A profound demographic realignment is underway across the United States, driven by a confluence of economic pressures and evolving lifestyle preferences. Americans, in increasing numbers, are making the costly decision to uproot their lives and seek new beginnings in states offering a more favorable economic environment. This significant interstate migration trend is fundamentally reshaping the nation’s economic and social fabric.
At the heart of this movement are two potent forces: the relentless rise in the cost of living, particularly housing, and the disparate state and local tax policies that either alleviate or exacerbate these financial burdens. The patterns observed across various datasets, from detailed Census figures to the operational insights of major moving companies, consistently paint a picture of a nation in flux, with residents voting with their feet for greener, or rather, cheaper, pastures.
Moving companies, with their real-time data on household relocations, offer a compelling corroboration of broader demographic shifts. While their datasets, naturally influenced by factors like geographic coverage and market share, may not be as expansive as official Census figures, they nonetheless reveal remarkably similar overall migration patterns. These companies track the ratio of inbound to outbound moves, providing a tangible measure of a state’s appeal.
In a recent U-Haul study, for instance, South Carolina emerged as the top destination, boasting the highest ratio of inbound-to-outbound one-way U-Haul moves. It was closely followed by Texas, North Carolina, Florida, and Tennessee, all states traditionally recognized for their relative affordability and growing economies. Conversely, the states experiencing the most significant outflows, characterized by the highest ratio of outbound-to-inbound moves, included California, Massachusetts, New Jersey, New York, and Pennsylvania.
Meanwhile, data from United Van Lines customers presented a largely parallel narrative, with some notable variations. West Virginia, Delaware, South Carolina, the District of Columbia, and North Carolina registered the highest inbound-to-outbound moving ratios. On the other side of the ledger, New Jersey, Illinois, New York, California, and Massachusetts were the states with the highest outbound-to-inbound ratios, indicating a persistent exodus.
When examining both companies’ datasets, a clear pattern of “winners” and “losers” emerges. States like California, New Jersey, New York, Illinois, and Massachusetts consistently rank among those losing residents, while South Carolina, North Carolina, Arizona, Idaho, Florida, Indiana, and Tennessee are reliably among the biggest beneficiaries of this internal migration. These consistent findings underscore an ongoing and undeniable trend: “Americans are continuing to leave high-tax, high-cost-of-living states in favor of lower-tax, lower-cost alternatives.”
The connection between a state’s tax policies and its migration patterns is strikingly clear. Analysis of available data reveals that of the 26 states whose overall state and local tax burdens per capita were below the national average in 2022—the most recent year for which such information is available—a significant 18 experienced net inbound interstate migration in Fiscal Year 2024. This suggests a powerful draw exercised by states with more lenient fiscal policies.
Conversely, among the 25 states and the District of Columbia where tax burdens per capita were at or above the national average, a substantial 17 of these jurisdictions confronted net outbound domestic migration. This stark contrast highlights the significant role that tax policies play in residents’ decisions to relocate, directly impacting a state’s population growth or decline.
The individual income tax, while only one component of a state’s overall tax burden, is particularly illustrative in demonstrating this relationship. For states that fall within the top third for domestic migration-related population growth, the average combined top marginal state income tax rate stands at approximately 3.5 percent. This relatively low rate appears to be a key attraction for new residents seeking to maximize their earnings.
In sharp contrast, the states in the bottom third for population growth due to migration exhibit a significantly higher average combined top marginal state income tax rate, hovering around 6.7 percent. This represents a 3.2 percentage point difference, suggesting that higher income tax rates are often a deterrent for those considering a move.
Further solidifying this trend, six of the states in the top third for domestic migration growth do not levy an individual income tax at all. These include Tennessee, Nevada, New Hampshire, Florida, Texas, and South Dakota, offering residents complete relief from this particular tax burden. Their success in attracting new residents underscores the powerful appeal of zero-income-tax policies.
Meanwhile, among the states in the bottom third for migration growth, four—Hawaii, New York, California, and New Jersey—impose double-digit income tax rates, making them considerably more expensive for earners. Even Pennsylvania, which has a relatively low state income tax rate of 3.07 percent, sees significant outmigration, largely because this low state rate is “paired with some of the highest local income tax rates in the country,” creating a substantial overall tax burden.
Beyond just the absence or presence of income tax, the structure of a state’s tax system also plays a critical role. States with more neutral tax structures, such as those employing single-rate, as opposed to graduated-rate, taxes on wage and salary income, have also proven highly attractive to interstate movers. In 2024, of the 12 states that utilized such single-rate systems, all but four—Illinois, Mississippi, Pennsylvania, and Michigan—experienced net inbound migration.
This pattern is further reinforced by the 2025 State Tax Competitiveness Index, which assesses the competitiveness of state tax structures as of July 1, 2024. Among the 25 states that earned top rankings on this Index, an impressive 20 experienced net inbound migration. Conversely, of the 25 lowest-ranking states, 17, along with the District of Columbia, suffered net outbound migration, illustrating a clear link between tax policy and population movement.
While tax differentials undeniably influence location decisions for some Americans, particularly for “higher-income and highly mobile individuals,” the motivations behind a move are often multifaceted. More commonly, individuals cite a range of reasons including job opportunities, the overall cost of living, family considerations, or lifestyle preferences as primary drivers for relocating.
It is crucial to recognize that taxes, though not always the sole or explicit reason, are an “important factor” that significantly impacts the cost of living and, indirectly, the availability of job opportunities within a state. Crucially, tax policy is “one that is directly within policymakers’ control,” offering a powerful lever for states seeking to attract and retain residents and businesses.
The post-pandemic era has ushered in a new landscape of increased remote and hybrid workplace flexibility, empowering “more Americans now enjoy the flexibility to live in a state of their preference while working for an employer located elsewhere.” This newfound mobility has intensified the competition among states to attract and retain talent and investment.
In response to this highly competitive environment, many states have proactively engaged in “reducing tax rates and improving tax structures in an effort to attract and retain individuals and employers.” This strategic recalibration reflects a recognition that favorable tax policies are essential for economic vitality and population growth. Indeed, several states that previously struggled with “highly uncompetitive tax codes”—such as Iowa, Louisiana, and Arkansas—have recently undertaken “significant steps to improve their tax structures and better compete with their lower-tax neighbors.”
This proactive approach serves as a stark warning to other states, “especially those that experience net outbound migration year after year.” These states should seriously “consider following suit or risk falling behind simply by standing still” in an increasingly dynamic and competitive interstate environment. The stakes for economic growth and demographic stability are simply too high to ignore.
Beyond individual decisions, the exodus of businesses and high-income earners from certain states underscores the gravity of the situation. Prominent businessman and investor Kevin O’Leary has bluntly characterized states such as New York, Massachusetts, New Jersey, and California as “uninvestable,” citing their “insane” policies and excessively high taxes. This assessment is not isolated, as these states consistently rank at or near the bottom in the annual Chief Executive survey evaluating the best and worst states for business.
These states typically impose state and local income tax rates that are “two to three times higher than in most other states.” Furthermore, they are often burdened by “high regulatory burdens, high production costs, and a high risk of litigation,” creating a challenging environment for businesses. Consequently, business migration out of these states has become “a common occurrence,” with tangible economic repercussions.
California, New York, New Jersey, and Massachusetts all feature prominently in the top five U.S. states experiencing net population loss due to interstate migration. The scale of this movement is staggering; hundreds of companies have relocated their headquarters and jobs out of California alone. For instance, in August 2024, Chevron publicly announced its decision to move its company headquarters from San Ramon, California, to Houston, Texas.
This move by Chevron is part of a broader trend, with many other significant companies recently transitioning their headquarters from California to Texas. These include CBRE Group, Charles Schwab, Hewlett Packard Enterprise, Oracle, and Pabst Brewing. Adding to this corporate exodus, since 2020, entrepreneur Elon Musk has either moved or announced plans to move five of his companies’ headquarters or core functions out of California and into Texas: Tesla, SpaceX, X, Neuralink, and The Boring Company.
