Putting down roots in a new state can be exciting, intimidating and downright expensive. When American families are deciding where to begin the next chapter of their lives, the data proves one thing: People are flocking to warmer climates and higher adjusted gross income which comes along with promising career opportunities.
Utilizing 2016 IRS data, a LendingTree study compared the adjusted gross income of those who moved into and out of each state and the District of Columbia. This revealed the positive or negative net flow of adjusted gross income in these areas and showed where people were moving. When Americans move across state lines and bring their income with them, it can be a boon to the state economy and, depending on state income tax laws, it can contribute to the state’s government in a big way.
Where baby boomers and millennials are moving
People of all ages and economic backgrounds are moving to Florida. Out-of-state migrants brought in a combined $30.2 billion in AGI to the Sunshine State, while people who moved away took about $12.5 billion with them. The net influx is about $17.7 billion in adjusted gross income, or an increase of 3% adjusted for the state’s overall AGI. In contrast, Connecticut saw the largest proportional loss in net income of $2.6 billion, or a decrease of 1.7% from the year prior.
Here’s a look at which areas different age groups are moving into and out of:
Where baby boomers and the elderly are moving
Although it’s a popular destination among all age groups, Florida is particularly alluring to baby boomers. The 55-plus age group represents about 72% of the state’s income growth. That shouldn’t be surprising, as Florida has no income tax. Older Americans are also moving to Arizona and the Carolinas at higher rates, with about half of their income growth generated by people ages 55 and older.
And they’re taking their income with them from the states they leave behind — in Georgia, for example, the net flow of adjusted gross income from the 55 to 65 age group decreased by $47 million. However, the Peach State’s positive net flow of income from the 26 to 45 age group was about $500 million more than the people leaving the state, more than making up for the loss.
Americans under 45 are moving west
It’s not hard to see the allure of states like Texas, Colorado and Washington, especially for ambitious millennials and younger Gen Xers who flock to cities with booming job markets. For Americans who are still in the workforce, these states have work opportunities abound ー just look at companies like Amazon, Starbucks and Microsoft, all of which are based in Washington state.
Data shows that younger Americans are flocking to Texas, where 75% of the state’s income growth comes from people between the ages of 26 and 45. Similarly, roughly half of Washington state’s income growth came from people in that age group, which largely includes millennials, who are generally between 23 and 38 years old in 2019.
Americans 45 and younger are also moving to Colorado, and at a higher rate than their more older counterparts. The net AGI of new Coloradans under 45 is $1.2 billion, compared to the net AGI of $603 million for those 45 and older.
Where Americans are moving based on adjusted gross income
While it’s not wholly unexpected, it’s interesting to note that the change in each state’s AGI is driven by how many high earners moved to or from the state in any given year. For example, Hawaii saw a mass exodus of people earning less than $100,000, but still saw a net positive AGI due to the growing population of migrants making more than $200,000. The state had an overall net increase of $150 million in that year — but the incoming top earners brought in a net $245 million.
It’s clear that when the wealthy move from a state, it has a significant effect on the net change in adjusted gross income. So while the wealthy may be moving to warm-weather states like Hawaii and Florida, they’re contributing to net negative AGI in the states they leave.
Earners with highest adjusted gross income are fleeing northern states with high costs of living
The five states with the biggest net drop in AGI were also the states that lost high wage earners. Between Connecticut, Illinois, New Jersey, New York and Pennsylvania, these state economies lost billions due to net negative migration. Around half of the income these states lost came from people earning $200,000 or more annually.
New York state alone saw a loss of more than $8.8 billion in AGI due to people of all ages and income levels moving out of state. California also saw net negative income levels from the older age groups, even though younger migrants actually brought money to the state.
LendingTree conducted a study to determine which states were attracting the most tax dollars by comparing the amount of adjusted gross income moving across state lines. This earned income doesn’t necessarily go to the states directly, as states have varying income tax laws, but more income per capita boosts the state’s overall economy. Using the most recent IRS data from 2016, LendingTree researchers subtracted the adjusted gross income of people moving out of the state from the adjusted gross income of people moving into the state. The difference is the net flow of adjusted gross income, which is used to rank states in terms of economic growth or decline.