Moving from PEI to the US: Taxes

Prince Edward Island is the smallest province by population, so the raw number of Islanders moving to the US each year is small, but the per-capita rate runs high. A job market concentrated in agriculture, fisheries, tourism, and a handful of aerospace and IT employers pushes a steady trickle of Charlottetown and Summerside residents toward New England and beyond. This page covers what’s specific to leaving PEI; the federal cross-border mechanics (departure tax, RRSP, FBAR) are the same regardless of which province you’re leaving from.

Why are Islanders moving to the US?

PEI’s economy runs on a narrow set of sectors: potato and seafood agriculture, tourism, fisheries, and government-linked work. Summerside’s Slemon Park, the former CFB Summerside air base, has grown into a real aerospace cluster anchored by StandardAero (formerly Vector Aerospace), pulling in aircraft maintenance and engine-overhaul talent. Charlottetown is the province’s only sizable urban center, with a cluster of IT and call-center employers including CGI, much of it reporting to head offices or clients in the US.

• When advancement caps out in a province this small, aerospace and IT workers often get pulled toward a much larger American cluster, Connecticut’s aerospace corridor being a natural landing spot for anyone coming out of the Summerside pipeline

How does PEI’s income tax work?

PEI taxes income on a set of graduated brackets, topping out at 18.75% on income above roughly $140,000 (2026, indexed annually), a rate that jumped from 16.7% in 2023. Combined with federal tax, someone clearing that threshold pays close to 52% on the next dollar earned. HST adds another 15% on nearly everything bought day to day, the same harmonized rate as New Brunswick and Nova Scotia.

None of that follows you south. Once you’re a US nonresident, PEI stops taxing your worldwide income, and HST stops applying to your everyday purchases.

What happens to my PEI taxes when I leave the country?

You file a final PEI return covering January 1 through your departure date, with PEI rates applied to whatever income and deemed gains land in that period. The bigger item is the federal deemed disposition: the CRA treats most of your property as sold at fair market value the day you leave, taxed on your exit-year return at your marginal rate, which can include PEI’s 18.75% top slice if the gain is large enough.

This applies the same way whether you’re leaving from Charlottetown, Summerside, or a rural county; it’s a federal rule with PEI’s rate stapled on top.

Does PEI have its own departure tax?

Not a separate one. The deemed disposition itself is federal, reported via T1161 and T1243, and applies the same way regardless of province. What’s specific to PEI is the rate charged on the resulting gain: your final return uses PEI’s brackets, up to that 18.75% top rate, a meaningful jump from the 16.7% rate that applied before 2023.

A farm property, a fishing license, or a stake in a family business, deemed sold at fair market value and taxed against PEI’s current top bracket, is often the single largest number in an Island departure.

What happens to my Health PEI coverage when I move?

For a permanent move outside Canada, Health PEI coverage ends on your actual date of departure, not at the end of a following month. That differs from an interprovincial move, which typically carries roughly three months of continued PEI coverage while a new province’s plan takes effect. Anyone moving to the US needs private or employer health coverage in place on arrival; there’s no PEI-funded bridge for a cross-border move the way there is for a move within Canada. Notify Health PEI of your departure date directly so the file closes cleanly and doesn’t complicate your final tax filing.

Where do most PEI movers end up in the US?

Massachusetts pulls a good share of PEI’s IT and healthcare-trained workers into the Boston market, a much bigger metro with correspondingly bigger pay. Connecticut is a natural landing spot for anyone coming out of the Summerside aerospace cluster, home to Pratt & Whitney and Sikorsky and a deep bench of aerospace employers that recruit maintenance and engineering talent directly from places like Slemon Park.

• Maine draws Islanders on geographic grounds; it’s the closest US state and a common first stop for anyone driving down rather than flying
• New Hampshire rounds out the New England cluster
• Florida draws a separate group, mostly retirees converting a PEI pension and CPP into a no-income-tax state

How does PEI’s top rate compare to US destination states?

Every common US destination for PEI movers taxes income at less than half of PEI’s 18.75% top provincial rate, and one charges no income tax on wages at all.

Jurisdiction	Top state/provincial income tax rate	Sales/consumption tax
PEI	18.75% (about 52% combined with federal)	15% HST
Maine	7.15%	5.5%
Massachusetts	9% (surtax above $1M)	6.25%
Connecticut	6.99%	6.35%
New Hampshire	0% on wages	0%
Florida	0%	6% (plus local)

Every one of these destinations taxes income at less than half of PEI’s top rate, and one charges no income tax on wages at all. That gap, plus PEI’s comparatively thin wage scale outside a few sectors, is a big part of why the move pencils out for a lot of skilled workers even before counting higher US pay in the same fields.

What should I do next?

The Canadian exit follows the standard departure checklist regardless of which US state you’re landing in. From there, the main PEI-specific items are getting the deemed disposition calculation right against PEI’s current top bracket, and lining up health coverage before departure rather than after.

• Departure tax checklist, the full Canadian exit sequence
• Canada departure tax (T1161/T1243), the exit filing detail
• Provincial health insurance when leaving Canada, coverage timing rules by province
• US-Canada tax treaty explained, the framework behind RRSP deferral and credits
• RRSP and TFSA on a US move, federal treatment and reporting
• First US tax return after moving from Canada, the arrival-year mechanics
• State income tax for cross-border filers, how these states compare more broadly
• Moving from Canada to Maine, the closest US state and a common first stop
• Moving from Canada to Massachusetts, the Boston healthcare and tech corridor
• Moving from New Brunswick to the US, the sister Maritime province’s exit picture
• Moving from the US to PEI, the reverse of this corridor

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