IRS Figures Show How States' Tax Rates Spur Migration

Editorial Staff

30 March 2026

Fresh Internal Revenue Service data shows that US states with the highest taxes lost the most income to other states, with California losing a net $11.9 billon, while New York lost $9.9 billion, Illinois $6 billion and Massachusetts $4 billion.

At a time when a possible wealth tax could be brought in by California, the impact that different tax rates have on the incentive to move remains a hot political issue, even though considerations whether to move are not entirely driven by tax.

The figures – reported by the Wall Street Journal on March 27, Realtor.com and others) – capture the adjusted gross income of tax filers who moved between and within states between 2022 and 2023.

Those earning more than $1 million in California pay a top income rate of 13.3 per cent; the state’s 9.3 per cent bracket begins at $72,724, the WSJ noted. Illinois imposes a relatively low and flat 4.95 per cent but its corporate and property taxes are among the highest in the country.

States that have no income tax, such as Florida, Texas, Tennessee and Nevada have gained net inflows. Florida gained $20.6 billion, and Texas $5.5 billion.

Realtor.com, which tracks the real estate sector, noted that Florida gained more wealth from wealthy newcomers than any other state in 2023, citing the IRS figures. The publication said the pandemic may have accelerated migration to lower-taxed states.

Leaving a state, such as Massachusetts, isn’t straightforward. A person must prove to the state that they have made a bona fide move, such as living in another state for more than 181 days, moving doctors, schools, driver’s licenses, actual residences, and other considerations.