In a paradigm-shifting trend, a new wave of affluent young Americans are opting to migrate to Florida, Texas, and New Jersey, leaving behind traditional economic powerhouses like New York and California. This intriguing data, unearthed by SmartAsset in their analysis of IRS migration data for the 2021 tax year, reveals that cities such as Miami, Austin, and Jersey City are becoming the go-to destinations for those aged 26 to 35 and earning over $200,000 a year. This high-earning group constitutes just 2% of their age demographic, yet they contribute a staggering 16% of the demographic’s income.
Florida and Texas, states that do not levy an income tax, have emerged as the top choices for this young, high earning populace, with Florida witnessing a net gain of nearly 2,200 high earners, bringing their total to over 23,500. In contrast, over 5,000 young high earners have reportedly left New York, despite it still holding the highest count of high earners in this age group. The unexpected entrant in the list of states with significant net migration is New Jersey, which saw a net gain of over 1,000 young, wealthy professionals, despite a general exodus of high earners from the state.
Young Wealthy Americans Flocking to Tax-Friendly States
There is a significant migration shift occurring among wealthy Americans aged 26 to 35. Florida, Texas, and New Jersey are becoming the top picks for this demographic, while traditionally popular states like New York and California are experiencing an outflow of young high earners, according to a SmartAsset analysis of IRS migration data from the 2021 tax year.
Destination Favorites: Florida, Texas, and New Jersey
Cities such as Miami, Austin, and Jersey City are seeing an influx of these high-earning young professionals. Florida and Texas, which do not charge income tax, are particularly attractive. Florida saw a net gain of nearly 2,200 high earners in this cohort, bringing the total number to over 23,500. Texas also saw a strong net gain, just over 1,900. This contrasts sharply with New York, which lost over 5,000 young high earners, despite still having the highest count of this demographic.
Surprising Migration Patterns: New Jersey and Connecticut
Interestingly, New Jersey, despite seeing an overall outflow of high earners, experienced a net gain of over 1,000 wealthy professionals aged 26 to 35. Cities like Jersey City and Hoboken have become popular destinations, even as rents for apartments have skyrocketed in recent years. Connecticut, ranking sixth for net migration of young high earners, showed a similar trend.
High-Earning Young Population Rates: Washington and California
Washington state leads in the statistic of a high rate of young high earners when compared with the overall wealthy population in the state and the general population. Over 13% of those making over $200,000 in Washington were between 26 and 35. This figure was 10% for California. Washington, DC, exceeded Washington state at 16%, although it lost nearly 700 young, wealthy professionals.
Other Popular Choices: Colorado, North Carolina, and Tennessee
These states were also popular migration destinations for the demographic. SmartAsset’s sixth annual study on millennial migration found that cities like Austin, Denver, Dallas, and Jacksonville were attracting top talent. Conversely, New York City, Chicago, and Boston experienced outflows.
Takeaways
The migration of high-earning young Americans to tax-friendly states like Florida and Texas is a notable trend. It signifies a shift in economic power and influence. It also indicates that young professionals are keenly aware of tax implications and are willing to move to take advantage of favorable tax laws. The growth of remote work due to the pandemic could be accelerating this trend. In a broader sense, this could also influence political, social, and economic policies in these states. The surprising net gain for New Jersey despite the overall outflow of high earners suggests that specific local factors, such as urban development and lifestyle, also play a significant role in these migration patterns.
