Alberta to Florida: The Lowest-Rate Exit Meets Zero State Income Tax

Alberta to Florida is the cleanest province-to-state move on the map. Alberta's flat 15% top provincial bracket gives a combined top marginal rate near 48%, the lowest of any province, and Alberta charges no provincial sales tax. Florida charges no personal income tax and no estate tax. The result is a move where the departure tax bill is smaller than it would be from Ontario, BC, or Quebec, and where the US side of the file is federal only.

Key takeaways

• Alberta's combined top rate of about 48% is the rate your departure tax is measured against. On a $300,000 unrealized gain, that is roughly $72,000, versus about $80,000 from Ontario.
• Sales tax goes up: Alberta's 5% GST becomes 7% in Miami-Dade, Broward, and Palm Beach.
• Alberta Health Care Insurance Plan coverage ends when you leave the province permanently. Budget for the gap before your US plan starts.
• Your RRSP is untouched on departure and grows tax-deferred in Florida with no state-level addback.
• The Alberta-to-Florida corridor is heavy on energy finance and retirees, and both groups have the same first question: which month to leave.

The Alberta departure

The deemed disposition rules are federal, so Alberta residents face the same list of caught assets as everyone else: non-registered investments, private company shares, crypto, and foreign property. Canadian real estate, RRSPs, TFSAs, and pensions are excluded. You report the deemed gain on Form T1243 and list your holdings on Form T1161 if their total fair market value exceeds $25,000.

What Alberta changes is the rate. The 33% federal top bracket plus Alberta's 15% gives about 48%. Half of a capital gain is taxable, so the effective departure tax on a gain taxed at the top rate is roughly 24 cents on the dollar. That is the lowest effective exit rate in Canada.

Two Alberta-specific items to handle before you leave:

• AHCIP. The Alberta Health Care Insurance Plan covers residents who are present in Alberta for the required portion of the year. When you move permanently to the US, coverage ends. Confirm the end date with Alberta Health and arrange US coverage to start the same month.
• Private corporations. Calgary produces a lot of professional corporations and holding companies. The shares are deemed sold on departure, and the corporation loses CCPC status the day the controlling shareholder ceases to be a Canadian resident. Whether to wind it up before leaving, keep it, or reorganize is a separate analysis that needs to start months ahead.

What Florida charges instead

There is no state income tax on wages, investment income, RRSP withdrawals, or capital gains. In exchange, Florida leans on consumption and property:

• Sales tax. 6% state plus county surtax, 7% total in the three South Florida counties. On the way in, that replaces Alberta's 5% GST.
• Property tax. Higher than Alberta on a like-for-like home. A newly purchased South Florida home runs an effective rate in the high 1% range until homestead applies.
• Homestead. Own and occupy as your permanent residence on January 1, apply by March 1, and you get up to $50,000 off assessed value plus a 3% annual cap on assessment increases. Miss the window and you wait a year.
• No estate tax. Florida imposes none, and Alberta has no estate or inheritance tax either, so the only estate-side change is that you enter the US federal estate tax system once domiciled.

The RRSP in Florida

Nothing happens to your RRSP on departure. Under Article XVIII of the Canada-US treaty, US tax on the growth is deferred until withdrawal, and since 2014 that deferral is automatic for eligible individuals. When you withdraw, Canada takes 25% on lump sums or 15% on periodic RRIF payments within the treaty limit, and the US taxes the withdrawal with a foreign tax credit.

Florida has no state income tax, so there is no state to disregard the treaty. This is the reason Florida is the easy RRSP state and California is the hard one.

Who makes this move

The Calgary-to-South-Florida traffic is energy finance and commodities professionals moving into Miami's trading and Latin American energy corridor, plus retirees who have wintered in Naples or Fort Lauderdale for years and are now going permanent. The retiree file is usually simpler on the Canadian side (fewer private company shares) and harder on the US side (the substantial presence test was probably met before the move).

Worked example

An Alberta couple leaves Calgary on June 30 with a $600,000 non-registered portfolio carrying $300,000 of unrealized gain, $900,000 in RRSPs, and a paid-off Calgary home they intend to sell.

• Departure tax. $300,000 gain, $150,000 taxable, at about 48%: roughly $72,000 on the final Alberta return.
• RRSP. No tax on departure. Withdrawals later at 15% Canadian withholding if structured as periodic RRIF payments, with a US foreign tax credit.
• Calgary home. Not deemed sold. If it sells within the year, the principal residence exemption covers the gain. If held and rented, NR6 and Section 216 apply.
• Florida. No state income tax on any of it. Sales tax and property tax on the new house are the only Florida-side costs.

Official sources

"When you leave Canada, you are considered to have sold certain types of property (even if you have not sold them) at their fair market value (FMV) and to have immediately reacquired them for the same amount. This is called a deemed disposition and you may have to report a capital gain (also known as departure tax)." — Canada Revenue Agency, Leaving Canada (emigrants), https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-entering-canada-non-residents/leaving-canada-emigrants.html

"No tax upon estates or inheritances or upon the income of natural persons who are residents or citizens of the state shall be levied by the state, or under its authority." — Florida Constitution, Article VII, Section 5(a), http://www.leg.state.fl.us/statutes/index.cfm?submenu=3#A7S05

Alberta personal income tax rates and brackets are published by the Government of Alberta. — Government of Alberta, Personal income tax, https://www.alberta.ca/personal-income-tax

Practitioner note

Alberta files are the ones where clients most often under-plan because the rate is "already low." The departure tax is smaller, but the T1161 penalty for not listing property is the same $25 a day up to $2,500, and a professional corporation left in limbo after departure creates US Form 5471 filings and potential GILTI exposure every year it survives. Low rate, same forms.

Next step

Fairlight prepares the Alberta departure return, the first-year US return, and ongoing cross-border filings. See cross-border pricing or book a call.