Didn’t you hear? New York is so 2018. At least, that applies to the super rich.
According to the New York City Independent Budget Office, between 2019 and 2020, the number of New Yorkers earning between $150,000 and $750,000 fell nearly 6%.
In addition, the number of true high-earners — those who made more than $750,000 — fell nearly 10% over the same period.
Some speculate that the wealthy elites are leaving New York because of the state’s high tax rates. While it’s hard to say exactly why people are moving, the loss of high earners could affect the city’s income tax revenue.
By comparison, the 41,000 filers in the top 1% of the city pay more than 40% of all income taxes. The 450,000 filers in the top 10% pay about two-thirds of all income taxes.
In other words, the remaining 90% of taxpayers contribute about a third of the city’s income tax revenue.
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In its most recent report, the financial technology company SmartAsset found that New York had a net outflow of nearly 20,000 high-earning households in 2020 — defined as households making more than $200,000. That was more than any state in the study.
So where are these people going?
No state attracted more high-income households than the Sunshine State.
According to SmartAsset, Florida added 32,019 tax filers who reported at least $200,000 in income in 2020. While the state also lost 11,756 such petitioners during the year, the end result was a net gain of 20,263 high-income applicants.
One of the ultra-high earners who moved to Florida was billionaire activist investor Carl Icahn. The 86-year-old was born in New York City and has been running his business from the city for decades. He moved his office to Sunny Isles Beach, Florida in 2020.
One distinct advantage of moving to Florida – especially for those who live in the Snowbelt – is the weather. But the main reason why Florida is the top destination for high earners may be financial: It’s one of the few states in the country that doesn’t charge its residents income tax.
Texas is another hot state that has no income tax. So it’s no surprise that high-income households are flocking to it.
In 2020, 18,417 tax filers making at least $200,000 moved to Texas, while 13,061 high-earning filers left it. Simple math shows a net profit of 5,356 high-income households for the Lone Star State.
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Aside from the absence of a state income tax, Texas also attracts newcomers with its reasonable cost of living. The typical home value in Texas is $315,451 according to real estate marketplace Zillow, which is lower than the national average of $357,319. New York City, on the other hand, has a typical home value of $782,365.
At the same time, Texas has a thriving economy and many job opportunities. According to the Texas Workforce Commission, the state led the nation for the fastest annual job growth of 5.4% from October 2021 to October 2022.
With a net income of 5,268 tax filers with incomes of at least $200,000 in 2020, Arizona is the third most popular destination for high-earning migrants.
Arizona does have a state income tax, but it is moving towards a flat tax rate of 2.5% percent for this tax year. With that rate in effect, the state now has the lowest flat tax in the country.
“It’s time to provide families and small businesses in Arizona with lasting tax relief so they can keep more of their hard-earned money,” said Governor Doug Ducey. “This tax credit keeps Arizona competitive and preserves our reputation as a job magnet and opportunity generator.”
One last thing: While Florida is known as the Sunshine State, Arizona actually gets the most sun. It receives an annual average sunlight of 5,755 kJ per square meter – more than any other state in the country.
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This article provides information only and should not be taken as advice. It comes without any kind of warranty.