In the event you’ve spent the previous couple of years dreaming of buying and selling the snow shovels of New York or Illinois for the sunshine of Florida or Nevada, you aren’t alone. However as of January 2026, the price of that transfer simply bought much more difficult. Whereas the One Massive Lovely Invoice Act (OBBBA) is legendary for its $6,000 senior deduction, it additionally incorporates some “quiet” provisions that act as a monetary velocity bump for retirees trying to alter their authorized residency.
Tax execs are calling it the “Residency Exit” entice. Whereas the federal authorities doesn’t cost a literal charge to cross state traces, the best way the OBBBA buildings its new deductions and credit makes it a lot simpler on your “outdated” state to say you continue to owe them a minimize. In the event you’re planning a 2026 transfer, you should be careful for these three technical snared hidden within the fantastic print.
1. The “Mid-Yr” OBBBA Deduction Cut up
The OBBBA’s $6,000 senior bonus is an enormous win, however it creates a reporting nightmare when you transfer mid-year. As a result of the deduction is predicated in your Modified Adjusted Gross Revenue (MAGI), shifting from a high-income state to a no-tax state in July forces you to “apportion” your federal breaks throughout two totally different state returns.
In response to the Tax Basis, many states “conform” to federal legislation, which means they robotically settle for the $6,000 deduction. Nonetheless, in case your transfer isn’t documented with “clear and convincing proof,” your outdated state might argue that you simply earned your full 12 months’s earnings underneath their jurisdiction, successfully clawing again the state-level good thing about your federal deduction.
2. The $40,000 SALT “Golden Handcuffs”
One of the crucial standard OBBBA modifications is the rise of the SALT (State and Native Tax) deduction cap to $40,000. For seniors in high-tax states, this can be a godsend—however it additionally creates a “Residency Exit” penalty. In the event you transfer from a state with $30,000 in property taxes to a state with $5,000, your federal tax invoice would possibly really enhance since you’ve misplaced that large itemized deduction.
As famous by Charles Schwab, this increased cap makes staying in high-tax states extra “reasonably priced” on a federal degree than it was once. For some seniors, the “exit charge” is the 1000’s of {dollars} in misplaced federal tax shielding they provide up once they transfer to a low-tax state. You must run the numbers: does the 0% state earnings tax in Florida really beat the $40,000 deduction you get in New Jersey?
3. The “Statutory Resident” Audit Surge
With the OBBBA making tax breaks extra beneficiant, high-tax states are extra determined than ever to maintain you on their rolls. In 2026, states like New York are utilizing Good Meter information and cell phone pings to show you spent greater than 183 days within the state. In the event you “exit” however maintain your outdated dwelling, you danger being hit with a “twin residency” invoice that may price tens of 1000’s in again taxes.
In response to Anchin, if you’re hospitalized in your outdated state or spend “sudden” time there visiting grandkids, you would unintentionally set off the 183-day rule. The “charge” right here isn’t a one-time cost; it’s the price of a multi-year audit the place the state assumes you’re a resident till you show in any other case.
Transferring with Warning
The OBBBA has made 2026 a terrific 12 months to be a senior, however it’s a tough 12 months to be a “Snowbird.” To keep away from the “Residency Exit” traps, be sure you doc your transfer with a paper path that features a new driver’s license, voter registration, and—most significantly—a change in your “close to and expensive” gadgets. Don’t let the thrill of a brand new zip code blind you to the quiet provisions that might flip your “Massive Lovely” transfer right into a expensive tax headache.
Are you planning a transfer to a special state this 12 months to save lots of on taxes? Depart a remark beneath and tell us if the brand new OBBBA guidelines have modified your thoughts about the place to retire!
