5 States Where High-Earning Americans Are Moving To — and 5 They’re Leaving

Americans consider relocating to other states for a variety of reasons, from getting a new job to enhancing their quality of life. But for high earners, the mathematics of taxation often plays a big role. High earners often have their own businesses or a large amount of investments, two sources of income that don’t necessarily tie you to a specific state.

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With some states assessing double-digit tax rates and others charging nothing at all, it’s inevitable that at least some high earners will move to a more tax-friendly home. This simplistic observation is borne out by migration data, which shows a major influx of high-earning Americans into zero-tax states while high-tax states suffer outflows. Here’s a look at where high earners flocked to and fled based on 2020 and 2021 data from SmartAsset, with “high earner” defined as having a minimum of $200,000 in adjusted gross income.

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States High-Earning Americans Are Moving To

The top five states in terms of net migration of high earners all generally have warmer climates and lower income taxes. In fact, the top two, perhaps unsurprisingly, have no state income taxes at all. Here they are in order.

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Twilight scene at the harbor.

Florida

  • Inflow: 40,134
  • Outflow: 12,567
  • Net Migration: 27,567

Florida has long been touted as a destination for seniors, and there’s no doubt that many of the state’s 27,000-plus newly minted, high-earning residents are attracted to its climate. But the fact that the Sunshine State also has no state taxes may play an even larger role.

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Aerial shot of Dallas, Texas, looking along the Margaret Hunt Hill and Roland Kirk bridges crossing the Trinity River into downtown Dallas on a sunny day in summer.

Texas

  • Inflow: 22,751
  • Outflow: 13,743
  • Net Migration: 9,008

Everything is bigger in Texas — except state income taxes. In addition to warm weather, booming industry and some of the most famous cities in the world, Texas has no state income tax, making it particularly welcoming for high-earning Americans.

Drone Aerial of Downtown Greensboro North Carolina NC Skyline.

North Carolina

  • Inflow: 11,437
  • Outflow: 5,991
  • Net Migration: 5,446

North Carolina isn’t exactly known as a tax haven, but it’s certainly not burdensome on its residents. In fact for tax year 2023, the state actually cut its individual levy to 4.75%, down from 4.99% in 2022.

Old Town Scottsdale, the city’s downtown hub, is home to hundreds of shops, galleries, chef-driven restaurants, upscale bars and high-energy nightclubs.

Arizona

  • Inflow: 9,763
  • Outflow: 5,200
  • Net Migration: 4,563

Arizona assesses a flat (and low) 2.5% income tax rate on state residents, and it doesn’t tax Social Security benefits. The state has low property taxes as well, with a median of just 0.63%, and programs are in place to reduce the tax benefit on seniors even more.

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Downtown Greenville, SC South Carolina Skyline Cityscape at Sunrise.

South Carolina

  • Inflow: 7,312
  • Outflow: 2,802
  • Net Migration: 4,510

Individual income tax rates can top out at 6.5% in South Carolina — down from 7% in 2021 — but the lowest rate is still 0%. The overall cost of living in the state, however, is still quite low compared with destinations like California and New York.

Mission Beach Sunset and View of Downtown, San Diego California, USA.

States High-Earning Americans Are Moving From

Just like low-tax states seem to draw high earners, it’s no surprise that they are generally fleeing higher-tax states. That’s certainly the case for the top state on the list, but it’s true also for the other major net losers.

San Francisco Downtown with the major skyscrapers includes Lumina, 181 Fremont, Salesforce Tower and more.

California

  • Inflow: 18,237
  • Outflow: 45,578
  • Net Migration: -27,341

California has a large population, so it’s not surprising to see it high on the list of net migration. The fact that it’s the biggest loser, however, is no doubt due in large part to its top tax rate of 13.3%. highest in the nation.

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New York

  • Inflow: 11,690
  • Outflow: 31,485
  • Net Migration: -19,795

New Yorkers love their state but they can’t stand the taxation, which has driven nearly 20,000 high earners away in recent years. The top state income tax rate is 10.9%, but property taxes and local sales taxes are also quite high, particularly for those who live in New York City.

Chicago cityscape looking out over the rush hour traffic commute of the highway in Illinois USA.

Illinois

  • Inflow: 5,731
  • Outflow: 14,862
  • Net Migration: -9,131

Illinois doesn’t make tax headlines as often as high-cost states like California, New York, New Jersey and Massachusetts. However, it’s still a burden for high earners. Average property and sales tax rates are among the highest in the country, even though its individual income tax rate of 4.95% is not particularly egregious.

Waltham is a city in Middlesex County, Massachusetts, United States.

Massachusetts

  • Inflow: 6,623
  • Outflow: 9,741
  • Net Migration: -3,118

In some circles, Massachusetts still has the nickname “Taxachusetts,” no doubt driving some of the negative net migration from the state. In fact, state residents just approved a 4% surtax on those earning over $1 million annually, something that may have pushed some top earners away.

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Downtown Newark skyline refection on the banks of the Passaic River.

New Jersey

  • Inflow: 10,920
  • Outflow: 13,537
  • Net Migration: -2,617

In 2023, New Jersey was ranked as having the sixth-highest tax burden among all U.S. states, with property taxes in particular being onerous. This combined levy can be even more damaging for high earners than just a high individual income tax rate — although New Jersey’s top rate of 10.75% is also among the highest in the country.

All migration data is sourced from SmartAsset.

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This article originally appeared on GOBankingRates.com: 5 States Where High-Earning Americans Are Moving To — and 5 They’re Leaving

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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