Middle-class families are leaving high-tax, housing-constrained states such as New York and California not because of the weather or politics, but because paychecks and mortgages go further in states that make it easier to work, build and earn, according to a new analysis of taxpayer migration records.
The analysis, which examined IRS data covering every move made by American taxpayers between 2018 and 2023, found that California lost more than 1.2 million people over that five-year period. New York, Massachusetts and Illinois together lost a net total of almost 1.7 million residents, taking their tax dollars, spending and income to other states. Florida gained more people than any other state, while Idaho, South Carolina, Delaware and Montana were also popular destinations.
New York Comptroller Thomas DiNapoli recently launched a taxpayer migration dashboard highlighting the outflow from his state, and said he remains deeply concerned about the net loss of married, middle-class filers. He urged policymakers to keep working on affordability for New York families. The new IRS-based analysis reinforces that warning with a detailed look at why people are packing up and leaving.
The usual explanations do not fully account for the pattern, according to the research. Weather and partisan lean were not decisive factors, and cost of living alone did not explain the moves. Instead, the strongest patterns pointed to state policies: places with lower taxes gained residents, as did states with freer labor markets and abundant housing. States with high taxes, government barriers to career opportunities and tight limits on building homes lost people.
The tax gap alone is substantial for a typical family. A married couple earning $100,000 in New York City owes $6,668 more in income taxes each year than it would owe in one of the nine states without an income tax. At $150,000, that difference grows to $11,338. Florida, Texas, Tennessee and half a dozen other states impose no state income tax, and those states are winning the migration race, the analysis found.
Housing plays an equally important role. States that issue more building permits and allow new homes to be constructed without years of zoning battles gained more residents than states measured by any other factor. Idaho, South Carolina and Florida make it relatively easy to build, while New York and California make it difficult. When a state restricts construction, home prices climb, and workers move to states where builders can keep up with demand.
Occupational licensing also pushes workers across state lines. Virginia requires licenses for 72 different occupations, and workers in those fields face an average of 580 days of education and experience requirements. In neighboring North Carolina, the average requirement is only 228 days. A worker who is already qualified in their profession may choose to move rather than spend an extra year meeting licensing demands.
The overall lesson, according to the analysis, is that states which allow residents to work, build and earn with fewer government barriers are more likely to keep the families that power their economies. Most Americans are not leaving high-tax, housing-constrained states by accident, and they are not moving to Florida or Texas by chance. They are following paychecks and mortgages they can actually afford.
DiNapoli is right to worry about New York's future, the analysis concludes, and the remedy is straightforward: reduce the tax burden, let builders build, and remove barriers to work. Otherwise, the moving trucks will keep heading for the state line.
