The High-Tax State Brain Drain
More bad news for California, Illinois and New York. A recent analysis finds that their most upwardly mobile millennials are fleeing for lower-tax states. Call it a high-tax state brain drain. The flight of the young and newly affluent promises to compound the states’ budget and economic problems.
Using IRS data, the fintech company SmartAsset ranked states based on net migration of young households (ages 26 to 35) in 2022 that earned at least $200,000 a year. The biggest losers: California (-3,226), Illinois (-1,323), Massachusetts (-1,102), New York (-345) and Pennsylvania (-320).
Michigan, Louisiana, Delaware, Minnesota and Missouri round the top 10 losers. Delaware (6.4%) and Illinois (4%) lost the largest share of their young, higher-earning households.
The biggest gainers were Florida (1,786) and Texas (1,660), which have no income tax. They attracted more than twice as many such households as any other state. “Half of states attracting the most young and rich households don’t charge state income tax,” the study notes. The other big gainers without an income tax are Tennessee (347) and Nevada (162).
