High-Tax States Americans Fled in 2021 — and Where They Moved

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Couple moving into a new home
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It appears many Americans who looked for a new home in 2021 had one goal in mind: to escape the clutches of the taxman.

A handful of states that have relatively high income tax rates or high overall tax burdens saw a flood of residents picking up stakes and moving in 2021, according to a recent Tax Foundation analysis of data from the U.S. Census Bureau, U-Haul and United Van Lines. By contrast, more tax-friendly places gained residents.

Following are the three states where the largest shares of residents threw in the towel in 2021 — and the three states that gained the largest shares of new residents.

Washington, D.C.

Washington D.C.
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Share of population lost: 2.8%

Before we get to the states in question, one quick note: The Tax Foundation did not include the District of Columbia in its rankings. But if it had, the nation’s capital would have ranked worse than all 50 states, with 2.8% of D.C. residents moving out in 2021.

It is also worth noting that the District of Columbia was one of only two governments entities to actually raise taxes in 2021. (The other is the next state in this list.)

States that lost the most residents

50. New York

Statue of Liberty
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Population lost: 1.8%

The Big Apple turned a bit mushy in 2021, with 1.8% of residents leaving New York for new homes in another state. That was the biggest exodus recorded by any state.

New York income tax rates ranged from a low of 4% to a high of 8.82% as of 2021, according to the Federation of Tax Administrators.

A 2021 report from WalletHub concluded that New York has the nation’s highest overall tax burden, which is defined as the proportion of total personal income that residents pay toward state and local taxes — including income taxes, property taxes, and sales and excise taxes. New York’s overall tax burden is 12.79%.

49. Illinois

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Population lost: 1.1%

Illinois’ income tax rate itself is relatively moderate: The state has a flat tax of 4.95%, meaning all residents pay that rate regardless of their income level. But it’s one of a handful of states that do not offer residents any standard deduction, as Uncle Sam does.

Other taxes in Illinois, especially property taxes, are higher, WalletHub found. The state has an overall tax burden of 9.52% — and it has the second-highest property tax rate in the nation.

If you’re looking to flee such taxes, too, check out “9 States With the Lowest Property Tax Rates.”

48. Hawaii

King Kamehameha statue in Hilo, Hawaii
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Population lost: 0.9%

Even paradise has a price — and, apparently, one that is too high for a growing number of folks.

The Aloha State said “so long” to 0.9% of its residents in 2021. The state has notoriously high income tax rates, ranging from 1.4% to 11%. It also has the second-highest overall tax burden, at 12.19%, WalletHub says.

States that gained the most residents

3. Montana

Men on horses in mountains
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Population gained: 1.8%

Turning to the states that gained the most residents, Big Sky Country saw its population grow by 1.8% in 2021.

Not only are income taxes relatively low to moderate in Montana — ranging from 1% to 6.9% — but the overall tax burden of 7.45% ties for 40th in the nation, according to WalletHub.

It probably helps that the state is one of few without any sales tax. If you’re interested in the others, check out “The 5 States That Don’t Charge Sales Tax.”

2. Utah

Utah hot air balloon
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Population gained: 2%

Utah has a flat income tax rate of 4.95% — just like Illinois. But unlike the latter state, Utah’s other tax rates are more reasonable, earning it the No. 27 spot in WalletHub’s ranking of overall tax burdens in the 50 states. Utah’s tax burden is 8.29%.

Residents of the Beehive State also are fortunate in that the state does not have either an estate or inheritance tax. Those who live in other states are not so fortunate. For more, check out “17 States With Inheritance or Estate Taxes — or Both.”

1. Idaho

Boise, Idaho
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Population gained: 3.4%

The Gem State certainly glitters for restless Americans. Its population jumped 3.4% in 2021, far and away the biggest increase among all U.S. states.

As with Utah, income taxes are relatively low to moderate in Idaho — ranging from 1.125% to 6.925%. It helps even more that Idaho’s standard deductions are the same as those offered by Uncle Sam, ranging from $12,550 to $25,100 for 2021, which makes them among the highest standard deductions offered by state governments.

WalletHub says Idaho’s overall tax burden is relatively low, too — 7.88%. That places it No. 36 in the nation.

Also like Utah, Idaho levies no inheritance or estate taxes.