Differing Laws of New Jersey and Florida

New Jersey has one of the highest income taxes in the nation. New Jersey’s income tax rate can range from 1.4% to 8.97% on state income. The state of Florida has no state income tax. Consequently, if you are a New Jersey resident and you want to reduce your potential tax liability, becoming a resident of Florida can help you do that.

New Jersey also imposes a state inheritance tax (based on who your property goes to at death). The state of Florida has no estate tax and no inheritance tax. If you think your estate will have to pay significant state estate or inheritance taxes, you may want to consider becoming a Florida resident, especially if you already have a home there.

Florida’s Constitution prohibits a state income tax and further prohibits municipalities in Florida from imposing an income tax. Because it would take a constitutional amendment to change this prohibition, it is highly unlikely that you would need to worry about Florida later imposing an income tax after you have established residency there.

However, even if you do establish Florida residency, you may still have to pay New Jersey income taxes on any income earned in those states. For instance, you will have to pay New Jersey income tax on rental income earned from real properties situated in New Jersey. Additionally, New Jersey will tax all wages earned from a New Jersey employer unless the nonresident’s work must be performed from his or her out-of-state location for reasons other than convenience.