Nobody likes to see the taxman come to the door — and a growing number of Americans are moving to places where they will see him less often, or never at all.
A handful of states that have relatively high income tax rates saw a flood of residents pick up stakes and move in 2023, 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.
According to the Tax Foundation:
“This population shift paints a clear picture: Americans are leaving high-tax, high-cost-of-living states in favor of lower-tax, lower-cost alternatives. Of the 32 states whose overall state and local tax burdens per capita were below the national average in 2022, 24 experienced net inbound migration in FY 2023. Meanwhile, of the 18 states and D.C. with tax burdens per capita at or above the national average, 14 of those jurisdictions experienced net outbound migration.”
Following are the three states where the largest shares of residents threw in the towel in 2023 — followed by the states that gained the largest shares of new residents.
50. New York
Net population change due to interstate migration in 2023: Decreased by 1.1%
Income tax rate in this state as of 2023: Ranges from 4% to 10.9%
The Big Apple continued to turn a bit mushy in 2023, with 1.1% of residents leaving New York for new homes in another state. That was the biggest such exodus recorded by any state, based on the Tax Foundation’s analysis.
The loss of residents continues a trend that has been evident for several years now in New York.
49. California
Net population change due to interstate migration in 2023: Decreased by 0.9%
Income tax rate in this state as of 2023: Ranges from 1% to 13.3%
California has some of the highest income tax rates in the country. The top rate of 13.3% is the highest in the U.S.
In recent years, California has seen a steady stream of its residents leave. 2023 was no exception, with 0.9% of the population relocating to somewhere else, according to the Tax Foundation analysis. High tax rates are likely one reason why the Golden State is losing some of its gleam.
48. Hawaii
Net population change due to interstate migration in 2023: Decreased by 0.8%
Income tax rate in this state as of 2023: Ranges from 1.4% to 11%
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 0.8% of its residents in 2023.
The state has notoriously high income tax rates, but there is a silver lining for those who hate the taxman: Hawaii sits atop the list in “9 States With the Lowest Property Tax Rates.”
States that gained the most residents
Next up are the states at the opposite end of the spectrum: those that attracted the most Americans who moved across state lines in 2023, based on the Tax Foundation’s analysis. The top three states include a three-way tie, so there are actually five states that follow.
3. North Carolina, Tennessee and Florida (three-way tie)
Net population change due to interstate migration in 2023: Increased by 0.9%
Income tax rate in these states as of 2023: See below
Three states saw their populations grow by 0.9%. The states — and their tax rates — are:
- Florida: No state income tax
- North Carolina: 4.75%
- Tennessee: No state income tax
One city in North Carolina and two in Florida are among “10 of the Most Popular Money Stories of 2023.”
2. Delaware
Net population change due to interstate migration in 2023: Increased by 1%
Income tax rate in this state as of 2023: Ranges from 2.2% to 6.6%
Delaware is a bit of a sleeper: While most of the fastest-growing states are in the South and parts of the West, Delaware is the outlier. This state in the Mid-Atlantic increased its population by 1%.
Newark, Delaware, was among the “The 17 Most Popular Housing Markets on Zillow in 2023.”
1. South Carolina
Net population change due to interstate migration in 2023: Increased by 1.6%
Income tax rate in this state as of 2023: Ranges from 0% to 6.5%
All that Southern charm appears to be drawing new residents to South Carolina. The Palmetto State saw its population grow by 1.6% in 2023, tops in the nation, according to the Tax Foundation report.
Columbia, South Carolina, is also among the “10 Cities Generation Z Is Taking Over.”
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