The United States continues to strengthen its position as the global hub for high-net-worth earners. In fact, the US population of high earners climbed 7.6 percent last year, making it the fastest-growing location for this group. But the US also features complicated tax rules for high-earning non-citizens. Too often, a high-net-worth individual (HNWI) will relocate to the US only to be hit by unexpected taxes, overtaxed investments, or penalties for misreporting.
In this article, we lay out the most common tax misconceptions for relocating HNWIs and provide three money-saving relocation tax planning tips to help high-net-worth earners reduce their tax anxieties.
Why high-net-worth individuals are vulnerable to tax setbacks
Global mobility can cause tax complications for any group, but it’s especially challenging for HNWIs. Here’s why relocation tax planning is difficult for high earners and what makes it such a pressing issue:
HNWI relocations grab the attention of tax auditors.
When HNWIs move to the US, tax authorities pay attention, and IRS audits become more frequent. According to the IRS, the US tax authority plans to increase audit rates by more than 50 percent on wealthy individual taxpayers. That makes it more important than ever for high earners to avoid any relocation tax planning mistakes.
Federal tax reform brings lasting changes for HNWIs.
With the passage of the One Big Beautiful Bill Act (OBBBA) in July 2025, federal tax rules have shifted in ways that directly impact high-net-worth individuals. OBBBA makes the 2017 tax brackets permanent (including the top 37% rate) and reintroduces limits on itemized deductions for high earners.
While OBBBA temporarily expands the SALT deduction and raises the standard deduction, these benefits are phased out at higher income levels, limiting their usefulness for many wealthy taxpayers. Combined with new rules around charitable contributions, child credits, and other provisions, the law adds new layers of complexity to relocation tax planning for HNWIs.
US taxes impact international citizens differently than US citizens.
For international citizens relocating to the US, the tax rules are not the same as for US citizens. Additional filing requirements, reporting obligations, and exposure to US penalties can apply. Tax planning may also require consideration of the overall, global tax position, for taxpayers with ongoing tax complexities in other countries. Tax savings projected for the US only, may quickly evaporate if the full picture is not analyzed.
Overlooking these differences for non-US citizens can quickly escalate into costly mistakes, including unexpected tax liabilities, significant fines, or even legal consequences.
Common relocation tax planning mistakes for high earners
When high-net-worth earners relocate to the US, they frequently underestimate both their tax payment and reporting obligations. Here are a few common tax problems high earners experience when they move:
Passive foreign investment companies (PFIC) increase tax complexity.
When high-net-worth earners plan for cross-border moves, they may not realize they own investments through a PFIC. A PFIC is any foreign corporation that meets either of two tests: it receives 75 percent or more of its gross income from nonbusiness (passive) sources, or 50 percent or more of its assets produce or are held to produce passive income. For instance, foreign mutual funds and exchange-traded funds (ETFs) often qualify as PFICs. When high-net-worth earners move to the US, they need to pay taxes on those investments and sort through complicated tax reporting requirements for foreign assets, which may include filing a Form 8621.
The process of reporting and paying tax for PFIC assets can be costly and time-consuming. It may require individuals to track down detailed information about their investments from overseas brokers. Without proper guidance, international citizens who hold PFIC assets risk paying significantly higher taxes and facing additional penalties, making it essential to work with a professional experienced in cross-border investment reporting.
State tax rates vary.
Many international travelers are caught off guard by how much tax rates vary from one state to the next. For instance, nine states don’t collect state income tax, while Hawaii’s top personal income tax rate is 11 percent, and New York's highest tax rate is 10.9 percent. Because different states require different tax rates and follow unique rules, it’s easy for new residents to report or pay their taxes incorrectly.
Estate tax and gift tax rules are unique for noncitizens.
High-income earners who move to the US often misinterpret estate and gift tax rules because these taxes differ for US citizens and noncitizens. US citizens can access a significant exemption for these taxes, which amounts to $13,990,000 on global assets in 2025.
Noncitizens, on the other hand, are taxed only on their US-situated assets, but their exemption is limited to just $60,000. As a result, purchasing property or other US assets can substantially increase future estate tax exposure, even if no tax is due at the time of purchase. This often leads to unexpected estate tax liabilities later if proper planning isn’t done in advance.
Relocation tax planning solutions for HNWIs
Here’s what high earners can do to help avoid tax violations and/or losses:
Understand relocation tax risks and complications.
HNWIs can reduce their risk of tax violations by understanding what their tax and reporting obligations are and planning for tax complications. As we mentioned, watch out for high-risk tax situations, such as PFIC assets, varying state tax rates, and gift and estate tax. By knowing high-risk tax areas, HNWIs can learn to identify potential tax-saving solutions and avoid penalties.
Divest foreign investments.
An easy way to reduce tax concerns for international investments is to divest and reinvest in the US. In many cases, that simply means moving investments from a PFIC into similar investments, such as ETFs, stocks, or bonds, within the US. Keep in mind that this process doesn’t have to be completed before the move. The HNWI just needs to divest within the tax year to avoid complications.
Consider working with a global mobility expert.
For high-net-worth earners who don’t want to deal with the stresses of sifting through tax rules on their own, it is often beneficial to work with a global mobility tax expert. Such professionals understand the complexities of cross-border taxes and can help identify the most tax-efficient path forward.
Simplify global mobility tax and compliance
HNWIs face complicated tax reporting requirements, and they’re at a higher risk of being audited. However, high earners can often reduce their US tax risk by taking the time to understand their biggest tax complications, limiting their exposure to additional tax reporting obligations, and leveraging third-party assistance.
Want help understanding and managing your US tax obligations? Contact us to discuss how we can help you navigate global mobility taxes and relocate with less stress.
