Where the Young and Rich Are Moving – 2023 Study
Jaclyn DeJohn | AUG 9,2023
High earners can make up a disproportionate amount of tax revenue. For people aged 26 to 35, only 2% of tax returns filed show an income of $200,000 or higher. Despite its small size, this cohort actually makes up 16% of the income for this age group – an outsized tax base that can impact local businesses and government revenues.
So to track which states these young rich professionals are moving to, SmartAsset examined the most recent IRS migration data.
- Florida and Texas gain the most young high earners, while New York and California lose the most. Florida gained a total of 2,175 high earners aged 26 to 35 after accounting for both inflows and outflows, while Texas gained a net 1,909. Despite the losses, New York (-5,062) and California (-4,495) still have the highest count of young high earners of any state by a wide margin.
- While high earners in general left New Jersey, rich young people are flocking to it. Across all age groups, New Jersey lost 2,617 high-earning tax filers in 2021. However, the state netted 1,048 new rich young professionals in the same year. This was the most dramatic reversal from the aggregate trends. Connecticut saw a similar, though less drastic, trend.
- High earners are youngest in Washington. Whether it’s compared with the rich population of all ages or the population as a whole, Washington has a disproportionately large number of young rich people. More than 13% of those making at least $200,000 in this state are between the ages of 26 and 35. The state with the second-biggest population in this cohort is California with 10%. New York, California, Massachusetts and New Jersey also have particularly high rates of high-earning young people.
- Despite losses, Washington DC remains exceptionally young and rich. DC lost nearly 700 high-earning tax filers aged 26 to 35, but still maintains a relative population higher than any state. More than 16% of people making over $200,000 fall into that age bracket.
Where the Most High-Income Young People Moved
Florida gained a net of 2,175 high-earning tax filers between ages 26 and 35. While 3,391 were added in the state, 1,216 either moved or fell out of the income bracket. Most recently, there are 23,537 tax returns with over $200,000 income for this cohort. Florida is one of the nine states that doesn’t charge an income tax.
Texas actually saw more raw inflow of young, rich professionals than Florida, with 4,048 new filers in the given age bracket. But outflows were also higher at 2,139 filers, for a net migration of 1,909 into the state. Of nearly 700,000 tax returns with more than $200,000 income in Texas, 7% are for people aged 26 up to 35. Texas does not charge income tax at the state level.
3. New Jersey
New Jersey had the most drastic reversal of the migration trend across all age groups. While high earners generally left, the mix of high earners leaned more into the 26 to 35 crowd. 3,311 new tax filers fell under the $200,000 bracket in this age range, while 2,263 left.
Like Texas and New Jersey, those ages 26 to 35 make up a particularly high percentage of people earning over $200,000 (7%). A net 754 tax filers in this income bracket was added to the state after 1,681 migrated in and 927 migrated out.
5. North Carolina
North Carolina had a total of 13,621 tax returns filed for high earners aged 26 to 35. This demographic makes up 5.9% of all people earning over $200,000 in the state. Across all age ranges, North Carolina had the third-highest net migration of high income earners.
Young people making over $200,000 increased in Connecticut more than the rate across all age groups. Out of 8,274 tax filers in this group, 660 were net additions after a 1,404 inflow and 744 outflow.
Washington state has the benefit of no state income tax and the highest proportion of young high-earners when compared with the $200,000+ cohort as a whole. A net 464 new high earners were added to the state thanks to a 2,660 inflow and 2,196 outflow.
With a total of 7,345 high earners filing in Tennessee between the ages of 26 and 35, the state added a net of 441 new high earners in this group. 868 high-earning young people moved into Tennessee, while 427 moved out. Tennessee also does not charge state income tax.
Arizona gained a net 321 new filers with greater than $200,000 in income between the ages of 26 and 35. While 832 new tax filers in this cohort came to the state, 511 left.
10. South Carolina
South Carolina rounds out the top 10, with 318 net new young high-earners in the state, for a total of 95,584. Six hundred and one new tax returns were filed at this level, while 283 moved out of state.
Data and Methodology
To determine where high-earning households are moving, we considered data from all 50 states, as well as the District of Columbia. We defined high-earning households as those with adjusted gross incomes of $200,000 or more. More specifically, we closely examined the following two metrics:
- Inflow of young tax filers making $200,000 and above. This is the number of tax returns for people aged 26 up to 35 with adjusted gross incomes of at least $200,000 who moved into a state. Data comes from the IRS and for tax year 2021.
- Outflow of tax filers making $200,000 and above. This is the number of tax returns for people aged 26 up to 35 with adjusted gross incomes of at least $200,000 who moved out of a state. Data comes from the IRS and for tax year 2021.
States are ranked according to net inflow in descending order.
Tips for High-Earning Households
- Hire a financial advisor. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you.
- Consider alternative investments. If you’re a high earner you may qualify as an accredited investor. You’ll need a net worth of at least $1 million (excluding their home) and an income of at least $200,000 in each of the last two years ($300,000 for married couples). Accredited investors have access to different types of alternative investments that may produce higher returns, including hedge funds and private equity.
- Take advantage of a backdoor Roth IRA. If you make $153,000 and your filing status is single ($228,000 if you’re married), you’re ineligible to contribute to a Roth IRA. However, you can use a maneuver known as a backdoor Roth IRA by converting a traditional IRA into a Roth version. You’ll have to pay taxes on the money, but your funds will grow tax-free from there.
Questions about our study? Contact firstname.lastname@example.org.
Photo credit: ©iStock.com/monkeybusinessimages
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