Where should rich clients retire?
If your clients are super wealthy and want to avoid a big tax bill, they’re better off retiring in Michigan than in Maryland.
That’s according to a study from online finance tool provider SmartAsset that ranked all eligible states by the total amount of taxes a client will pay — or an overall tax-burden dollar amount — including estate, property and state and federal income taxes. While, some of the pricier parts of the country like Vermont, Oregon and Rhode Island had the highest tax burden and ended up on the bottom of the list, outliers like Florida (4) broke the top ten.
States in the middle of the country generally fared much better, with the exception of Illinois (7) and Wisconsin (13). Nevada, Tennessee and Florida were among the frontrunners. (Note: Hawaii was left off the list due to a lack of estate tax reporting.)
While the coastal states generally trailed the pack because of higher taxes and costs of living, they fare much better in other categories like health care quality, weather and overall well-being.
The study estimated federal and state income taxes for the top 1% of earners. To determine income taxes, the study used an estimated household income of $465,626, the amount needed to crack the 1%, according to IRS data. Property taxes were based on a home value five times the income or more than $2 million and estate taxes were considered on an estate worth $15 million.
Total estate taxes reported in 2016 topped nearly $18.3 billion, according to the most recent data available from the IRS. California had the most number of estate tax returns filed the prior year, followed by East Coast states like Florida and New York, according to the agency. In all, 5,200 households filed estate taxes nationwide.
Here are the best and worst places for wealthy clients to retire based on total tax burdens, according to the SmartAsset study.