The migration patterns of high-earning millennials are being reshaped by income tax rates and living conditions across the United States, with New York and California experiencing notable losses in young high earners. A recent report by SmartAsset highlights the net movements of individuals aged 26 to 35, earning at least $200,000 a year, using IRS data from the 2021 tax year. In this demographic, Florida and Texas have emerged as the top destinations, with net gains of 2,175 and 1,909 people, respectively. In stark contrast, New York and California saw significant outflows of young professionals—5,062 and 4,495, respectively. Although these two states remain home to the largest populations of high earners, the trend suggests a growing preference for states with lower living costs and favorable tax policies.
The appeal of Florida and Texas is underscored by no state income tax and a welcoming environment for remote workers. The pandemic enabled many individuals to escape the confines of urban living, leading to a migration towards states offering more affordable housing and an overall attractive lifestyle. Randy Ryerson, vice president of marketing and communications at Penske, points to remote work as a catalyst, allowing professionals to choose their residences based on personal preferences rather than commuting needs. Warm climates, spacious living conditions, and favorable tax structures make Florida and Texas increasingly desirable, especially for those focused on financial growth and retirement savings.
Corporate movements have also influenced this migration trend, with prominent companies relocating or expanding operations in South. New York-based finance giants, such as Blackstone and Goldman Sachs, have made significant investments in Miami, while tech firms like Tesla and Oracle are establishing themselves in Texas. As a result, Texas has become a leading base for Fortune 500 companies, with Houston emerging as the favored city for corporate headquarters. Additionally, Texas’s cost of living is approximately $45,000, which is $8,000 lower than both California and New York, enhancing its attractiveness to young, high-earning professionals seeking a better work-life balance.
Florida’s appeal continues to grow, not only among retirees but also among young workers seeking ample amenities and competitive employment opportunities. The state reports an unemployment rate of 2.7%, lower than the national average, making it a vibrant market for job seekers. For instance, Harshneel More, a software engineer who transitioned from San Francisco to Tampa, highlights the improved lifestyle in terms of amenities, such as gyms and swimming pools, that weren’t accessible back home. This combination of favorable living conditions and financial benefits creates a compelling case for young earners to relocate.
While many high earners are migrating to southern states, other regions are also seeing influxes. New Jersey, which netted 1,048 new high earners, and Connecticut, with a net gain of 660, demonstrate that some professionals are opting to stay close to metropolitan areas for work flexibility. This trend indicates that young professionals are searching for affordability without completely abandoning their jobs or urban connections. Washington State also ranks in the top destinations, netting 464 new young high professionals, notable for having the highest percentage of high earners aged 26 to 35 in the nation.
Overall, the trend reveals a shifting landscape of young professionals navigating work-life dynamics, seeking opportunities that align with their lifestyle preferences and financial goals. Not only are millennials moving toward states with no income tax and higher potential returns on investments, but they are also prioritizing quality of life, cost of living, and accessibility to urban centers. With shifts in where Fortune 500 companies establish their bases, and the ongoing adaptability of remote work, the migration of young high earners will likely continue to influence regional economics in the coming years.