Escape New Jersey's 10.75% Tax Rate

New Jersey doesn't have a formal "exit tax" on individuals, but it does have unique rules for selling property. When you sell NJ real estate, 2% of the sale price (or 8.97% of gains, whichever is less) is withheld for estimated taxes. This isn't an exit tax—it's a withholding that's reconciled on your tax return. The Division of Taxation is also known for aggressively pursuing former residents who claim to have moved but maintain NJ connections.

New Jersey uses a "domicile" test based on where you intend your permanent home to be. Key factors include: where you spend most of your time, location of your immediate family, where you vote, your driver's license state, bank account locations, where you receive mail, professional and business affiliations, club and religious memberships, and where your estate documents are executed. No single factor is determinative—NJ looks at the totality of circumstances.

Unlike New York, New Jersey doesn't have a formal statutory residence test based on days. However, time spent in NJ is a significant factor in determining domicile. If you spend the majority of your time in NJ while claiming Florida residency, the Division of Taxation may challenge your domicile change. Keep detailed records of where you sleep each night.

New Jersey's Division of Taxation is known for aggressive residency audits, especially of high-income individuals who claim to move to no-tax states. Auditors will examine where your spouse and children live, where your vehicles are registered, where you have social connections, and your credit card and bank records. The burden is on YOU to prove you left.

New Jersey has a "throwback rule" for corporations, but individual income from pass-through entities (S-corps, partnerships, LLCs) is taxed based on residency. If you establish Florida domicile, your K-1 income from NJ businesses may still be partially taxable to NJ as "source income." Consult a tax professional about allocation rules.

You don't have to sell, but keeping a NJ home significantly increases audit risk. If you keep NJ property, it should ideally be rented out (not available for your use), and you need overwhelming evidence of Florida domicile. Many tax advisors recommend selling or converting to investment property within 1-2 years of moving. Remember the 2% withholding on NJ property sales.

New Jersey's top marginal rate is 10.75%—one of the highest in the nation. For someone earning $200,000, potential state tax savings could be $12,000+ annually. For $400,000 in income, savings could exceed $30,000. Florida has no state income tax on wages, investment income, or retirement income. Over 10 years, savings can be $150,000+. Individual situations vary—consult a tax professional.

Maintain: Florida driver's license, Florida voter registration, Declaration of Domicile filed in Florida, lease/deed for Florida residence, utility bills in Florida, records of time spent in each state (calendars, travel receipts, E-ZPass records), Florida vehicle registration, updated estate documents executed in Florida, records of NJ ties severed with dates, and documentation of Florida social/religious memberships.