Moving from Ottawa to Austin: Taxes, Defence Tech, and RRSP

Ottawa runs on the federal government, and increasingly on the layer built on top of it: defence contractors, cybersecurity firms serving DND and the CAF, and the policy shops orbiting Parliament Hill. Austin has its own overlapping version of that world, Army Futures Command at Camp Mabry, Dell, the relocated Oracle headquarters, Indeed, and Samsung’s semiconductor plant, plus a university research pipeline running through UT Austin. The tax gap between the two cities is one of the largest available on this corridor map, but it opens on the departure date, not the arrival date, and the mechanics in between are worth getting right before a lease gets signed.

Why does Ottawa’s tax bill nearly disappear in Austin?

Because Texas doesn’t run a second income tax system at all, state or city, and Ontario’s combined rate sits among the highest in North America to begin with. Ontario’s five brackets top out at 13.16%, and the surtax stacks 20% on basic tax above roughly $4,991 and another 36% above roughly $6,387, pushing the effective provincial rate to about 20.5% before federal tax is even added. Texas has no equivalent bracket at any level of government.

	Ottawa / Ontario	Austin / Texas
Income tax	Up to 13.16%, plus 20%/36% surtax on basic tax above two thresholds	None (state or city)
Combined with federal top rate	About 53.53%	About 37% (federal only)
Sales tax	HST 13%	6.25% state, up to about 8.25% combined in Austin
Property tax (effective rate)	Roughly 1%	1.8% to 2.5%, Travis County, varies by school district
Estate tax	None (deemed disposition at death instead)	None at the state level; federal estate tax can still apply

What happens to the deemed disposition on departure?

Ceasing Ontario residence triggers the departure tax first, at Ontario’s full surtax-augmented rates, before any Texas rule applies. Canada deems most property sold at fair market value on the departure date, half of any resulting gain becomes taxable, and the gain lands in Ontario at Ontario’s rates because the province test keys to the last day of actual residence.

• Texas has no state return to offset that bill against, since there’s no state-level filing to carry a credit against in the first place.
• The departure tax pillar covers the T1161 and T1243 mechanics, and the leaving-Canada checklist covers the full sequence.

Why is this a two-authority departure, not three?

An Ottawa exit deals with exactly two tax authorities, the CRA and the IRS, because Ontario has no provincial-plus-Revenu-Québec split the way a Montreal or Quebec City departure does. That keeps the paperwork simpler than the Quebec corridors, though it doesn’t shrink the departure tax itself, which runs on federal and Ontario rules regardless of which province files the final return.

What’s pulling DND and federal policy staff to Austin?

Two separate pipelines feed this corridor, and neither is a coincidence. DND and CAF cybersecurity specialists have a natural landing spot in Austin’s defence-tech cluster around Army Futures Command at Camp Mabry, while Ottawa’s federal policy analysts and regulatory staff increasingly land in Austin’s own growing gov-tech and lobbying scene.

• Dell, the relocated Oracle headquarters, Indeed, and Samsung’s Austin semiconductor plant round out the employer list, pulling in engineering and product talent well beyond the defence and policy movers specifically.

Do Carleton and uOttawa grads end up at UT Austin?

A growing number do, mostly through research partnerships rather than a direct recruiting pipeline. Carleton University and the University of Ottawa both feed graduate researchers into UT Austin’s engineering, computer science, and public policy programs, and a share of them stay in Austin afterward for the same defence-tech and gov-tech employers drawing in the federal-career movers.

How does Texas treat the RRSP and TFSA?

The RRSP side is the cleanest math available on this corridor. The treaty defers US federal tax on RRSP growth automatically, and because Texas has no state income tax, there’s no state-level addback competing for the same credit the way there is in California or New York.

• The TFSA gets none of that protection, since the deferral is RRSP-specific; closing it before departure avoids carrying PFIC and foreign-trust reporting into a filing that gets no offsetting benefit from keeping it open. See RRSP and TFSA after moving to the US.

What happens to OHIP and the health premium?

Both wind down, on their own separate clocks, and Texas replaces neither automatically. OHIP coverage typically runs a short tail after Ontario residency ends and the ministry is notified, and the Ontario Health Premium, built into the Ontario tax bill, stops accruing the year after departure.

• Moving from Canada is a Special Enrollment Period event on the federal marketplace, giving 60 days from the move date to enroll in an employer plan or healthcare.gov coverage. See provincial health insurance on leaving Canada.

How does Austin property tax compare to Ottawa’s?

It runs meaningfully higher, and it’s the one line item in this corridor that moves against the mover’s favor. Travis County, plus whichever school district and city levy applies, typically brings the effective combined rate to somewhere between 1.8% and 2.5% of assessed value, well above Ottawa’s roughly 1%.

• There’s no equivalent to Ontario’s land transfer tax on the buy side in Texas; the closing cost that replaces it is a small documentary recording fee, not a percentage-of-price tax. A Texas homestead exemption can reduce the bill on a primary residence, but it takes a Texas ID and proof of occupancy, so the first year rarely gets the full benefit.

What about sales tax and the Texas estate tax?

Both drop from the Ontario numbers, though sales tax drops by less than the income-tax gap suggests. Ontario’s HST runs a flat 13% on most purchases, while Texas charges 6.25% at the state level with local add-ons that can push the combined rate up to about 8.25% in Austin, still below Ontario’s flat rate.

• Texas has no state estate tax at all, and no state gift tax either; only the federal estate tax exemption applies, which matters for an Ottawa household with meaningful non-registered assets settling permanently rather than on a fixed-term posting.

Where do Ottawa arrivals settle in Austin?

It splits mostly by which pipeline brought them. Defence and cybersecurity movers tend toward the neighborhoods near the Domain and North Austin, closer to the Camp Mabry and Dell corridor, while federal policy and gov-tech arrivals lean downtown or East Austin, closer to the Capitol and the lobbying and startup scene.

• None of it changes the tax analysis; the property tax rate moves with the taxing jurisdiction and school district, not the neighborhood’s reputation.

What should I do before I sign a lease?

Pin the departure date on the facts first, since it fixes the surtax exposure on the final Ontario return and starts the OHIP clock. Texas has no state income tax to plan around once the move happens, so the real work sits entirely on the Canadian exit and the first US return, not on choosing a Texas neighborhood.

• Moving from Ontario to Texas, the province-level version of this corridor
• Moving from Canada to Texas, the generic version
• Calgary to Austin, the energy-to-tech corridor from Alberta
• Toronto to Austin, the tech corridor from Bay Street
• Ottawa to Washington DC, the government-to-government corridor
• Ottawa to Seattle, the defence-to-tech corridor into Washington
• Canada’s departure tax, T1161 and T1243
• The leaving-Canada checklist
• RRSP and TFSA after moving to the US
• The US-Canada tax treaty explained
• Your first US tax return as a new Canadian immigrant
• State income tax on a cross-border move
• Ottawa to Denver, the defence-to-aerospace corridor into Colorado
• Ottawa to Houston, the government-to-energy corridor into Texas
• Ottawa to Los Angeles, the aerospace and policy corridor into California
• Ottawa to San Francisco, the government-to-tech corridor into California
• Ottawa to Atlanta, the government-to-corporate corridor into Georgia
• Ottawa to Dallas, the government-to-defence corridor into Texas
• Ottawa to Nashville, the government-to-healthcare corridor into Tennessee

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.