If you’ve spent the last few years dreaming of trading the snow shovels of New York or Illinois for the sunshine of Florida or Nevada, you aren’t alone. But as of January 2026, the cost of that move just got a lot more complicated. While the One Big Beautiful Bill Act (OBBBA) is famous for its $6,000 senior deduction, it also contains some “quiet” provisions that act as a financial speed bump for retirees attempting to change their legal residency.
Tax pros are calling it the “Residency Exit” trap. While the federal government doesn’t charge a literal fee to cross state lines, the way the OBBBA structures its new deductions and credits makes it much easier for your “old” state to claim you still owe them a cut. If you’re planning a 2026 move, you need to watch out for these three technical snared hidden in the fine print.
1. The “Mid-Year” OBBBA Deduction Split
The OBBBA’s $6,000 senior bonus is a massive win, but it creates a reporting nightmare if you move mid-year. Because the deduction is based on your Modified Adjusted Gross Income (MAGI), moving from a high-income state to a no-tax state in July forces you to “apportion” your federal breaks across two different state returns.
According to the Tax Foundation, many states “conform” to federal law, meaning they automatically accept the $6,000 deduction. However, if your move isn’t documented with “clear and convincing evidence,” your old state may argue that you earned your full year’s income under their jurisdiction, effectively clawing back the state-level benefit of your federal deduction.
2. The $40,000 SALT “Golden Handcuffs”
One of the most popular OBBBA changes is the increase of the SALT (State and Local Tax) deduction cap to $40,000. For seniors in high-tax states, this is a godsend—but it also creates a “Residency Exit” penalty. If you move from a state with $30,000 in property taxes to a state with $5,000, your federal tax bill might actually increase because you’ve lost that massive itemized deduction.
As noted by Charles Schwab, this higher cap makes staying in high-tax states more “affordable” on a federal level than it used to be. For some seniors, the “exit fee” is the thousands of dollars in lost federal tax shielding they give up when they move to a low-tax state. You have to run the numbers: does the 0% state income tax in Florida actually beat the $40,000 deduction you get in New Jersey?
3. The “Statutory Resident” Audit Surge
With the OBBBA making tax breaks more generous, high-tax states are more desperate than ever to keep you on their rolls. In 2026, states like New York are using Smart Meter data and mobile phone pings to prove you spent more than 183 days in the state. If you “exit” but keep your old home, you risk being hit with a “dual residency” bill that can cost tens of thousands in back taxes.
According to Anchin, if you are hospitalized in your old state or spend “unexpected” time there visiting grandkids, you could accidentally trigger the 183-day rule. The “fee” here isn’t a one-time charge; it’s the cost of a multi-year audit where the state assumes you are a resident until you prove otherwise.
Moving with Caution
The OBBBA has made 2026 a great year to be a senior, but it’s a tricky year to be a “Snowbird.” To avoid the “Residency Exit” traps, make sure you document your move with a paper trail that includes a new driver’s license, voter registration, and—most importantly—a change in your “near and dear” items. Don’t let the excitement of a new zip code blind you to the quiet provisions that could turn your “Big Beautiful” move into a costly tax headache.
Are you planning a move to a different state this year to save on taxes? Leave a comment below and let us know if the new OBBBA rules have changed your mind about where to retire!
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