Where Americans Are Moving — And Where They’re Moving Out
When workers and retirees move to a new locale, local economies often reap a wealth of benefits. New residents not only pad a region’s tax base, they also contribute to the area’s vibrancy by shopping in local stores, purchasing area services or starting businesses of their own.
As a result, states may compete to attract new residents and businesses. Using IRS data from 2016, we took a closer at how this competition is playing out nationwide. We found some states are doing better than others at wooing new residents and expanding the number of tax dollars they take in.
- Key findings
- Migration by age
- Migration by income
- Thinking of moving? Consider these cost-cutting tips
- Florida tops the list for the most successful state at drawing in new residents and reaping the financial benefits — and it is not even close. IRS data shows that people who moved to Florida brought in a combined adjusted gross income (AGI) of about $30.2 billion to the state. Meanwhile, people who left took roughly $12.5 billion in income with them, leaving Florida to enjoy a net influx of about $17.7 billion in AGI.
- In Florida, incoming seniors were responsible for most of the new tax dollars flooding the state, which is a well-known retirement hotspot, according to a recent study from MagnifyMoney, a LendingTree-owned site. The ages 55 and older crowd represents about 72% of incoming AGI for Florida.
- Of the 50 states, plus Washington, D.C., 20 enjoyed a net gain in income. Where Florida saw a net increase of more than $17 billion in AGI, the remaining 19 states enjoyed a combined positive net gain of about $19.4 billion – or roughly $1 billion per state.
- The state of New York saw the largest decrease in AGI from migration, despite being home to an economic power center. About $20.3 billion worth of income left the state, with just $11.5 billion in income coming in. That left a net change of about -$8.8 billion. But like Florida, New York is a hugely populous state with a massive economy and so the loss in residents only accounted for a small fraction – around 1.2% – of the state’s total amount of income.
- Connecticut saw the largest loss in income relative to the overall economy. About $6.1 billion in AGI left the state, while $3.4 billion moved in. That led to a net decrease of about $2.6 billion.
Migration by age
The states that appear to be the most successful in drawing in new residents are those that appeal to people in transition – such as young workers in search of a new job or retirees looking for a warmer, more affordable place to live. Transplants over the age of 55, for example, have largely congregated in warm, low cost-of-living states that are known for catering to seniors. Meanwhile, young workers under the age of 35 have streamed into millennial-friendly states with appealing lifestyles and booming job markets.
Where the elderly fueled growth
Baby boomers and retirees fueled much of the growth in retirement-friendly states, such as Florida and Arizona. Home to some of the most popular cities in the country for retirees, both states have long attracted seniors with their sunny climates, relatively low cost of living and senior-friendly lifestyles.
However, some southern states, such as North Carolina and South Carolina, have also emerged as popular destinations for retiring baby boomers. According to IRS data, around 50% of the net gain in adjusted gross income enjoyed by the Carolinas came from transplants over the age of 55.
Where young workers fueled growth
States with strong job growth and big, trendy cities are attracting younger workers. Texas, for example, has emerged as a magnet for young people, with roughly 75% of the state’s income growth coming from people between the ages of 26 and 45. According to another survey by LendingTree subsidiary, MagnifyMoney, Texas is home to some of the most popular cities for millennials, including Austin, Dallas and Houston.
The state of Washington has also attracted a large share of young people, with roughly 63% of the state’s income growth coming from people under age 45.. The job hot spot Seattle ranks No. 8 among the most popular cities for millennials, according to the survey from MagnifyMoney, a subsidiary of LendingTree. Meanwhile, major employers, such as Amazon, Boeing and Microsoft, have also helped draw people to the state.
States with mixed growth
Some states, such as Georgia, have had much more mixed success growing their tax base. Georgia, for example, has suffered an exodus of people between the ages of 55 and 65, costing the state roughly $47 million in income. However, it has also attracted a substantial number of people ages of 45 and younger who earn more money overall than the people moving out.
Other states, such as California, have seen so many older residents move out that they have experienced a net decline in income, despite drawing large numbers of young people in.
Migration by income
Money has also played a big role in where people decide to move and how much states stand to benefit. For example, tax data shows that people with lower incomes are leaving some states, such as Hawaii and Louisiana, in droves, while more affluent people are moving in.
Transplants with higher incomes have also brought a substantial amount of wealth to some lucky states, such as Florida. But, in the process, they’ve also drained wealth from the states they left behind.
Where the wealthy are moving
Wealthy retirees and high income workers have fueled much of the growth in income that select states have enjoyed. In Florida, for example, more than 85% of the income growth the state experienced in 2016 came from people who earned more than $100,000 a year.
Meanwhile, Hawaii saw a large number of workers earning less than $100,000 leave the state, causing the state’s net income for those groups to decline. However, so many wealthy people earning more than $200,000 a year moved in that Hawaii still managed to enjoy a net gain in overall adjusted gross income.
Similarly, Louisiana also experienced a surge in income from people making more than $200,000 a year. However, so many people earning less than $200,000 left the state in 2016 that it still suffered a net loss overall.
Where the wealthy are moving out
Affluent residents have also abandoned states with high costs of living, hefty taxes and cold winters, causing those states to lose a substantial amount of income.
Among the five states that experienced the biggest net drop in adjusted gross income – Connecticut, Pennsylvania, New Jersey, Illinois and New York – around half of the income those states lost came from people earning more than $200,000 a year.
Thinking of moving? Consider these cost-cutting tips
If you, too, are planning to move out of state, set a budget beforehand to make sure you can afford to head out of town. Here are some tips for trimming costs so you can treat yourself in your new locale.
- Avoid the crowds: Moving companies are more likely to hike prices during periods of high demand, such as the summer months when kids are out of school, or early fall when college kids are moving into their dorms. Weekends are also more convenient for workers to move, leading to increased demand. If you can afford to time your move, choose a less popular period of time, such as a Tuesday in late fall.
- Don’t buy brand-new moving supplies: With the proliferation of community pages on Facebook, Freecycle groups and online marketplaces, such as Craigslist, there’s a good chance you’ll be able to find all the supplies you need secondhand. You may even be able to score key supplies, such as moving boxes, for free from neighbors who are looking to clear out their garages.
- Pare down your belongings: If you’re beginning a new phase in your life as a retiree or are moving several states away for a job, take this opportunity to cull your belongings and start fresh with as little “stuff” as possible. That way, you can rent a smaller truck or pay less if you’re having a company move your belongings for you.
Using a loan to cover moving costs
Moving can be expensive, even after you’ve cut costs. That’s why you may consider a moving loan to help cover costs. A moving loan is a personal loan, which means it has a fixed rate. But it also means it could be hard to qualify for; personal loans are often reserved for those with good credit.
If you need other options for funding your move, you might consider:
- Credit card: If you need to be for the short-term, a credit card may be a viable option; you’ll have instant access to money you need, and you can get rewards. Just be careful to repay your debt in full before the end of the month to avoid high interest charges.
- Secured loan: A home equity line of credit, home equity loan or other secured loan can help you avoid high interest when you need to borrow. Be careful when taking out a secured loan; you could lose your collateral such as your car or house if you fall behind on payments.
To find out which states were winning migration and attracting the most tax dollars, we compared the amount of adjusted gross income moving across state lines. To do this, we subtracted the adjusted gross income of people moving out of the state from the adjusted gross income of people moving into the state. This left us with the net flow of adjusted gross income, which we used to rank the states. All data comes from the IRS and is for 2016.
Disclaimer: This article contains links to studies from MagnifyMoney, a subsidiary of LendingTree.