Low-Tax States Keep Winning the Competition for People and Income

The latest IRS migration data shows that Americans are still moving to low-tax states and taking income, investment, and economic opportunity with them. From 2022 to 2023, Florida alone posted a net adjusted gross income gain of about $21 billion. At the same time, high-tax states such as California, New York, Illinois, Massachusetts, and New Jersey posted some of the largest losses. The pattern is hard to miss. People and money are flowing toward lower-tax, faster-growing states.

The Sun Belt Keeps Gaining Ground

The biggest income winners in the new IRS data were led by Florida, followed by other lower-tax, growth-oriented states such as Texas, South Carolina, North Carolina, Arizona, and Tennessee. The biggest losers were concentrated in high-tax states with heavier fiscal and regulatory burdens. That is not a coincidence. It reflects a long-running pattern in which families, workers, investors, and business owners respond to incentives. When states make it easier to earn, save, invest, and build, more people choose to stay or move in. When states make those things harder, more people choose to leave.

This is about more than population totals. Adjusted gross income is a proxy for earnings, savings, entrepreneurship, and future tax base. When a state loses income along with residents, it is not just losing bodies. It is losing productive capacity. It is losing investment. It is losing future growth.

High-Tax States Are Losing More Than Residents

The state losses were especially striking. California lost about $12 billion in net adjusted gross income. New York lost about $10 billion. Illinois lost about $6 billion. Massachusetts lost about $4 billion. New Jersey also posted a large loss. Meanwhile, one recent summary of the same IRS release found that red states gained about $37 billion in income and nearly 500,000 filers, while blue states lost about $41 billion and more than 500,000 filers.

That is the real lesson for policymakers. High tax rates and higher costs do not stay on paper. They change behavior. They encourage households and employers to look elsewhere. States can insist that tax policy does not matter, but taxpayers keep proving that it does.

A state can push higher income taxes, higher business costs, and a more hostile climate for growth for only so long before the tax base starts to erode. Once that process begins, it becomes harder to reverse. The people most able to move are often the same people most able to bring jobs, investment, and entrepreneurial activity with them. That is one reason the losses can compound over time.

Florida and New York Show the Trend Clearly

The long-term population picture reinforces the point. A generation ago, Florida was smaller than New York. Today, it is larger. Federal Reserve population data shows Florida at about 23 million residents in 2025 and New York at about 20 million. That shift did not happen by accident. It reflects years of stronger in-migration into Florida and weaker growth in New York, alongside a broader movement toward states with lower taxes and stronger growth climates.

The same story shows up in the IRS migration tables. Low-tax states are not just attracting retirees. They are attracting income. They are attracting working-age households. They are attracting the kind of economic activity that strengthens a state’s future.

CFE Takeaway

People and money are moving to low-tax states and away from high-tax states because incentives still matter. When states make it easier to work, invest, build, and keep more of what is earned, they become magnets for growth. When states move in the opposite direction, they should not be surprised when families, entrepreneurs, and employers head for the exit.

The latest IRS migration data is another reminder that tax competition is real. Americans are voting with their feet, and the states winning that competition are the ones offering a better economic deal.