Ottawa to Atlanta: The Defence Corridor, a Federal Pension, and Georgia's Flat Tax

Atlanta's defence footprint is larger than most Canadians expect: Lockheed Martin's Marietta plant, Robins Air Force Base two hours south, and a contractor base that recruits from Ottawa's defence and intelligence community. Add the CDC, the Fortune 500 headquarters, and Atlanta's consulting offices, and the Ottawa-to-Atlanta corridor covers most of the capital's professional workforce. The tax picture is a large cut: Ontario's combined top rate of about 53.5% becomes about 42% in Georgia.

Key takeaways

• Ontario's roughly 53.5% top rate, including the provincial surtax, sets the departure tax. On a $300,000 unrealized gain, about $80,000.
• Georgia's flat income tax is 4.99% for 2026, down from 5.19% in 2025. No city income tax.
• A Canadian public service pension paid to a Georgia resident is taxed in the US with Canadian withholding capped at 15% under the treaty once NR301 is filed; Georgia's retirement income exclusion may cover part of it after age 62.
• 13% HST becomes 8.9% sales tax in the City of Atlanta.
• OHIP ends on permanent departure.

The Ontario departure

Departure tax applies to non-registered investments, private company shares, crypto, and foreign property at fair market value on the departure date. Ontario real estate, RRSPs, TFSAs, and registered pensions are excluded. Report on Form T1243, list holdings on Form T1161 if the total exceeds $25,000. The Ontario surtax ends on departure. OHIP ends on permanent departure.

The federal pension in Georgia

Under Article XVIII of the treaty, Canadian tax on periodic pension payments to a US resident is capped at 15%; file NR301 with the pension centre before the first post-departure payment. The US taxes the pension as ordinary income with a foreign tax credit, and Georgia taxes it at the flat rate, with a retirement income exclusion available from age 62. CPP and OAS are taxable only in the US.

Atlanta's side

Flat state income tax stepping down annually; no city income tax; 8.9% sales tax in the City of Atlanta, 7% to 7.75% in Cobb and the northern suburbs where the defence employers sit; property tax near 1% effective with county homestead exemptions; no estate tax.

The RRSP in Georgia

Federally deferred under the treaty and deferred for Georgia because the state starts from federal AGI. Withdrawals face 25% Canadian withholding on lump sums, 15% on periodic RRIF payments within the treaty limit, a US foreign tax credit federally, and Georgia's flat rate.

Clearances and the residency start

Defence roles often require US citizenship or a green card. A sponsored green card sets the US residency start on its issue date unless the substantial presence test was already met; coordinate the Canadian departure date with it.

Who makes this move

DND and CSE engineers to Lockheed Martin Marietta and the contractor base, Ottawa health-policy professionals to the CDC, federal consultants to Atlanta's consulting offices, and Ottawa finance and procurement staff to the Fortune 500 headquarters.

Worked example

A former DND engineer and spouse move to Marietta on September 30 with a $40,000-a-year public service pension, $150,000 of unrealized gain in a non-registered account, $500,000 in RRSPs, and a Kanata home sold in the departure year.

• Departure tax. $150,000 gain, $75,000 taxable, at about 53.5%: roughly $40,000.
• Pension. NR301 filed; 15% Canadian withholding; taxed federally with a foreign tax credit and by Georgia at the flat rate.
• RRSP. No tax on departure; federal and Georgia deferral.
• Home. Sold as a resident under the principal residence exemption.
• Marietta. Combined top rate about 42%. HST 13% becomes sales tax 7% in Cobb County.

Official sources

"Pensions may also be taxed in the Contracting State in which they arise and according to the laws of that State; but if a resident of the other Contracting State is the beneficial owner of a periodic pension payment, the tax so charged shall not exceed 15 per cent of the gross amount of such payment." — Canada-United States Tax Convention, Article XVIII(2)(a), https://www.canada.ca/en/department-finance/programs/tax-policy/tax-treaties/country/united-states-america-convention-consolidated-1980-1983-1984-1995-1997.html

"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

The Georgia income tax rate has been reduced to a flat rate of 4.99%. — Georgia Department of Revenue, Important Tax Updates, https://dor.georgia.gov/taxes/important-tax-updates

Practitioner note

Georgia's retirement income exclusion is one of the more generous in the Southeast, and a Canadian pension qualifies once the client reaches the age threshold. We flag the birth-year timing when the pension starts, because a client who turns 62 in March and starts the pension in January leaves part of the exclusion on the table.

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

Next step

Fairlight prepares the Ontario departure return, the pension withholding paperwork, and the first-year federal and Georgia returns. See cross-border pricing or book a call.