Billions of AGI Shifting to Lower-Tax States

According to the latest IRS Migration Data released in early 2026, a trend in taxpayer relocation is emerging: Taxpayers are leaving states with higher income tax rates and moving to states with lower income tax rates.¹ But the migration is about more than just population shifts — billions of dollars in adjusted gross income (AGI) is crossing state lines, potentially reshaping the tax bases and revenues of states.

Why are taxpayers moving?

IRS Migration Data, compiled annually by the agency’s Statistics of Income Division in collaboration with the U.S. Census Bureau, tracks the movement of taxpayers and income across the country. The latest release captures moves made between the filing of 2021 tax returns in calendar year 2022 and the filing of 2022 returns in calendar year 2023.²

Generally, taxes are just one factor in whether to move; affordability, weather, job opportunities, and proximity to family can also be important. For higher-income households, state taxes can be pivotal, as moving from a higher-tax state to a lower-tax state may yield significant annual savings.

What does the data reveal?

States with the highest net AGI inflow were Florida with $20.6 billion, Texas with $5.5 billion, South Carolina with $4.1 billion, North Carolina with $3.9 billion, and Tennessee with $2.8 billion.^{3, 4}

Conversely, the states with the highest net AGI losses were California with $11.9 billion, New York with $9.9 billion, Illinois with $6.0 billion, Massachusetts with $3.9 billion, and New Jersey with $2.6 billion.⁵

At the county level, Palm Beach County, Florida, experienced the highest net AGI inflow of any county in the country with $3.0 billion, while Cook County (which includes Chicago, Illinois), recorded the largest net AGI outflow of any county with $4.4 billion.⁶

In terms of population data, the top five states with the most new tax filers were Texas (+56,473), followed by Florida (+55,349), North Carolina (+39,118), South Carolina (+29,214), and Tennessee (+24,104). California experienced the largest decline in tax filers with 100,397 leaving the state, followed by New York (-71,987) and Illinois (-28,609). New Jersey (-19,370) and Massachusetts (-15,378) rounded out the bottom five states.⁷

Although the AGI figures are substantial, the data should be interpreted carefully. States such as California and New York have large populations and income bases, so presenting just the net AGI loss of a state does not necessarily indicate economic decline. The data suggests that states with lower income tax structures continue to attract a greater share of net AGI inflows.

How are states impacted?

Taxpayer migration can directly impact state budgets. When taxpayers relocate out of a state, they also take their income with them, which means the state may experience a decline in tax revenue. This outflow of taxpayer AGI can also impact a state’s fiscal planning, as state lawmakers may need to consider adjustments to spending and tax policy to maintain financial stability.

In contrast, states with a net inflow of AGI may experience higher income tax revenue, a larger tax base, and increased economic activity. Their challenge, however, could be in identifying ways to continue attracting taxpayers into their states.

Nonetheless, if the migration trend continues, the latest IRS data suggests that AGI migration is becoming a more influential factor in setting state tax and economic policy.

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1–3, 5–7. Tax Foundation, April 20, 2026
4. IRS.gov, SOI Tax Stats, Migration Data (2022–2023 tax filing data), March 2026