Toronto to Nashville: Healthcare, Corporate Relocation, and Zero State Income Tax

Nashville's healthcare companies, its expanding technology campuses, and its corporate headquarters recruit Toronto's finance, technology, and healthcare professionals. The move is one of the largest rate cuts on the map: Ontario's combined top rate of about 53.5% becomes a federal-only 37%. The planning is on the Ontario side.

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.
• Tennessee has no state income tax; US tax is federal only.
• 13% HST becomes 9.25% sales tax in Nashville.
• Tennessee property tax is low, near 0.6% to 0.9% effective.
• OHIP ends on permanent departure. Keeping the Toronto home means NR6, Section 216, and the Vacant Home Tax if empty.

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 pensions are excluded. Report on Form T1243, list holdings on Form T1161 if the total exceeds $25,000, and post security under Form T1244 for illiquid assets. The Toronto home: sell it, rent it under NR6 and Section 216, or face the Vacant Home Tax.

Nashville's side

No state income tax on wages, salaries, or investment income; sales tax 9.25% in Nashville and up to 9.75% in some Tennessee counties; property tax near 0.6% to 0.9% effective; no estate tax; no inheritance tax.

The RRSP in Tennessee

Untouched on departure, federally deferred under the treaty, with no Tennessee 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

RSUs vesting after the move are split by working days between Canada and the US; no Tennessee layer. Both payrolls may withhold on the full amount.

Who makes this move

Toronto healthcare and finance professionals to HCA and Nashville's healthcare companies, Toronto software engineers to the technology campuses, Bay Street finance staff to Nashville's corporate headquarters, and Ontario construction and real estate professionals to the Nashville building boom.

Worked example

A Toronto software engineer moves to Nashville on May 31 with $220,000 of unrealized gain in a non-registered account, $450,000 in an RRSP, RSUs vesting after the move, and a Toronto condo sold in the departure year.

• Departure tax. $220,000 gain, $110,000 taxable, at about 53.5%: roughly $59,000.
• Condo. Sold as a resident under the principal residence exemption.
• RSUs. Vests split by working days; no Tennessee layer.
• RRSP. No tax on departure; periodic withdrawals later at 15%.
• Nashville. No state income tax. HST 13% becomes sales tax 9.25%. Property tax on a $650,000 home around $4,500.

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

The general state tax rate is 7%. The local tax rate varies by county and/or city. — Tennessee Department of Revenue, Sales and Use Tax, https://www.tn.gov/revenue/taxes/sales-and-use-tax.html

There are 5 Ontario income tax brackets and 5 corresponding tax rates. — Government of Ontario, Personal income tax, https://data.ontario.ca/dataset/personal-income-tax-rates-and-credits

Practitioner note

Toronto-to-Nashville is a clean file: no state tax, low property tax, and a state that adds nothing to the RRSP. The planning is entirely on the Ontario side, and the departure date is the decision.

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

Next step

Fairlight prepares the Ontario departure return, the property filings, and the first-year US return for Nashville clients. See cross-border pricing or book a call.