New York, California takes the biggest hit as more Americans flee to low-tax states

The exodus from high-tax states accelerated in 2022.

According to a Bank of America analyst note based on insights from data from the US Census Bureau, growing numbers of Americans migrated last year from predominantly blue, high-tax states like California and New York to red, lower-tax states like Florida and Texas from U-Haul tariffs.

Although the total US population grew by only 0.4% between July 2021 and July 2022, the data underscores wide disparities in population growth at the state level.

The South, which has states with some of the lowest individual income taxes in the country, was the fastest growing region. Its population grew far faster than the national average, increasing by about 1.1% — or about 1.4 million people over the past year — a phenomenon dubbed the “Sunbelt Migration.” The region also benefited from about 870,000 Americans who left other parts of the country for warmer climates and lower taxes.

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A truck is seen in front of a U-Haul facility on August 31, 2020 in New York City. (John Lamparski/Getty Images/Getty Images)

By state, Texas, Florida, North Carolina, Georgia, Arizona, South Carolina and Tennessee led the migration growth, according to the analyst note led by Rafe Jadrosich. Overall, Florida saw a population increase of 319,000 while Texas saw an increase of 231,000.

Neither Texas nor Florida have a state income tax.

Overall, six states in the top third are waiving payroll taxes, according to a separate analysis by the nonpartisan Tax Foundation, a group that advocates for lower taxes. Florida, Texas, South Dakota, Tennessee and Nevada do not levy individual income taxes, nor does Washington, which taxes capital gains but not income.

At the other end of the spectrum, California, New York and Illinois, which have some of the highest tax burdens in the country, experienced the largest population declines in 2022.

U-Haul furniture truck in Fort Collins February 19, 2014. U-Haul is an American equipment rental company founded in 1945. Among other things, people can rent trucks and transport their belongings.

“This population shift paints a clear picture,” said Janelle Fritts, policy analyst at the Tax Foundation. “People left high-tax, high-cost states for lower-tax, lower-cost alternatives.”

In the bottom third, five states — California, Hawaii, New Jersey, New York, and Oregon — have double-digit income tax rates, according to the Tax Foundation.

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About 343,000 Californians left the state last year, compared to about 300,000 New Yorkers. In Illinois, around 142,000 residents left the state.

“The census data and these industry studies can’t tell us exactly why each person moved, but there’s no denying that there’s a very strong correlation between low-tax, low-cost states and population growth,” Fritts said. “As many states respond to robust revenues and increased state competition with tax cuts, these trends may only get bigger.”

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