Changing the Landscape - Americans Opt for Low-Tax States in 2023 through State-to-State Migration
Americans were on the move in 2023, and recent findings by the U.S. Census Bureau interstate migration data and commercial datasets by U-Haul and United Van Lines show that many chose low-tax states over high-tax states.
Inmigration rates — the number of people moving into a state as a share of that state’s total number of movers — were higher than the national state-to-state migration rate of 19.9% for states concentrated in the South and West.
The District of Columbia had one of the highest (44.3%) inmigration rates. Most (13,093) people moving into the District of Columbia arrived from neighboring Maryland.
California had the lowest (11.1%) inmigration rate. Despite a relatively large number of in-movers, California also had a relatively large base of movers overall, helping to explain the state’s low immigration rate. Most (44,279) people moving to California arrived from Texas.
Outmigration rates — the number of people moving out of a state as a share of that state’s total number of movers — tended to be higher than the national state-to-state migration rate for states in the Northeast and West. The District of Columbia had the highest (46.6%) outmigration rate, with most people moving to neighboring Maryland (17,770) or Virginia (13,582).
Texas had the country's lowest (11.7%) outmigration rate, with most of those who did move relocating to California (42,479) or Florida (38,207).
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Some of the largest state-to-state migration flows in 2022 involved people moving to and from highly populated states (Table 1). The two largest flows, which were not statistically different from each other in size, came either to or from the four most populous states: large numbers of people moved from California to Texas and from New York to Florida.
Between July 2022 and July 2023, the U.S. population grew by 0.49%, up from the previous year's 0.37%. While international migration contributed to national growth, interstate migration was the primary driver of state-level population changes. Recent U.S. Census Bureau estimates reveal that New York experienced the largest population loss to other states (1.1%), followed closely by California (0.9%), Hawaii (0.8%), Alaska (0.8%), and Illinois (0.7%). Conversely, South Carolina led in population growth from domestic inbound migration (1.6%), followed by Delaware (1.0%), and North Carolina, Tennessee, and Florida (all 0.9%).
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.
Just as states with lower income tax rates—or no income tax at all—have proven highly attractive to interstate movers, so have states with more neutral tax structures. Of the 12 states that levy single-rate, as opposed to graduated-rate, taxes on wage and salary income, all but four (Illinois, Michigan, Mississippi, and Pennsylvania) experienced net inbound migration.
People move for various reasons, and taxes can be a decisive or indirect factor. Census data and industry studies highlight a strong correlation between population growth and states with low taxes and favorable tax structures. Recent years have seen many states cutting taxes and improving structures in response to increased revenues and competition. The pandemic has further fueled relocations, emphasizing the need for states to understand and adapt to changing migration patterns for maintaining a competitive edge.
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https://smartasset.com/data-studies/migration-patterns-between-regions-2024
https://www.census.gov/library/stories/2023/11/state-to-state-migration.html
https://www.northamerican.com/migration-map
https://taxfoundation.org/data/all/state/state-population-change-2023/
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