vehicle registration
• Food, healthcare, and entertainment

Even small differences add up over time. So while one state may seem “cheaper” on paper, the full picture may tell a different story.

Remote Workers: Watch Out for State Residency Rules

Remote work has made moving easier, but it’s also introduced tax gray areas. Some states want to tax income based on where you live. Others want a piece because your employer is based there.

This is where things get tricky. If you live in one state and work remotely for a company in another, you might need to file in both. A few tips:

• Establish clear residency in your new state (driver’s license, voter registration, etc.)
• Track where your income is earned
• Avoid dual residency status—it can lead to double taxation



This is a situation where having a knowledgeable advisor and CPA in your corner is invaluable.

Timing Matters

If you’re planning a move around year-end, the date matters. Some states will tax you as a resident even if you move on December 31st.



To avoid that:

• Establish ties early in your new state
• Sever legal and financial ties with your old state (voter reg, licenses, primary home)
• Spend more than 183 days in your new location to establish clear residency

We had a client move from Illinois to Arizona in October. By working closely with their CPA and planning ahead, we avoided paying Illinois income taxes for the full year.

Make the Most of the Move

Relocating isn’t just a financial event—it’s a life shift. It’s a chance to rethink what matters, simplify, and re-align your lifestyle with your long-term goals.



A move can be the perfect time to:

• Reassess your investment strategy
• Update your estate plan
• Set new retirement spending goals
• Consolidate accounts or insurance policies

We often help clients use their move as a financial “reset”—a chance to tune up every part of their plan.

Final Thoughts

Changing states isn’t just a change of address. It’s a financial move with long-term consequences. Income taxes, property costs, healthcare, estate laws—they all shift the moment you cross that border.

But with smart planning, you can relocate with confidence—and even use it to your financial advantage.



Aligned Wealth Advisors helps retirees, remote workers, and high-net-worth families plan moves with clarity and precision. From tax strategy to investment alignment, we’ll help you unpack the financial side of your next big step.

Andrea Ward, CPA

Andrea has worked in the finance industry for nearly all of her professional life. Taking over the family business she continues to combine her tax and investment knowledge to leverage the investment power of money while reducing gains taxes paid to the IRS. She lives in the Fort Worth, Texas area, (although is happy to work with virtual clients all over the United States!) Andrea loves to travel and dabble in home decorating.

Matt Ward

Matt began helping clients in the insurance industry. However, he struggled with big business’s emphasis on selling rather than helping, so he came to work with the family business focusing on investment advisory. In his free time, he shreds the gnar on his snowboard and jams on drums and guitar (but not at the same time).