12 Aug Moving to a Lower-Tax State? What the Latest IRS Data Shows
Why Are Americans Moving to Lower-Tax States? What the Latest IRS Data Shows
Where you live can affect far more than the weather, cost of housing, or distance from family.
For some households—particularly retirees, business owners, and higher-income individuals—where they establish residency can also have meaningful tax and financial planning implications.
Recent IRS migration data provides an interesting look at where Americans and their income are moving. The numbers show billions of dollars in adjusted gross income (AGI) shifting between states, with several lower-income-tax states experiencing substantial inflows.
Florida led the country with a net AGI inflow of approximately $20.6 billion, followed by Texas at $5.5 billion.
But before concluding that taxes are driving everyone south, it’s important to understand what the data actually tells us—and what it doesn’t.
What Does IRS Migration Data Measure?
The IRS Statistics of Income Division, working with the U.S. Census Bureau, compiles migration data using changes in addresses reported on individual income tax returns.
Importantly, the latest figures discussed here were released in 2026, but they reflect moves identified between tax returns for two earlier filing periods.
The data compares 2021 tax returns filed in calendar year 2022 with 2022 returns filed in calendar year 2023.
That distinction matters. The data gives us a detailed picture of taxpayer migration, but it should not be interpreted as a measurement of moves occurring in 2026.
What makes the information especially interesting from a financial planning perspective is that the IRS isn’t simply counting people.
It also tracks the adjusted gross income associated with taxpayers moving from one state to another.
Which States Gained the Most Adjusted Gross Income?
According to the IRS migration data cited by Broadridge, the five states experiencing the largest net inflows of adjusted gross income were:
| State | Net AGI Inflow |
|---|---|
| Florida | +$20.6 billion |
| Texas | +$5.5 billion |
| South Carolina | +$4.1 billion |
| North Carolina | +$3.9 billion |
| Tennessee | +$2.8 billion |
Florida’s lead is particularly notable. Its net AGI inflow was nearly four times that of Texas, the state with the second-highest inflow in the data.
The county-level numbers provide another interesting perspective.
Palm Beach County, Florida, recorded approximately $3.0 billion in net AGI inflows—the highest of any county in the country.
Which States Lost the Most Adjusted Gross Income?
At the other end of the migration data were several large states that experienced significant net AGI outflows.
| State | Net AGI Outflow |
|---|---|
| California | -$11.9 billion |
| New York | -$9.9 billion |
| Illinois | -$6.0 billion |
| Massachusetts | -$3.9 billion |
| New Jersey | -$2.6 billion |
At the county level, Cook County, Illinois—which includes Chicago—recorded the country’s largest net AGI outflow at approximately $4.4 billion.
These figures shouldn’t automatically be interpreted as evidence that the states experiencing outflows are in economic decline.
California and New York, for example, have large populations and substantial income bases. A net AGI outflow is one piece of a much larger economic picture.
What the data does show is that substantial amounts of taxpayer income are moving across state lines.
It’s Not Just Income Moving—It’s Taxpayers
The population figures generally follow a similar pattern.
According to the data cited in the Broadridge analysis, the states with the largest net increases in tax filers were:
- Texas: +56,473
- Florida: +55,349
- North Carolina: +39,118
- South Carolina: +29,214
- Tennessee: +24,104
Meanwhile, California experienced the largest net decline in tax filers at -100,397, followed by New York at -71,987 and Illinois at -28,609.
New Jersey and Massachusetts rounded out the five states with the largest net declines in tax filers.
Are People Really Moving Because of Taxes?
Taxes may be part of the equation—but they aren’t necessarily the entire reason someone moves.
A decision to relocate can involve:
- Housing and overall cost of living
- Weather and lifestyle
- Employment or business opportunities
- Proximity to children, grandchildren, or other family members
- Health-care considerations
- Retirement lifestyle preferences
- State and local taxes
For higher-income households, however, state tax differences may become particularly meaningful.
Moving from a state with a relatively high individual income tax to one with a lower individual income tax—or no individual income tax on certain types of income—can potentially change a household’s overall tax picture.
But simply moving to a lower-tax state doesn’t automatically mean you’ll spend less or end up financially better off.
A Lower-Tax State Isn’t Necessarily a Lower-Cost State
When comparing states, focusing only on the individual income tax rate can provide an incomplete picture.
A household’s actual cost of living can also be influenced by housing costs, property taxes, insurance, sales taxes, transportation, health care, and other expenses.
For example, someone considering a move primarily for tax reasons may discover that savings in one area are partially offset by higher costs elsewhere.
That’s why relocation can be approached as a broader financial planning decision rather than simply a state income tax calculation.
Why This Can Matter Even More in Retirement
Retirement is often when people gain the greatest flexibility over where they live.
Without a daily commute or a job tying them to a particular location, retirees may consider relocating closer to family, downsizing, moving somewhere warmer, or choosing a state they believe will better support their retirement lifestyle.
That creates an opportunity to look at the financial consequences of the move before making it.
A retirement relocation analysis may include questions such as:
- How will the state tax different sources of retirement income?
- How could the move affect my overall cost of living?
- What might I pay in property and sales taxes?
- How could housing and insurance costs change?
- Will I purchase a new home or rent?
- How could the move affect my estate planning?
- Do my retirement income and investment strategies still make sense after relocating?
For someone with substantial retirement assets, taxable investments, a pension, business income, or multiple sources of income, these questions can become an important part of deciding whether relocation makes financial sense.
Moving May Be a Good Time to Review Your Financial Plan
A move across state lines can also be a natural trigger for a broader financial review.
That doesn’t necessarily mean changing your investments simply because you’ve changed your address.
Instead, it may be an appropriate time to review how your accounts, income sources, tax strategy, and estate plan work together under your new circumstances.
For example, you may want to review your 401(k), Traditional IRA, Roth IRA, Rollover IRA, brokerage accounts, pension income, and other investment or retirement accounts as part of the overall planning process.
The objective isn’t to make changes simply for the sake of making them. It’s to determine whether the financial plan you built in one state still supports your goals after you establish your life in another.
What Should You Consider Before Moving to a Lower-Tax State?
The IRS migration data may show where taxpayers and income are moving, but it doesn’t tell us whether an individual household will actually benefit financially from relocating.
That’s a much more personal calculation.
Before moving primarily for financial reasons, consider looking beyond the headline state income tax rate and comparing the broader financial picture.
Questions worth asking include:
- How does my current state tax my income?
- How would the potential new state tax my particular sources of income?
- What will housing cost in the new location?
- How do property taxes compare?
- What are the differences in insurance costs?
- Will my health-care costs or access to care change?
- What other state and local taxes could affect my budget?
- Will my overall cost of living actually decrease?
- How will the move affect my retirement income plan?
- Does my estate plan need to be reviewed after the move?
For some households, taxes may be an important financial benefit of relocating. For others, differences in housing, insurance, health care, and other expenses could reduce some of the expected savings.
Changing Your Address Isn’t the Entire Tax-Residency Story
People considering a move for tax reasons should also understand that relocating involves more than simply changing a mailing address.
State residency and domicile rules vary, and determining where someone is considered a resident for tax purposes can depend on the facts and circumstances surrounding the move.
If you plan to maintain homes or significant connections in more than one state, residency questions can become particularly important.
Before assuming that a move will change your state tax obligations, consider discussing the applicable residency requirements with a qualified tax or legal professional familiar with the states involved.
Business Owners May Have Additional Considerations
Relocation can become even more complicated for business owners.
Moving your personal residence doesn’t necessarily mean that all income connected to a business will suddenly be taxed differently.
The location of the business, where work is performed, how the business is structured, where customers or employees are located, and other factors may affect state tax obligations.
This can be particularly important for an owner who is considering relocating before selling a business or experiencing another significant liquidity event.
Rather than assuming that moving before a major transaction will produce a particular tax result, business owners may want to coordinate with their CPA, attorney, and financial advisor well before the anticipated transaction.
Retirees Should Look Beyond State Income Taxes
For retirees, the financial impact of moving can extend well beyond income taxes.
Your retirement lifestyle may be funded by several different sources, including Social Security, pensions, retirement account withdrawals, and taxable investments.
Understanding how a potential new state treats your particular income sources is one part of the analysis.
But retirement planning also involves expenses.
A lower state income tax may be attractive, but your retirement budget could also be affected by:
- Housing costs
- Homeowners insurance
- Property taxes
- Health-care expenses
- Transportation
- Travel to visit family
- Long-term care considerations
- Everyday cost-of-living differences
A more useful question than simply asking, “Which state has lower taxes?” may be:
“Where can I build the retirement lifestyle I want while keeping my overall financial plan sustainable?”
What About Florida and Texas?
Florida and Texas stand out in the IRS migration data because they recorded the two largest net AGI inflows: approximately $20.6 billion for Florida and $5.5 billion for Texas.
Both states are frequently part of relocation conversations, particularly for retirees, business owners, and individuals seeking a different tax and cost-of-living environment.
However, the IRS data alone cannot tell us why each taxpayer moved or whether taxes were the primary reason.
It also doesn’t mean that either state will necessarily be financially advantageous for every household.
The better approach is to compare the potential move based on your income, assets, expenses, housing plans, family considerations, and long-term goals.
Moving to Another State: Financial Planning Checklist
If you’re considering relocating—whether for retirement, work, family, lifestyle, or taxes—consider reviewing these areas before making the move:
- ☐ Compare your current and prospective state’s income tax structure.
- ☐ Determine how each state treats your specific retirement and investment income.
- ☐ Compare property taxes and housing costs.
- ☐ Estimate homeowners or renters insurance costs.
- ☐ Review health-care availability and potential costs.
- ☐ Compare your expected overall cost of living.
- ☐ Review your retirement income strategy.
- ☐ Review your taxable brokerage and retirement accounts as part of your overall financial plan.
- ☐ Determine whether your estate planning documents should be reviewed after relocating.
- ☐ Discuss state residency and domicile requirements with a qualified tax or legal professional.
- ☐ If you own a business, evaluate whether the move changes any business-related state tax obligations.
- ☐ Consider the nonfinancial reasons for moving, including family, lifestyle, community, and quality of life.
Frequently Asked Questions
Are Americans moving to lower-tax states?
The IRS migration data discussed in this article shows substantial net AGI inflows into several states with lower individual income tax structures, including Florida, Texas, Tennessee, South Carolina, and North Carolina. However, the data does not establish that taxes were the reason each taxpayer relocated. Housing, employment, family, weather, lifestyle, and other considerations may also influence migration.
Which state gained the most adjusted gross income from migration?
According to the IRS migration data cited by Broadridge, Florida experienced the largest net AGI inflow at approximately $20.6 billion. Texas ranked second with approximately $5.5 billion.
Does moving to a state with lower income taxes always save money?
No. State income taxes are only one part of a household’s financial picture. Property taxes, sales taxes, housing, insurance, health care, transportation, and other living expenses can influence whether a move actually improves your overall finances.
Should taxes determine where I retire?
Taxes can be one consideration, but they generally shouldn’t be the only one. Retirement location decisions may also involve cost of living, housing, health care, proximity to family, lifestyle preferences, and long-term financial sustainability.
Should I review my financial plan after moving to another state?
A significant relocation can be a useful time to review your financial plan. Depending on your circumstances, this may include retirement income, investments, tax planning, insurance, estate planning, and your expected living expenses.
Does changing my mailing address establish residency in a new state?
Not necessarily. State residency and domicile rules vary. Individuals maintaining connections or homes in multiple states should consider consulting qualified tax and legal professionals regarding the specific requirements that apply to their circumstances.
The Bottom Line
The latest IRS migration data illustrates a significant movement of taxpayers and adjusted gross income between states.
Florida and Texas recorded particularly large net AGI inflows, while California, New York, Illinois, Massachusetts, and New Jersey experienced some of the largest net outflows.
But the numbers shouldn’t be interpreted as a simple instruction to move from one state to another.
Where you live is both a financial and a personal decision.
Taxes matter. So do housing costs, insurance, health care, family, lifestyle, business interests, and the type of retirement you want to create.
Instead of asking whether moving to a lower-tax state will save you money, consider asking a broader question:
How would moving affect my entire financial plan?
Considering a Move?
A move across state lines can affect more than your address. It may be an appropriate time to review your retirement strategy, investments, taxes, estate planning, and overall cost of living.
Nova Wealth Management works with individuals and families nationwide, including from our offices in Florida and Texas. We can help you evaluate how a potential relocation fits into your broader financial plan and, when appropriate, coordinate with your tax and legal professionals.
Schedule a Meeting to speak with one of our advisors.
Toll-Free: (888) 677-9910
Prepared using educational information from Broadridge Advisor Solutions. © 2026 Broadridge Financial Services, Inc.
Disclosure: Nova Wealth Management, Inc. is a Registered Investment Advisor. This material is provided for general educational and informational purposes only and is not intended to provide personalized investment, tax, or legal advice. State and federal tax laws, residency requirements, and other regulations vary and are subject to change. Individuals should consult qualified tax and legal professionals regarding their specific circumstances. Investing involves risk, including the possible loss of principal. Financial decisions should be based on an individual’s unique financial situation, objectives, and goals.
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