If you’re hunting for the best states for high networth individuals, the short answer is that it depends on what you’re protecting: income, investments, an inheritance, or a business. States like Florida, Texas, Nevada, Wyoming, South Dakota and Washington regularly come up because they don’t tax wage income at the state level, and several offer strong trust and asset-protection laws. But the cheapest state on paper isn’t always the best fit.
Start with income tax
This is the headline factor. Several states levy no broad personal income tax, including Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. Tennessee and New Hampshire have historically taxed little or no wages as well, though their rules around investment income have shifted over time, so verify the current law.
For someone earning high income or selling a business, the gap between a no-tax state and a high-tax one can be huge. A single large capital gain in California or New York is treated very differently than the same gain in Florida. Still, a tax saving can be erased if you pay more in other ways, which brings us to the next point.
Don’t overlook property and sales taxes
Texas has no income tax but property taxes are relatively high. Washington leans on sales tax and has its own tax on certain capital gains. Florida’s property taxes can jump when a home is reassessed after a sale. If you own expensive real estate, add up the whole bill rather than comparing one line.
A rough checklist
- State income and capital gains tax
- Property tax on your actual home value
- Sales tax and fees on things you buy often
- Estate or inheritance tax
Estate and inheritance taxes matter more than people think
A number of states impose their own estate or inheritance tax, often with exemption thresholds much lower than the federal one. Washington, Oregon, Massachusetts, Illinois, Maryland and New York are among those with an estate tax, and some others, like Pennsylvania and New Jersey, have inheritance taxes. Florida and Texas don’t. If you expect to leave a large estate, this can outweigh income-tax savings.
Federal rules also apply everywhere, so it’s worth reading the guidance on the IRS website and then talking with an estate attorney who knows your state.
Trust laws and asset protection
This is where South Dakota, Nevada, Delaware and Wyoming earn their reputation. They’ve modernized trust statutes to allow long-lasting trusts, flexible administration and, in some cases, stronger protection from creditors. Families who want multigenerational planning often look here, and you don’t always have to live in the state to use its trust laws, though the details are technical.
Florida and Texas are known for generous homestead protections, which can shield a primary residence from certain creditors. The rules are specific and have limits, so don’t assume.
Lifestyle is part of the equation
Money doesn’t live in a spreadsheet. Think about where you’ll actually spend your time. Do you want an airport that serves your travel needs? Quality healthcare? A climate you can stand in August? A community you like? Some people save six figures a year in taxes by moving, then discover they miss family and fly back every month.
Residency rules are another trap. States like New York and California pursue former residents aggressively and look at where you spend days, where your family lives and where you keep your belongings. Moving on paper without moving in life invites an audit.
Picking among the best states for high networth individuals
Pair your situation with the state. A founder preparing to sell a company might favor a no-income-tax state. A family focused on passing wealth down might choose based on estate tax and trust law. Someone semi-retired may care most about property tax and healthcare.
Before any move, model the numbers with a CPA and an estate lawyer. Laws change, and what’s true this year may not hold next year.
Common mistakes people make when choosing
The first is chasing a single tax line. Someone moves to a no-income-tax state, keeps a business entity registered elsewhere, and finds the old state still wants its share. Source-of-income rules can follow you.
The second is ignoring the people around you. Moving away from an accountant, attorney or family who help manage things can cost more than it saves, at least for a while.
The third is timing. Moving before a big sale, not after, can matter a lot, but so can the paperwork showing you really changed domicile. Keep records: a new driver’s license, voter registration, a lease or deed, and a pattern of where you actually sleep.
Finally, remember that tax law is political and changes. A state with a friendly regime today may revisit it. Build a plan that works even if rates move a bit, rather than one that only works under today’s rules.
This article is for general information only and is not financial advice.
Related reading
- Braunwyn Windham-Burke Net Worth: What Is Publicly Known
- OG from Basketball Wives: Net Worth, Career and How Estimates Work
Photo: Christopher Ko, CC BY-SA 4.0, via Wikimedia Commons
