In its new report, SmartAsset, which ranks US states according to net migration, finds that the most popular regions for attracting young high earners are Florida, Texas and New Jersey.
To determine which states young, high-income professionals earning over $200,000 a year are choosing to settle in, SmartAsset, a US financial technology company, has analyzed the most recent migration data from the IRS (International Revenue Services), the US federal agency that collects income tax.
According to its latest study, dated July 2023, Florida and Texas attract the largest number of high-income young people, while New York and California lose the most. After taking into account departures and arrivals, Florida saw a net increase of 2,175 high-income young people aged 26 to 35, while Texas welcomed 1,909 more. Nevertheless, New York (-5,062 high-income earners) and California (-4,495 high-income earners) remain the states with the most high-income young people of any age group, despite these significant losses.
While high-income earners have generally left New Jersey, affluent young people are flocking there. Overall, New Jersey lost 2,617 high-income filers in 2021. However, in the same year, the state recorded the arrival of 1,048 new wealthy young professionals. This represents a dramatic reversal of general trends. Connecticut also experienced a similar, albeit less radical, evolution.
Wealthy young people in Washington
High-income earners are the youngest in Washington. Compared to the affluent population of all ages and the total population, this state shows a notable imbalance in favor of the wealthy young. More than 13% of individuals earning at least $200,000 in Washington State are between the ages of 26 and 35. The second state in terms of high-income young people is California, with a percentage of 10%. Other states such as New York, California, Massachusetts and New Jersey also boast high rates of high-income young people.
Despite the departures, Washington DC remains exceptionally young and affluent. The region lost around 700 high-income tax filers between the ages of 26 and 35, but retains a proportion of this population that exceeds that of all other states. More than 16% of those earning over $200,000 belong to this age bracket.
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Florida
Florida recorded a net gain of 2,175 high-income filers aged 26 to 35. While 3,391 moved to the state, 1,216 moved elsewhere or left this income bracket. More recently, there were 23,537 tax returns over $200,000 for this cohort. Florida is one of nine states with no income tax.
Texas
Texas attracted a larger number of affluent young professionals than Florida, with the addition of 4,048 new filers in this age bracket. However, departures were also substantial, totaling 2,139 filers, resulting in a net migration of 1,909 to the state. Of the nearly 700,000 tax returns over $200,000 in Texas, 7% are from people aged 26 to 35. Texas has no state income tax.
New Jersey
New Jersey has seen a major reversal in migration trends across all age groups. Whereas high-income individuals had tended to leave the state, this trend reversed in favor of 26-35 year-olds. Thus, 3,311 new taxpayers passed the $200,000 income threshold in this age bracket, while 2,263 left.
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Colorado
As is the case in Texas and New Jersey, 26-35 year-olds account for a particularly large share of those earning over $200,000 (7%) in Colorado. The state welcomed a net total of 754 filers in this income bracket, with 1,681 moving into the state and 927 leaving.
North Carolina
In North Carolina, 13,621 tax returns were filed by high-income earners aged 26 to 35, representing 5.9% of all people earning over $200,000 in the state. Across all age groups, North Carolina ranks third in terms of net migration of high-income earners.
Connecticut
In Connecticut, the number of young people earning over $200,000 grew at a faster rate than in any other age group. Of the 8,274 filers in this group, 660 are net additions after 1,404 new arrivals and 744 departures.
Washington
Washington State has the advantage of no income tax, and has the highest proportion (over 13%) of high-income newcomers among the $200,000+ cohort. It welcomed 464 new high-income earners thanks to 2,660 arrivals and 2,196 departures.
Tennessee
With a total of 7,345 high-income earners aged 26 to 35 filing tax returns in Tennessee, the state enrolled a net total of 441 new high-income earners in this bracket. 868 young high-income earners moved to Tennessee, while 427 left. Tennessee has no state income tax.
Arizona
Arizona recorded a net gain of 321 new filers with incomes over $200,000 and aged 26 to 35. While 832 new taxpayers in this category arrived in the state, 511 left.
South Carolina
South Carolina rounds out the top 10, with 318 new high-income earners in the state, for a total of 95,584. 601 new tax returns were filed in this category, while 283 left.
Methodology applied
To determine the preferred relocation destinations of high-income households, SmartAsset analyzed data from all 50 states, as well as the District of Columbia. The analysis focused on the following two criteria: the number of young filers earning $200,000 or more, and the departures of filers earning $200,000 or more.
The number of young filers earning $200,000 or more corresponds to the number of tax returns filed by individuals aged 26 to 35 with an adjusted gross income of at least $200,000, who chose to settle in a given state. The data used comes from the IRS and covers the 2021 tax year.
Departures of tax filers earning $200,000 or more represent the number of tax returns filed by individuals aged 26 to 35, with adjusted gross incomes of at least $200,000, who left a given state. Again, data is from the IRS and covers the 2021 tax year.
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