The migration of high-income earners in the United States has led to significant shifts in the economic landscape. In recent years, particularly during the pandemic, there has been a substantial exodus of high earners from major cities, with IRS data showing that large urban counties lost over $68 billion in taxable income from net migration between 2020 and 2021. Large coastal cities like Manhattan, New York, San Francisco and Los Angeles experienced particularly large flights of income.
This trend is reflected in the destinations chosen by these high earners, with many relocating to states like Florida, Texas and Arizona. Florida leads the nation in net income migration, attracting high-income earners with its financial landscape and debtor protections. Texas follows with a $10.7 billion net gain, and Arizona boasts a $9.4 billion net gain, both offering favorable tax structures and thriving business environments.
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On the other hand, California, New York and Illinois are seeing significant outflows of high-income earners because of high personal income tax rates and cost of living, with California experiencing a net loss of $343.2 million.
The most moved-to states in 2023 included South Carolina, North Carolina, Tennessee, Arizona and Florida, with cities like Tucson, Arizona; Charleston, South Carolina; Charlotte, North Carolina; Nashville, Tennessee; and Raleigh, North Carolina being particularly attractive because of their low cost of living, reasonable housing prices and access to outdoor recreational opportunities. South Carolina was the most popular state to move to in 2023, experiencing twice as many moves into the state as people leaving.
High-income earners considering a move can benefit from consulting a local financial adviser. Financial advisers can provide tailored guidance on managing wealth, optimizing tax benefits and making informed financial decisions in the context of their relocation.
The trend of wealth migration also is becoming more pronounced, with wealth gravitating toward regions like Florida and Texas with more accommodating tax policies. The shift is driven by the absence of personal income tax in these states and by factors like lifestyle preferences and business opportunities. The economic implications of this wealth migration are profound and far-reaching, affecting various sectors including commercial real estate and job markets.
The migration trends offer a clear view of how economic and fiscal policies at the state level significantly influence wealth distribution across the U.S. The departure of high-income earners from states like California, New York and Illinois, and their influx into states like Florida, Texas and Arizona, underscores the impact of state tax policies and cost of living on migration decisions.
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*This information is not financial advice, and personalized guidance from a financial adviser is recommended for making well-informed decisions.
Jeannine Mancini has written about personal finance and investment for the past 13 years in a variety of publications including Zacks, The Nest and eHow. She is not a licensed financial adviser, and the content herein is for information purposes only and is not, and does not constitute or intend to constitute, investment advice or any investment service. While Mancini believes the information contained herein is reliable and derived from reliable sources, there is no representation, warranty or undertaking, stated or implied, as to the accuracy or completeness of the information.
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This article Where Are The Rich Americans Moving This Year, And What States Are They Leaving? originally appeared on Benzinga.com
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