People are solving the problem of high taxes in their state by moving to Florida instead.
Roughly 950 Americans per day were flocking to the Sunshine State even before the pandemic, according to the International Sales Group's 2020 Miami Report, which collected the data in 2019. And they were coming in large numbers from more expensive states like California, New Jersey, and New York.
While Florida has nice weather, it also offers an appealing tax climate. Residents there don't pay state income tax, and they also get a deal on real estate, effectively paying less than 1% for property taxes while other popular states pay more than 2%. New Jersey, where 72 people per day were leaving the state for Florida, has the highest rate at 2.47%.
But Florida is not the only place where taxes are low. It actually ranks No. 5 on WalletHub's list of states with the lowest total tax burden, with taxes accounting for 6.8% of residents' income. Alaska, Delaware, Tennessee, and Wyoming all rank higher.
If you're looking to move out of state to save money, remember that while inexpensive taxes can lower your cost of living, there are other financial considerations to take into account too.
The coronavirus pandemic has changed the way employers operate, and many people are working from home. That means you may not even need to live in the same state you work.
But if you can't work remotely and don't have a gig lined up, it may be a good idea to find one before you relocate.
Video by David Fang
"I would probably expect that anyone who's younger and looking to move, first and foremost have employment when they arrive, or can weather the period needed to land a job," says Jay Parker, chief executive officer of real estate firm Douglas Elliman, which conducted its own moving trends research. Parker heads up the firm's Florida brokerage division.
A steady income stream can boost your chances of success, he says. And regardless of whether you're renting or buying, having a job can help you save and make it much easier to secure housing.
It might make sense to rent for a period of time if you're moving to a new state, experts suggest.
"Rent for the first year," Mark La Spisa, a certified financial planner and president of Vermillion Financial Advisors, told Grow. "If you buy versus if you rent, you cut your flexibility down. If you're going to move somewhere new, you want flexibility to get the lay of the land."
Renting can give you the option to try different neighborhoods before settling in one area. People relocating should not buy a home if there's a chance they'll move again in three years, says Thomas E. Murphy, the chief executive officer of Murphy & Sylvest Wealth Management in Texas.
"You are unlikely to recover your closing costs," he says.
Video by Jason Armesto
Last year, those fees averaged $5,749 for a single-family home, according to numbers from data firm ClosingCorp. To put that in perspective, that's more than twice what the typical American age 34 and younger had in savings, per a Bankrate survey.
Moving to a new state is about more than just saving money. It's important to be content where you are.
Consumers should know different regions of a state aren't all the same, Parker says. "Some parts are more urban and some are more community-based. Others are less dense and have a slower pace." And even similarly sized cities in different states can have very different cultures.
You may need to switch from primarily taking public transit to primarily driving, for example, which could affect your free time as well as your budget. Or you may find that your new state may have a less lively nightlife or social scene.
Before jumping in, he says, "take the time to consult your lifestyle and see if it matches with the different elements in a community, because that can have a material impact on where you decide to go" — and how long you stay.
More from Grow: