California and New York are losing billions in income to out-of-state moves

California and New York feel the shift

Moving trucks can change more than a family’s address. The latest IRS county migration data show that all 10 counties with the largest net losses of interstate tax filers were in California or New York between filing years 2022 and 2023.

The movement also carried billions of dollars in adjusted gross income elsewhere. That matters because residents’ earnings support state and local tax collections used for schools, roads, emergency services, and other public needs. The figures track tax returns, not every individual resident.

California and New York lead county-level net losses in tax filers

California and New York contained all 10 counties with the largest net losses of interstate tax filers in the latest IRS data. The group included four California counties and six counties in New York City or Long Island.

Large populations partly explain why these counties produce bigger raw totals than smaller areas. Still, their combined showing reveals a clear challenge for two states known for major industries, famous cities, expensive housing, and high state tax rates. People also continued moving into both states.

California and New York lose income

California and New York are not only watching residents move. IRS data show that departing tax filers often reported higher adjusted gross income than arriving filers, resulting in a net income loss for many large counties.

Adjusted gross income includes wages and several other income sources reported on federal returns before certain deductions. It is not the same as tax revenue, but it helps show the earning power connected to migration. One wealthy household can shift the total by millions.

Los Angeles posted the biggest drop

Los Angeles County recorded the nation’s largest net loss of interstate tax filers, with 17,496 more returns leaving than arriving. Those departing filers took nearly $1.9 billion more in adjusted gross income to other states than incoming filers brought from them.

The result does not mean Los Angeles lost that amount from its entire economy. It reflects the annual income reported by migrating households. Even so, sustained losses can weaken revenue growth and change demand for housing, businesses, and public services.

Fun fact: Los Angeles County had more than 9.7 million residents in the 2020 census, making it America’s most populous county.

New York boroughs filled the ranking

Queens recorded a net loss of 17,109 interstate tax filers, while the Bronx recorded a net loss of 16,319. Brooklyn, officially Kings County, also appeared among the 10 counties with the largest declines, losing a net 6,924 filers.

These numbers highlight how migration can look different across a city. New York City’s five boroughs are also counties, allowing the IRS to measure them separately. Moves between boroughs are not counted as interstate migration because they remain within New York State.

Coastal California also saw exits

Orange County posted a net interstate loss of 11,618 tax filers. San Diego, Riverside, and San Bernardino counties also appeared in the national top 10, showing that the movement reached beyond Los Angeles and affected both coastal and inland Southern California.

Housing costs may influence some moves, but the IRS data do not ask taxpayers why they relocated. Jobs, family needs, retirement, weather, remote work, taxes, and lifestyle can all play a role. One dataset cannot prove a single cause.

Long Island joined the outflow

Suffolk County lost a net 10,434 interstate tax filers, while neighboring Nassau County lost 9,130. Both suburban counties sit on Long Island, outside New York City, showing that the migration pattern extended beyond the five boroughs.

Residents leaving these areas may seek lower housing costs, different taxes, warmer weather, or family connections elsewhere. Yet both counties also welcomed newcomers during the same period. A net loss is the difference between incoming and outgoing filers, not just a count of departures.

Little-known fact: Long Island is the largest island in the contiguous United States, stretching about 118 miles eastward.

Manhattan gained people but lost wealth

Manhattan, officially New York County, was the nation’s strongest gainer in interstate tax filers in the latest data. At the same time, it lost about $922 million in adjusted gross income, meaning departing filers collectively reported more income than arriving filers.

That contrast shows why headcounts alone can be misleading. A county can gain taxpayers while losing earning power if higher-income households leave and lower-earning households arrive. It may still benefit from new workers, spending, businesses, and future income growth.

Arizona and Texas welcomed filers

Maricopa County, Arizona, recorded the largest net gain, adding 9,353 interstate tax filers. Harris County, Texas, followed with 8,955, while King County, Washington, and Clark County, Nevada, also ranked among the leading destinations.

These counties contain or surround Phoenix, Houston, Seattle, and Las Vegas. Their gains suggest that Americans are not moving toward a single kind of place. Some choose lower-cost Sun Belt metros, while others move to expensive job centers with large technology, health care, logistics, and service industries.

Taxes are just one part of the move

Florida, Texas, Tennessee, and several other destinations do not collect broad individual income taxes on wages. That can appeal to households comparing take-home pay, especially retirees, business owners, and high earners who can choose where they live.

However, lower income taxes do not always mean lower total costs. Property taxes, insurance, sales taxes, housing, transportation, health care, and wages differ widely. People may save money in one area but spend more in another, making each move a personal calculation.

Housing can reshape migration choices

California and New York contain some of America’s most expensive housing markets. Families who can work remotely or relocate may find larger homes and lower monthly payments in parts of Arizona, Nevada, Texas, and the Southeast.

Affordability is powerful, but popular destinations can become expensive as more residents arrive. Fast growth may raise home prices, rents, traffic, school enrollment, and demand for water and roads. Migration can therefore ease pressure in one place while creating new challenges somewhere else.

Income losses can affect public budgets

When high-income taxpayers leave, states and cities may collect less income tax than expected. The effect can be especially noticeable in places that depend heavily on top earners, whose payments may rise or fall sharply with bonuses, investments, and business income.

That does not mean every departing dollar becomes lost tax revenue. New residents, wage growth, tourism, companies, and investment can offset some losses. Policymakers must examine several years of data before deciding whether migration has created a lasting fiscal problem.

For another California tax update tied to wealthy residents, state revenue, and political pushback, see why Newsom is opposing the wealth tax proposal.

The story is bigger than one ranking

IRS migration data provide a valuable picture, but they have limits. They mainly capture people who file tax returns, compare addresses across filing years, and may not fully count children, some low-income residents, or people who do not file.

California and New York remain economic powerhouses that continue attracting workers, students, businesses, tourists, and immigrants. The bigger question is whether interstate losses will continue and how leaders will respond.

For another California wage update tied to worker pay, business costs, and customer prices, see why the state’s pay raise is creating unexpected pressure.

Are high-cost states risking too much when wealthy residents take their income elsewhere? Share your thoughts and drop a comment.

This slideshow was made with AI assistance and human editing.

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