Recent studies indicate that a growing number of wealthy individuals are leaving their cities in the post-pandemic era, driven largely by high taxes and soaring living costs. According to a report from SmartAsset, Florida and Texas are particularly popular destinations for these individuals. While this trend may appear new, Bob Chitrathorn, Vice President of Wealth Planning at Simplified Wealth Management, emphasizes that people have been moving for a few years now, and the fact that most aren’t returning makes it seem achievable and advantageous. The events of 2020 have made people more comfortable with change as they have already dealt with significant adjustments. This is supported by statistics from the U.S. Census Bureau, which reveal that 27.3 million people relocated within the U.S. last year, marking a 4% increase from 2021. Moreover, a study on moving trends by relocation services company Higher a Helper demonstrates that a growing number of people are moving across state lines, with only 59% of movers staying local last year. Both moves within the same state and moves to different states reached their highest levels since the turn of the millennium.
To identify the rise in affluent Americans migrating, the SmartAsset study analyzed the movement patterns of U.S. adults earning $200,000 or more between 2020 and 2021. The findings indicate that Florida and Texas, the two largest Southern states, attracted the highest number of high earners. Florida gained 27,500 wealthy individuals within the study’s timeframe, while Texas welcomed 9,000. Conversely, California and New York experienced an exodus of affluent residents, losing more than 45,000 and 31,000 residents, respectively. Similar tax migration data reported by Kiplinger reveals that Massachusetts, New York, and Pennsylvania also saw a decrease in high earners. Interestingly, Massachusetts, New Jersey, and Connecticut were identified as the only states where over 10% of tax filers earned more than $200,000 annually. In terms of population percentage, seven Southern states – Florida, North Carolina, South Carolina, Tennessee, Georgia, Alabama, and Arkansas – attracted the highest number of wealthy individuals. On the other hand, Washington, D.C. had the highest rate of high-earning households leaving, with a net loss of 2,009. Chitrathorn mentions that his clients and colleagues mainly relocate to Texas, Florida, Tennessee, and Nevada. Some individuals moving to Nevada are originally from California and wish to remain close to family. He explains that Texas and Florida’s lack of state income tax, as well as Tennessee’s favorable income tax rates, are major draws. Additionally, states benefiting from an influx of affluent residents purchasing homes often see an accompanying increase of higher-income individuals. Chitrathorn explains that lower taxes also attract businesses, which in turn can lead to employees relocating alongside them.