Florida’s Growth Amid Migration Trends
Florida is seeing a significant influx of residents, translating to a gain of $20.6 billion in annual adjusted gross income from 2022 to 2023. In contrast, states like New York and California, which have high tax rates, are still experiencing substantial losses even after the pandemic.
California faced the largest drop in net income, losing $11.9 billion as many of its residents opted for more affordable living in places like Texas, Nevada, and Arizona. A recent analysis of IRS data highlighted these migration patterns.
Other states suffering similar declines include New York, with a loss of $9.9 billion, Illinois at $6 billion, and Massachusetts, which saw a decrease of $4 billion. States like New Jersey and Maryland weren’t far behind, losing $2.6 billion and $1.8 billion respectively.
“People are moving for affordability,” says Joel Varner, a senior economist at Realtor.com. It’s interesting to note that those states welcoming the most new residents are the ones actively increasing housing supply, which helps bring prices down.
Interestingly, many states that are losing revenue share something in common—they impose high taxes on millionaires and billionaires, often driving businesses away. In New York City, for instance, high earners pay a hefty 10.7% tax.
Mayor Zoran Mamdani of New York has been advocating for an additional 2% tax on billionaires to further increase revenue. Meanwhile, California maintains a top tax rate of 13.3% for its wealthiest residents, alongside a lower rate of 9.3% that kicks in at just over $72,000.
Minnesota, with the highest tax rate in the Midwest at 9.85%, also imposes an extra 1% tax on investments over $1 million. In contrast, states without income taxes, with Alaska as an exception, are reportedly benefitting the most from migration.
Following Florida’s impressive income gain, Texas reported a $5.5 billion increase, while South Carolina and North Carolina saw rises of $4.1 billion and $3.9 billion, respectively. Other notable increases included Tennessee and Arizona, both at $2.8 billion, and Nevada at $1.5 billion.
Interestingly enough, New Hampshire found itself with nearly $900 million from Massachusetts, which had introduced a 4% tax on billionaires in 2022, pushing the top tax rate to 9%.
