State Taxes And Migration of Retirees to Low Tax States

Are people leaving high-tax states for low-tax states and will tax reform affect decisions? This paper argues that through 2016 there was a substantial movement of people from high-tax states to lower-tax states and argues that’s likely to continue and perhaps accelerate after tax reform.

Interstate migration flows are influenced by many factors, including retirement, job opportunities, housing costs, and climate. Experts disagree about how large a role taxes play in migration, but that role will certainly be increased by the new tax law.

The raw data suggest that taxes do influence migration. Of the 25 highest-tax states, 24 of them had net out-migration in 2016. Of the 25 lowest-tax states, 17 had net in-migration. The largest out-migration is from high-tax New York, whereas the largest in-migration is to low-tax Florida. Florida is enjoying an influx of wealthy entrepreneurs and retirees looking for a tax climate that boasts no income tax or estate tax.