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- New Yorkers have historically moved to Florida and Texas to save money on taxes and other expenses.
- But the cost of living in parts of Florida and Texas has jumped significantly since 2019.
- High earners are especially impacted. Movers will still save money, just not as much as before.
In December, Rahul Sen Sharma told Business Insider that he was moving from New York to Miami — and bringing his company with him.
Sen Sharma, the president of financial markets index provider and data firm Indxx, listed his reasons.
"One, the tax structure is more favorable for personal as well as from a corporate standpoint," he told BI's Phil Rosen. "Two, it's more affordable from a business perspective, and three, the cost of hiring employees is also less in terms of salaries."
Sen Sharma is joining the hordes of wealthy people who fled south during the pandemic for the lack of income tax, as well as better weather and lower cost of living generally. Chief among them: Amazon chairman Jeff Bezos and hedge-fund titan Ken Griffin.
But wait: There's new data that shows how much money people — especially wealthy people — save by moving from NYC to Miami is changing.
People who relocated from New York to Florida and Texas in 2023 won't save as much as people making the same move in previous years, according to an analysis of tax data from the IRS by financial company SmartAsset prepared for Bloomberg.
New Yorkers moving to Texas for many of the same reasons will also face sticker shock.
High earners will feel the impact more bluntly than lower-salaried employees.
People moving to Florida and Texas save less now
SmartAsset found that movers making $250,000 who traded New York for Miami saved 28% less in 2023 than they would have if they moved in 2019. A person moving from New York to Miami making $250,000 saved $88,036 a year in 2023, down from $122,956 in 2019.
The increased costs of lower-tax states also affect people with lower incomes. Someone with a $100,000 salary who made the move from New York to Miami in 2023 saved an estimated $37,166 a year, down from $51,273 in 2019, according to SmartAsset.
A similar pattern played out for relocators from New York to Austin and Dallas — people making $250,000 a year saved 20% and 25% less, respectively, in 2023 than in 2019.
The savings gained by moving to Florida and Texas are dwindling
Utilities, gas, and housing are just a few expenses that have gotten pricier in Florida and Texas since 2019.
Utility costs in Miami increased 17% from 2019 to 2023, according to SmartAsset, while gasoline soared by 54.4%. In Austin and Dallas, utilities jumped by 12.5% and 16.5%, respectively, and gas prices rose about 32%.
The main culprit for the dwindling savings in Florida and Texas, however, is rising home prices.
It's still cheaper overall to buy in Miami rather than New York, but homes are getting more expensive at a faster rate in Miami.
Alexander Spatari
According to Realtor.com, the median sold home price in Manhattan is $999,000, compared to $545,000 in Miami. But, according to SmartAsset, home prices in Miami jumped 43.7% from 2019 to 2023, a few points higher than the national increase of 33.7%. In Miami, rents rose nearly 38% during the same period. Meanwhile, Manhattan home prices went up 29.3%, and rents increased 3.3%.
It's a similar story in Texas: Austin rents increased 25.5%, while home prices went up 55.6%.
"The inflation over the last few years has impacted Manhattan less than Miami, Dallas, and Austin," Jaclyn DeJohn, SmartAsset's managing editor of economic analysis, told Bloomberg. "The real, or inflation-adjusted, purchasing power saved when moving from Manhattan to any of the three cities has actually decreased over the last four years, even after accounting for all the cost and tax differences."
People are surprised by cost increases in places they thought were inexpensive
While the SmartAsset study mainly focused on the savings hit for wealthier relocators, movers who make less will be hit by higher costs, too.
According to an analysis of individual-level data from the Census Bureau by Business Insider, the typical mover to Florida makes $55,000 a year, while the typical Texas mover makes about $50,600.
The lack of income tax may be appealing, but movers have been hit by other costs.
Newcomers to the Sunshine State have been surprised at Florida's higher-than-expected property taxes. Appraised home values in Florida rose by 26% between 2021 and 2022.
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Robert Walsh told CBS in 2022 that the taxes on his Fort Lauderdale duplex jumped from $5,000 a year to $13,000.
"It's one reason I got a duplex to help pay my taxes, insurance and utilities," he told CBS.
It's not all that different in Texas, where homeowners are feeling the effects of increased property taxes.
Texas' average property tax percentage rate is 1.74%, according to Business Insider, while New York City's is 0.98%, according to SmartAsset.
"The property-tax percentage rate is higher," Marie Bailey, a Texas real-estate agent who moved from California, told Business Insider's Alcynna Lloyd. "Every time a prospective client calls me, it's one of the first things I talk about."