California lost more than $300 million in tax revenue from wealthy residents moving: study

California lost more than $300 million in tax revenue from wealthy residents moving: study

For the third straight year, the state of California has experienced a decline in population, according to U.S. Census Bureau data, and many of those packing up and heading east are some of the state’s wealthiest.

A study of IRS Migration Data by an online real estate portal found that no state experienced a larger loss of tax income from migration than California.

The study, conducted by MyEListing.com, found that California lost more than $340 million in 2021 IRS tax revenue due to residents moving.

While about 40% of Californians have previously indicated that they had “seriously considered” leaving the Golden State, mainly due to cost of living, the migration of high-earners from California is a bit more mysterious.

“Despite its numerous attractions … beautiful landscapes and cultural richness, California’s high personal income tax rates seem discouraging for many high-wealth individuals. This, coupled with the state’s high cost of living, will likely fuel a wealth migration out of California,” the website wrote in its analysis.

California is the entertainment capital of the world as well as home to Silicon Valley, but it appears some of the highest earners no longer need to keep their California residency to maintain their careers and businesses.

For the third straight year, the state of California has experienced a decline in population, according to U.S. Census Bureau data, and many of those packing up and heading east are some of the state’s wealthiest.

A study of IRS Migration Data by an online real estate portal found that no state experienced a larger loss of tax income from migration than California.

The study, conducted by MyEListing.com, found that California lost more than $340 million in 2021 IRS tax revenue due to residents moving.

While about 40% of Californians have previously indicated that they had “seriously considered” leaving the Golden State, mainly due to cost of living, the migration of high-earners from California is a bit more mysterious.

“Despite its numerous attractions … beautiful landscapes and cultural richness, California’s high personal income tax rates seem discouraging for many high-wealth individuals. This, coupled with the state’s high cost of living, will likely fuel a wealth migration out of California,” the website wrote in its analysis.

California is the entertainment capital of the world as well as home to Silicon Valley, but it appears some of the highest earners no longer need to keep their California residency to maintain their careers and businesses.

Below are the states that experienced the biggest increases and decreases in IRS tax revenue linked to migration:

States With the Largest Net Positive Tax Income Migration

RankingStateNet Income Migration
1Florida$12.4 billion
2Texas$10.7 billion
3Arizona$9.4 billion
4Colorado$8.6 billion
5North Carolina$7.8 billion
6South Carolina$7.2 billion
7Tennessee$6.9 billion
8Utah$6.7 billion
9Georgia$6.6 billion

States With the Largest Net Negative Tax Income Migration

RankingStateNet Income Migration
1California-$343.2 million
2New York-$299.6 million
3Illinois-$141.7 million
4New Jersey-$135 million
5Massachusetts-$129 million
6Ohio-$122 million
7Pennsylvania-$119 million
8Michigan-$117 million
9Indiana-$115 million

The study analyzed the most-recent data available from the IRS, which accounted for the 2021 tax year. Data from the IRS regarding the 2022 tax year will likely be released some time this year.

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