Toronto to Raleigh: Tech, the Research Triangle, and North Carolina's Falling Flat Tax

Research Triangle Park's software employers, its pharma cluster, and its universities recruit Toronto's tech workers, life sciences professionals, and academics. The move is a large tax cut: Ontario's combined top rate of about 53.5% becomes about 41% in North Carolina, with no city income tax and a state rate that steps down every January.

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.
• North Carolina's flat income tax is 3.99% for 2026 and still stepping down. No city income tax.
• North Carolina follows the treaty's RRSP deferral.
• 13% HST becomes 7.25% sales tax in Wake County.
• 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 under the principal residence exemption, rent it under NR6 and Section 216, or face Toronto's Vacant Home Tax if it sits empty. OHIP ends on permanent departure.

Raleigh's side

North Carolina's flat income tax is 3.99% for 2026 under the state's step-down schedule; no city income tax; 7.25% sales tax in Wake County; property tax near 0.8% effective; no estate tax.

The RRSP in North Carolina

Federally deferred under Article XVIII of the treaty and deferred for North Carolina 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 North Carolina's flat rate.

Equity

RSUs vesting after the move are split by working days between Canada and the US; the state and any local authority tax their share. Both payrolls may withhold on the full amount; the excess is recoverable on the first-year returns.

Who makes this move

Toronto and Waterloo software engineers to Research Triangle Park's tech employers, Toronto pharma and biotech professionals to the Triangle's life sciences cluster, Ontario academics to Duke, UNC, and NC State, and Bay Street finance staff to Raleigh's growing fintech sector.

Worked example

A Toronto software engineer moves to Cary on June 30 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; North Carolina taxes its share at the flat rate.
• RRSP. No tax on departure; federal and North Carolina deferral.
• Cary. Combined top rate about 41%. HST 13% becomes sales tax 7.25%.

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

For Taxable Years after 2025, the North Carolina individual income tax rate is 3.99% (0.0399). — North Carolina Department of Revenue, Tax Rate Schedules, https://www.ncdor.gov/taxes-forms/individual-income-tax/tax-rate-schedules

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-Raleigh is one of the cleanest files we prepare: no city tax, a flat and falling state rate, low property tax, and a state that follows the treaty. The Ontario side is the whole file.

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

Next step

Fairlight prepares the Ontario departure return, the property filings, and the first-year federal and North Carolina returns for Raleigh clients. See cross-border pricing or book a call.