Recently, changes to the US tax code have encouraged more and more people to relocate – taking their money to low-tax states like Florida.
It turns out, however, that Florida capitalized on shifting trends even before the new tax law was implemented.
According to a new study by Loan tree, which analyzed IRS data from 2016, Florida is the top recipient of relocations out of all 50 states – by a landslide.
The Sunshine State attracted a net inflow of about $ 17.7 billion in adjusted gross income (AGI) – most of which (72%) was from people aged 55 and over. It is systematically one of the most popular destinations for retirees because of affordability and low taxes.
Florida’s $ 17.7 billion net AGI eclipses the remaining 19 states that saw positive net revenue inflows – which combined for a total of $ 19.4 billion.
South Carolina and another tax-free state – Texas – followed Florida, with adjusted net income of around $ 2.25 billion each.
Florida is unique in that it also attracts a large proportion of high net worth people – over 85% of its net income comes from people earning six figures or more.
On the other hand, New York City lost the largest adjusted gross income from migration, around $ 8.8 billion.
Another high-tax state, Connecticut, suffered the largest loss in revenue relative to its overall economy – at $ 2.6 billion. Connecticut, Pennsylvania, New Jersey, Illinois and New York lost about half of their income thanks to people earning more than $ 200,000, indicating that the rich were walking away.
As the study analyzed data from 2016, this trend has likely only intensified thanks to recent changes to the U.S. tax code. A $ 10,000 cap on state and local tax deductions caused an exodus from states like New York, Connecticut and California – where tax burdens were already heavy – to low-tax states like Florida , Texas and Nevada.
Data from the US Census Bureau showed that while Florida received more movers than any other state last year, New York’s outflows to the Sunshine State were the highest – 63,772 people. New York had the third largest influx of any state, with 452,580 people relocating in the past year.
People who earn $ 650,000 can save more than $ 69,700 taxes per year when moving from New York to Florida.