Moving from NJ to Florida: Tax Advantages and What Downsizers Need to Know in 2026

Every year, thousands of New Jersey homeowners pack up and head south to Florida. And every year, the question is the same: does the financial math work? The short answer is yes for most people, especially retirees and downsizers. The longer answer involves understanding New Jersey's exit tax, Florida's homestead exemption, the real difference in property taxes, and the practical steps to make the transition smooth.

As a licensed agent in both New Jersey (since 1993) and Florida, I have guided dozens of Bergen County families through this exact move. The tax advantages are significant, but the details matter. Here is the full picture for 2026.

The Biggest Advantage: No State Income Tax

This is the headline, and it is hard to overstate. Florida has no state income tax. Zero. That means Social Security benefits, pension income, 401(k) distributions, IRA withdrawals, and all other retirement income are completely tax-free at the state level in Florida.

Compare that to New Jersey, which taxes retirement income at rates up to 10.75%. New Jersey does offer a pension and retirement income exclusion that allows married couples filing jointly with total income under $100,000 to exclude up to $100,000 of retirement income. But that exclusion phases out above $100,000 and disappears entirely above $150,000 in gross income. For a couple with $200,000 in annual retirement income, the difference can mean paying $8,000 to $12,000 more per year in New Jersey taxes than they would in Florida.

Over a decade of retirement, that tax savings alone can reach six figures. For many downsizers, that difference alone justifies the move.

The Florida Homestead Exemption: Real Savings

Florida offers one of the most homeowner-friendly property tax protections in the country. The Florida Homestead Exemption allows homeowners who establish Florida as their primary residence to reduce their home's taxable assessed value by up to $50,000. Here is how it breaks down:

• The first $25,000 exemption applies to all property taxes, including school levies.
• The second $25,000 applies to non-school property taxes only, and is available to homeowners whose assessed value is at least $50,000.
• Additionally, many Florida counties offer a senior exemption of up to $50,000 for residents aged 65 and older with limited household income.

Beyond the initial exemption, Florida's Save Our Homes amendment caps annual increases in assessed value at 3% (or the Consumer Price Index, whichever is lower). For long-term Florida homeowners, this cap means property tax bills grow slowly even as market values climb. And crucially, Florida allows portability — homeowners who sell their Florida home and buy another in the state can transfer up to $500,000 of accumulated Save Our Homes benefit to their new property.

To claim the homestead exemption, you must file with your county property appraiser by March 1 of the year following your move, and you must have established Florida as your permanent legal residence. This means obtaining a Florida driver's license, registering to vote in Florida, and spending the majority of the year in the state.

Property Tax Comparison: New Jersey vs. Florida

This is where the numbers get striking. New Jersey has the highest property taxes in the United States, with an average effective rate of roughly 1.88% to 2.42%. In Bergen County specifically, the average annual property tax bill for a single-family home ranges from approximately $12,000 to $15,000, and can surpass $20,000 in premium towns like Tenafly, Ridgewood, or Franklin Lakes.

Florida's average effective property tax rate is approximately 0.79% to 0.89% — roughly one-third to one-half of New Jersey's rate. On a $500,000 home in Florida, the annual property tax bill would be roughly $4,000 to $5,000. Combined with the homestead exemption and Save Our Homes cap, a retiree moving from Bergen County (paying $13,000 to $15,000 in annual property tax) to a similarly valued Florida home could save $8,000 to $10,000 per year on property taxes alone.

When you add that to the income tax savings, a downsizing couple could save $17,000 or more per year in total state and local taxes after relocating to Florida. Over a 15-year retirement, that is more than $250,000 in savings.

The NJ Exit Tax: What You Need to Know

New Jersey imposes what is commonly called an exit tax on homeowners who sell their New Jersey property. When you sell a New Jersey home, the state requires title companies to withhold 2% of the total sale price (not just the gain) and remit it to the state. This withholding applies to sales above $1,000, and it is strictly enforced.

The catch is that the 2% withholding is an advance payment against any capital gains tax you may owe, not an additional tax. If your actual tax liability is lower than the withholding, you can file for a refund. But the process takes time, and many relocators are surprised by the cash-flow impact when they are expecting their full net proceeds at closing.

For a home that sells for $750,000, the 2% withholding is $15,000 that goes to the state at closing. If you are moving to Florida and using those proceeds for your new home purchase, you need to be aware of this timing gap. Working with an experienced NJ-FL transition agent who understands both states' tax rules is essential to avoid surprises.

For a full breakdown of New Jersey's real estate transaction costs, see our NJ Realty Transfer Fee and Mansion Tax guide.

The Caveat: Florida Sales Tax

Florida does have a higher sales tax than New Jersey, which partially offsets some of the property and income tax savings. Florida's state sales tax is 6%, and with county surtaxes the total rate typically runs 7% to 7.5% depending on the county. New Jersey's sales tax is 6.625%, so the difference is modest for everyday purchases.

For high-spending retirees, the sales tax difference matters but is far outweighed by the property tax and income tax savings. Most of the fruits and vegetables, prescription drugs, and other essentials that retirees spend heavily on are exempt from Florida sales tax.

Practical Steps for a Tax-Smart Relocation

If you are ready to start planning an NJ-to-Florida move, here are the key financial steps to take:

• Consult a tax professional before listing your New Jersey home. Your specific tax situation matters, and a CPA who understands multi-state moves can help you structure the transition efficiently.
• Understand your homestead timeline. You need to establish Florida residency before you can claim the homestead exemption. Plan your move so you are in Florida by early in the year, giving you time to file the exemption by March 1.
• Budget for the NJ exit tax. The 2% withholding comes out of your sale proceeds at closing. Factor that into your cash-flow planning for the Florida home purchase.
• Compare property tax rates by Florida county. Not all Florida counties have the same effective tax rates. Palm Beach, Broward, and Palm Beach Gardens each have different millage rates. See our South Florida neighborhood guide for a comparison.
• Work with a dual-state specialist. A licensed agent in both New Jersey and Florida who understands the tax implications on both sides can save you tens of thousands of dollars in mistakes and missed opportunities.

For a more detailed step-by-step guide, see our downsizing before moving to Florida guide and the complete NJ-to-Florida relocation guide.

Is the Tax Move Worth It?

For most New Jersey retirees and downsizers, the answer is yes. The combined savings on state income tax and property taxes typically amount to $15,000 to $20,000 per year for a couple with a paid-off home and a moderate retirement income. Over your retirement years, that is a life-changing amount of money.

But the tax math is only part of the story. The lifestyle differences, the proximity to family, the quality of healthcare, and the emotional weight of leaving a home where you raised your family all matter too. The best decision is one that works on paper and in real life.

As a REALTOR licensed in both New Jersey (License #9236275) and Florida (License #SL3588731), I help Bergen County homeowners navigate every aspect of the NJ-to-Florida transition. Whether you are just beginning to explore the idea or are ready to list your New Jersey home and start looking in Boca Raton, Jupiter, or Palm Beach Gardens, I would welcome the chance to help.