Montreal to Austin: AI, Three Authorities, and Zero State Income Tax

Montreal's AI labs and gaming studios have sent a steady stream of engineers to Austin's technology employers and startups. The move is the largest rate drop a Canadian can make on salary: Quebec's combined top rate of about 53.3% becomes a federal-only 37%. The departure year runs through three authorities, and Austin adds property tax.

Key takeaways

• Two Canadian departure returns: the federal T1 and Revenu Québec's TP-1, with matching departure dates.
• Quebec's roughly 53.3% top rate sets the departure tax. On a $300,000 unrealized gain, about $80,000.
• Texas has no state income tax; US tax is federal only.
• Quebec's 14.975% combined GST and QST becomes 8.25% sales tax in Austin.
• Travis County property tax runs about 1.8% to 2%. RAMQ ends on departure.

The three-authority departure

The federal deemed disposition applies to non-registered investments, private company shares, crypto, and property outside Canada; Quebec mirrors it. Report on federal Form T1243 (with T1161 if the property list exceeds $25,000) and on the Quebec equivalents. RAMQ ends when you leave Quebec to settle outside Canada. QPP paid later to a Texas resident is taxable only in the US.

Austin's side

No income tax; property tax around 1.8% to 2% effective with a homestead exemption and a 10% annual appraisal cap; 8.25% sales tax; no estate tax.

The RRSP in Texas

Untouched on departure, federally deferred under the treaty, with no Texas layer. Withdrawals face 25% Canadian withholding on lump sums, 15% on periodic RRIF payments within the treaty limit, with a US foreign tax credit.

Equity

AI and startup compensation is equity-heavy. RSUs and options vesting or exercised after the move are split by working days between Canada and the US; both payrolls may withhold on the full amount.

Who makes this move

Montreal machine learning engineers and researchers to Austin's AI employers, Quebec game developers to Austin's studios, Montreal aerospace engineers to the region's advanced manufacturing, and Quebec software talent to Austin's enterprise software companies.

Worked example

A Montreal machine learning engineer moves to Austin on June 30 with $200,000 of unrealized gain in a non-registered account, $350,000 in an RRSP, RSUs vesting after the move, and a Plateau condo sold in the departure year.

• Departure tax. $200,000 gain, $100,000 taxable, at about 53.3%: roughly $53,000 across the T1 and TP-1.
• Condo. Sold as a resident under the principal residence exemption on both returns.
• RSUs. Vests split by working days; no Texas layer.
• RRSP. No tax on departure; periodic withdrawals later at 15%.
• Austin. No state income tax. Sales tax 14.975% becomes 8.25%.

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

Revenu Québec sets out the income tax obligations of individuals who cease to be resident in Québec, including the deemed disposition of property on departure. — Revenu Québec, Leaving Québec, https://www.revenuquebec.ca/en/citizens/your-situation/residence-status-and-tax-obligations/leaving-quebec/

"Texas imposes a 6.25 percent state sales and use tax on all retail sales, leases and rentals of most goods, as well as taxable services. Local taxing jurisdictions (cities, counties, special purpose districts and transit authorities) can also impose up to 2 percent sales and use tax for a maximum combined rate of 8.25 percent." — Texas Comptroller of Public Accounts, Sales and Use Tax, https://comptroller.texas.gov/taxes/sales/

Practitioner note

Montreal AI movers often hold shares in a Quebec startup that has not yet had a liquidity event. Those shares are deemed sold on departure at fair market value, and the valuation is the whole file. We get a defensible valuation before the date is set and file T1244 to defer the tax on shares that cannot be sold to pay it.

See also: Weighing Florida instead? See the Canada-to-Florida guide, or the same city's Montreal to Miami guide.

Next step

Fairlight prepares the T1, the TP-1, the T1244 deferral, and the first-year US return for Austin clients. See cross-border pricing or book a call.