People in different states face vastly different local tax regimes, and the higher rates in some states are prompting a number of ultra-wealthy investors to move from northern to southern states, according to the Spectrem Group, a market research and consulting firm in Chicago.

Slightly more than half of investors with at least $25 million in assets are considering a move south to lower their tax bills, said Spectrem in its recent “$25 Million Plus Investors” report. The number of those considering relocation has grown since Spectrem started asking the question in 2014. At that time, the percentage contemplating a move was about one-quarter.

“This group has the financial ability to relocate to another state,” said Spectrem president George Walper Jr. “The trend did not surprise me [because] different states have different income, estate and real estate taxes. The wealthy have been leaving places like New York, New Jersey, California and Illinois” for states with lower taxes for several years already.

Among those considering a move, 45% are doing it for tax reasons, the report said. Respondents also said they’re looking for a better climate.

The Covid-19 pandemic has also prompted the rich to contemplate new scenery because the lockdown made them realize they can work anywhere, Walper said, adding that some folks might consider leaving the U.S. altogether because of pending federal tax hikes.

The survey showed that nearly three-quarters of wealthy investors are concerned about state and local income taxes, as well as real estate and estate taxes. That question was not asked when the survey was taken in 2018. For the recent survey, Spectrem polled 151 individuals who were the primary financial decision makers in their households.

“Tax increases have always been a key national concern for $25-million-plus investors, but the percentage of investors concerned over taxes has increased significantly,” the report said. “In 2014, taxes were a top national concern for 65% of $25-million-plus investors. In 2020, the percentage of the wealthiest Americans concerned about taxes jumped up to 75%.”

The report noted that 47% of investors sold equities during the pandemic-fueled economic shutdown, while 43% bought equities during that time.

“Just under a quarter have purchased real estate or real estate investments since the economic shutdown,” Spectrem said. “Financial professionals should be aware that many of these $25-million-plus investors may be interested in ways to profit from the current economic environment and [advisors] should provide opportunities for these investment changes.”

Advisors can help wealthy investors maneuver through new tax pressures, including likely increases in federal taxes. But they also need to create relationships with younger generations of clients and need to be willing to talk to all of a client’s other advisors and consultants, the report said.

“It is very unusual for the wealthiest Americans to only work with one type of professional to manage their wealth,” the report said. “For those investors who work with a financial professional, the firm that has the greatest percentage of their assets still only has 53% of their assets.”