Moving to a state without individual income tax can leave you with substantially more money each year. But a move also raises questions about where you will live, how you will fund that home, and what happens to any property you already own.
Those questions affect one another. Selling your present home might provide the cash to buy the next one without a mortgage. Keeping it as a rental might provide future income, while leaving you with less cash for the move. Choosing to rent at your destination might let you retain that investment and keep more savings accessible.
The purpose of this article is to help you anticipate these connected questions and discuss a realistic plan with a qualified accountant. Your income, property and family circumstances determine how the examples apply to you.
How do the move, housing choice and taxes fit together?
Start by distinguishing money available for the move from income and expenses after the move.
Money available includes savings, net proceeds from a home sale and any borrowing. It determines what you can put toward the next home and what remains available for unexpected costs.
The ongoing budget includes income taxes, rent or mortgage payments, property taxes, insurance and repairs. If you retain the old home, it also includes that property's rental income and costs. Retirement can change the income side of this calculation considerably.
These are not independent choices. Here is how some common combinations connect:
| What you do with the present home | Where you live next | What connects the decisions |
|---|---|---|
| Sell it | Buy | Net sale proceeds help fund the purchase; sale taxes and costs reduce the cash available. |
| Sell it | Rent | Sale proceeds remain available for other needs, while rent becomes an ongoing expense. |
| Keep it as a rental | Buy | You retain the asset and potential rental income, but need another source of purchase funds. |
| Keep it as a rental | Rent | You become a landlord in one location and a tenant in another; rental receipts and rent paid belong in the same overall plan. |
If you currently rent, there is no old-home sale or rental decision. The question is how the income-tax change helps support either another lease or a first purchase.
The route through this article: First we estimate the income-tax change. Then we examine renting and owning at the destination. Finally we follow the cash and tax consequences of selling or keeping the former home. The examples show the parts of one connected decision, not three isolated verdicts.
About the examples: They are educational, use dated rules and assumed households, and are not predictions of your tax bill. New York, California, Florida and Texas illustrate issues relevant to readers nationwide. Substitute the rules for your year and circumstances. A qualified accountant can help compare the options; timely advice may save thousands of dollars and make the decision easier.
What income tax would I stop paying?
Begin with the income you expect after the move. If you are working, use your expected wages. If you are retiring, ask your accountant to compare the state treatment of your Social Security, pension, retirement-account withdrawals and investments. A wage example is not a retirement projection.
A wage example using New York
The household: A married couple under 65, filing jointly, with no dependents. Income is wages only; adjusted gross income (AGI) here is income after any pretax payroll deductions.
The tax assumptions: New York's $16,050 standard deduction, no special state adjustments, and a full year in each location at the same earnings. The example assumes no remaining New York-source wages after moving.
| Annual wage AGI | New York State outside NYC and Yonkers | Additional NYC income tax after school credits | Total for NYC residents |
|---|---|---|---|
| $100,000 | $4,201 | $2,728 | $6,929 |
| $200,000 | $10,776 | $6,373 | $17,149 |
| $300,000 | $16,753 | $10,146 | $26,899 |
These are calculated estimates, rounded to dollars, using the 2026 New York estimated-tax schedules, including worksheets that reduce some lower-bracket tax benefits at higher incomes (called benefit recapture). NYC calculations include the school tax credit and rate-reduction credit under the published return instructions. They exclude other household-specific credits. Final return rounding may differ slightly.
Florida and Texas have no individual state income tax. A qualifying move therefore removes the modeled state and city income-tax amounts. Florida Department of Revenue, Texas Comptroller
For the $200,000 couple, the modeled income-tax reduction is about $898 a month outside NYC and Yonkers, or $1,429 a month from NYC. This is the starting tax benefit, before federal-tax changes and differences in living costs.
Two adjustments to check
Does the old state still tax some income? Confirm that the income is no longer taxable there. For example, some remote work for a New York office remains taxable by New York after a move. Income from property left there can also remain taxable there. New York residency and income-sourcing guidance.
Does the federal bill change? If you stop paying $10,000 of state tax that previously provided a full additional deduction at a 22% federal rate, the federal bill rises by $2,200 and the net saving is $7,800. If you take the standard deduction both before and after, that particular deduction effect is zero.
SALT means state and local taxes. For 2026, the cap before income-based reductions is $40,400, or $20,200 for married filing separately; the reductions begin above modified adjusted gross income—a tax-return income measure with specified additions—of $505,000 or $252,500 respectively. The ordinary joint standard deduction is $32,200. These are year-specific rules, not future promises. IRS 2026 guidance.
Your other deductions determine whether those limits affect you. The separate SALT article explains the calculation.
How does renting or buying affect the benefit of moving?
The income-tax reduction gives you a starting amount to work with. Your choice of housing determines how much of that amount remains available—and what capital you need upfront.
Compare the situation you are leaving with the one you are considering:
Rent before and after
Compare actual leases for suitable homes. Lower rent adds to your savings; higher rent uses some of them. Do not also subtract a separate homeowner property-tax bill from a tenant's budget.
Own before and after
Compare the old property-tax bill with the estimated new bill. Only the change is an additional cost or saving. Use buyer-specific assessments and exemptions; a seller's bill may not reflect what you will pay. If you choose a more expensive home, identify that extra spending separately.
Rent now and buy after moving
Income-tax savings can help pay the new ownership costs, and the rent you used to pay stops. Count both. The new property-tax bill alone cannot tell you whether the move works financially.
Own now and rent after moving
Compare the new rent with the ownership costs you stop paying if you sell. If you keep the former home as a rental, assess that property's income and expenses separately, as explained below.
How can I estimate the property tax on a new home?
Start with an estimate for the actual home you might buy. Ask the local property-tax office what a new owner would pay. The seller's current bill may reflect reductions you cannot keep.
There are two main ingredients: the home's value for tax purposes and the local tax rates. A homestead exemption reduces the value taxed when an eligible owner uses the home as a main residence. It does not remove all property taxes. School taxes and other local taxes may allow different reductions.
What might the bill look like on a $600,000 home?
Here is an Orlando example using published 2025 rates, not a quote for a purchase in 2026. Assume the local tax office values the home at $600,000 before exemptions. For simplicity, assume owners under 65, a full year of the ordinary homestead exemptions, no disability exemption and no reduction carried over from earlier limits on value increases. Those assumptions may not fit your home or circumstances.
For this Orlando tax area, school taxes use $575,000 after a $25,000 exemption. Other local taxes use $549,278 after a $50,722 exemption. Applying the published rates gives about $3,708 in school taxes plus $6,393 in other property taxes: $10,101 for the year.
The following table applies the same assumptions to several values. “Value for tax purposes” is an example input, not a promise that the assessor will use your purchase price.
| Assumed value for tax purposes | Orlando example: annual tax | Dallas example: annual tax |
|---|---|---|
| $600,000 | $10,101 | $9,893 |
| $900,000 | $15,527 | $15,535 |
| $1,200,000 | $20,954 | $21,178 |
| $1,500,000 | $26,380 | $26,820 |
Where do the numbers come from? The Orlando example uses tax area 08 in the county's 2025 tables. School taxes are $6.449 per $1,000 of taxable value, and the other rates total $11.6388 per $1,000. Officials call each dollar per $1,000 a “mill.” Sources: Orange County's final rates, rate components, and Florida's 2025 exemption adjustment.
The Dallas example covers a home inside the City of Dallas, Dallas County and Dallas Independent School District. The county, hospital, college and city each exempt 20% of the assumed value. The school calculation subtracts its 10% exemption and $140,000 general exemption. The rates and reductions come from the Dallas Central Appraisal District's 2025 tax table. A home in a different school or special district can have a different bill.
These are examples of the tax based on property value. They exclude separately billed assessments, early-payment discounts, insurance, association fees, repairs and mortgage costs. The two examples happen to produce similar bills; they do not establish which state is cheaper overall.
How much of the new property tax could income-tax savings cover?
For the $200,000 wage-income couple outside NYC and Yonkers, the $10,776 income-tax reduction is similar in size to the illustrated property-tax bill on a $600,000 home. From NYC, the $17,149 reduction exceeds those bills by about $7,000. This shows how tax savings can contribute to ownership; it is not a net-savings calculation. These illustrations combine 2026 income-tax rules with explicitly dated 2025 property-tax benchmarks.
Buying at the $1.5 million appraisal instead of $1.2 million adds about $5,426 a year in the Orlando benchmark or $5,642 in Dallas. Equal prices do not establish that houses are comparable in size, condition or location. Use current estimates for the actual homes you are considering.
Could owning help me avoid rising rent in retirement?
Avoiding rent and potential rent increases can be a major advantage after you stop working, especially if you own without a mortgage. A fixed-rate mortgage also makes principal and interest payments more predictable. Property taxes, insurance, repairs and association charges still need a place in your budget and may rise.
Renting can preserve accessible savings and generally leaves major building repairs to the landlord, subject to the lease and applicable law. Buying commits money to the property and gives you an equity interest whose value can change. Discuss which arrangement suits your retirement income and cash reserves with a qualified accountant.
What other ownership costs should I allow for?
In hurricane-exposed areas, including parts of Florida, insurance and storm-related costs can be major considerations. Obtain an inspection and property-specific insurance quotes. Check roof and other repair needs, wind and flood exposure, coverage exclusions and deductibles.
Standard homeowners insurance generally excludes flooding; a hurricane deductible may be based on the insured dwelling limit rather than the repair bill. Florida insurance guidance, hurricane deductibles.
Tax savings can help meet these costs, but an annual insurance premium does not tell you how much cash an uninsured loss or deductible might require.
An inspection and insurance quotes help put actual costs beside the tax savings.
Which costs of my own home can I deduct?
Ordinary personal rent generally is not federally deductible. Homeowners may deduct qualifying mortgage interest and property taxes if they itemize, subject to limits.
Personal mortgage principal, homeowners insurance and ordinary repairs generally are not deductible, and you cannot depreciate a home used only as your personal residence. IRS homeowner guidance, mortgage-interest rules.
Should I sell the former home or keep it as a rental?
The next home's funding often depends on what happens to the current one. Selling turns equity into cash after debt, costs and taxes. Keeping the property leaves that equity invested and creates a potential income stream, with expenses and obligations attached.
Does buying another home let me avoid tax on the sale?
The replacement-home rollover many homeowners remember was a real federal provision. Former Section 1034 generally allowed deferral when a qualifying replacement residence cost at least as much as the adjusted sale price of the old home. Congress repealed that rule in 1997, generally for sales after May 6, 1997, subject to transition rules. It is not available for an ordinary home sale today. Repeal of Section 1034, IRS historical explanation
You do not generally have to reinvest your home-sale proceeds to qualify for the federal exclusion. Buying a more expensive replacement does not increase it. Eligible sellers can exclude up to $250,000 of gain, or $500,000 on a qualifying joint return. Generally, ownership and residence tests cover two of the five years before sale; for the joint maximum, one spouse must meet ownership and both must meet residence and the applicable look-back test. IRS home-sale rules
Consider this assumed sale by a qualifying married couple:
| Sale calculation | Amount |
|---|---|
| New York home sale price | $1,200,000 |
| Less assumed selling costs | $72,000 |
| Less adjusted tax basis | $500,000 |
| Gain | $628,000 |
| Less qualifying joint exclusion | $500,000 |
| Gain remaining taxable | $128,000 |
That $128,000 is unchanged whether they buy for $600,000, $1.2 million, $1.5 million, or rent.
Basis generally reflects purchase cost and qualifying adjustments, including improvements; it is not the mortgage balance. Paying off a mortgage reduces available cash but does not itself reduce gain. Rental or business use can complicate the exclusion. IRS Publication 523
Moving before closing does not automatically remove New York tax: taxable gain from New York real estate remains New York-source income for a nonresident. The state has a nonresident real-estate estimated-payment procedure, with exemptions including certain fully excluded principal-residence gains. An estimated payment is not the final tax calculation. New York 2026 sale instructions
Treat the sale as a separate, one-time calculation. Keep it separate from recurring annual income and housing costs.
Which tax rates apply to the sale?
There are two separate questions: how much gain remains taxable, and what rate applies to that amount. The home-sale exclusion reduces the taxable amount. A preferential capital-gains rate reduces the tax charged on the remaining amount. They are different benefits.
For an ordinary personally owned home held more than one year, the federally taxable gain generally falls under the 0%, 15% or 20% long-term capital-gains rates, depending on filing status and total taxable income. The gain sits above other taxable income and may cross rate bands. Short-term gain generally uses ordinary federal income-tax rates. Rental depreciation can receive different treatment, including a maximum 25% federal rate on certain gain associated with earlier building-depreciation deductions. The tax rules call that portion “unrecaptured Section 1250 gain.” IRS capital-gains guidance
| State | Treatment of taxable gain for an individual | Rate context |
|---|---|---|
| New York | Generally included in ordinary state taxable income; no separate preferential long-term capital-gains rate. A qualifying principal-residence exclusion generally carries through. | 2026 state scheduled rates range from 3.9% to 10.9%; benefit-recapture rules can affect the incremental tax. NYC resident income tax may also apply. |
| California | Capital gains are taxed as ordinary income. California also allows a qualifying principal-residence exclusion, although state basis differences can change the calculation. | Published 2025 scheduled rates range from 1% to 12.3%, plus a 1% tax on taxable income above $1 million. California's 2026 estimated-tax instructions direct taxpayers to use the 2025 tables. |
| Florida | No individual state income tax on the gain. | 0% Florida individual income tax; federal tax can still apply. |
| Texas | No individual state income tax on the gain. | 0% Texas individual income tax; federal tax can still apply. |
Sources: New York 2026 computation rules, New York home-sale instructions, California capital gains, California home-sale exclusion, California rate schedule, 2026 estimated-tax instructions, California additional tax, Florida Revenue, and Texas Comptroller.
These are marginal rate ranges, not a percentage to apply to the entire sale price or every seller's gain. Your other income and filing status determine which bands apply. In New York, the safest estimate is to calculate the return with and without the sale, including benefit recapture, rather than multiply all gain by one bracket rate.
What could those rates mean in dollars?
The percentages below demonstrate the arithmetic. They are not recommended rates to use for a future sale; first determine the rates and thresholds that apply in the year you sell.
The earlier couple has $128,000 of taxable gain after the exclusion. If all that gain falls within the federal 15% long-term band, the regular federal capital-gains tax on it is $19,200. That is a conditional rate illustration, not a complete return calculation.
For a California resident selling a California home with the same state-taxable gain, if all $128,000 falls within the state's 9.3% band, the additional California income tax from that gain alone is $11,904, before other return interactions. A Florida resident selling a Florida home, or a Texas resident selling a Texas home, has no individual income tax from that state. Federal tax remains.
A separate federal 3.8% net investment income tax may apply to some or all of the taxable gain. It generally uses the smaller of net investment income or modified AGI above $250,000 for joint filers, $200,000 for single filers, or $125,000 for married filing separately. Gain excluded under the home-sale rules is not included. The extra 3.8% therefore does not apply to every sale. IRS NIIT questions and answers
Can my former state still tax the sale after I move?
A Florida resident selling a New York home can still owe New York tax on the taxable gain. The equivalent is true for a Texas resident selling California real estate. Conversely, selling a Florida or Texas property while still resident in New York or California can bring the gain into the resident state's tax calculation. Nonresident computations may also use other income to determine the applicable rate. New York residency guidance, California residency and real-estate sourcing
Finally, income tax is separate from real-estate transfer taxes, recording charges and closing costs. A withholding or estimated-tax payment collected at closing is a payment toward the final income-tax liability, not necessarily the seller's final rate. The cash available for a new home is the sale proceeds after mortgage payoff, costs and required payments—not simply sale price minus capital-gains tax.
What changes if I keep the former home and rent it out?
Keeping the home as a rental can produce revenue and postpone a sale. No sale means you have not yet realized its appreciation as a sale gain. Work out rental cash flow after financing, taxes, insurance, management, repairs and vacancy allowances. Revenue is not the same as spendable profit.
For that rental, qualifying interest, property taxes, insurance and repairs generally enter the rental-tax calculation. The building can generally be depreciated, meaning its eligible cost is deducted over time; land cannot. Improvements and loss limitations require separate treatment. These landlord deductions belong to the property rented to tenants, not to the home you live in. IRS rental guidance.
A later sale can bring tax on gain and depreciation-related amounts; waiting can affect the home-sale exclusion. A qualifying investment-property exchange may instead defer gain.
How could I fund the move without selling the former home?
Borrowing against the former home can release cash without selling it, but creates debt and interest payments. A later qualifying exchange can defer gain while keeping money invested in rental real estate. In some circumstances, the home-sale exclusion and exchange rules can work together. These possibilities affect both the cash available for the new home and the old property's future income.
The companion article develops these options with numerical examples. It also explains LLC ownership and retirement-plan arrangements, whose rules determine whether they help in a particular situation. They are planning possibilities to assess with an accountant, not automatic exemptions from tax.
What should I ask an accountant to compare?
Ask a qualified accountant to compare these decisions using your actual figures and timing. Keep one-time sale and moving costs separate from recurring tax savings and housing costs, then consider them together: cash released or retained in the old home affects what you can afford at the destination.
The purpose of these examples is to show what enters the calculation; the choice belongs to you with professional advice.
For help preparing an eligible basic return, IRS-supported VITA and TCE programs may offer free assistance. TCE particularly serves people age 60 and older. Ask the local site about eligibility and which questions it can handle; complex property, business or multistate planning may need a specialist.