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You’ve probably heard the phrase “misery loves company.” Turns out, money loves it too.
The latest IRS migration data, set to visuals on Realtor.com, show that well-heeled individuals are quietly packing their bags and leaving high-tax coastal markets for lower-tax Sunbelt and Mountain states.
The wealth migration isn’t just for the likes of Jeff Bezos and Elon Musk; smaller real estate landlords are getting in on the exodus and, in doing so, reshaping rents, demand, and long-term appreciation.
The New Map of American Money
Visual Capitalist released its own map of the movement in America in 2023 based on IRS data and the Realtor.com analysis. It shows that, by far, Florida is the most popular state for Americans to move to, followed by Texas, the Carolinas, Tennessee, Arizona, and Nevada, bringing their billions with them from other states.
Rank
State
Net Interstate Income Flows
1
Florida
$21B
2
Texas
$6B
3
North Carolina
$4B
4
South Carolina
$4B
5
Arizona
$3B
Conversely, California and New York, where residents are taxed at higher rates and real estate is more expensive, saw large population outflows.
Why Wealth Loves Florida
Despite its unpredictable weather and high insurance costs, Florida attracted roughly $20.65 billion in taxpayers’ money—more than any other state. Texas followed with $5.5 billion in net gains, with South Carolina at around $4.1 billion and North Carolina at $3.9 billion, highlighting the attraction to America’s Southeast.
Meanwhile, the coastal hubs are bleeding taxpayers’ cash. The Wall Street Journal’s Allysia Finley said on the Potomac Watch podcast:
“You see the same trends that were already occurring before the pandemic, and in part, you’ve got a lot of people from New York, New Jersey, the Northeast who are moving down to lower tax climates in the Sunbelt. So the top states that have lost adjusted gross income, and that’s how the IRS actually breaks down the data, by adjusted gross income…New York lost $9.9 billion. Illinois’s $6 billion. Massachusetts, $4 billion, New Jersey, 2.6 billion. Maryland, $1.8 billion. And Minnesota, $1.5 billion.”
Fellow podcast host Kyle Peterson was quick to point out that it wasn’t just the Sunbelt that was attracting residents: “New Hampshire, Wyoming, and South Dakota are gaining income in this IRS data. You’re not moving to South Dakota for the weather.”
High Earners Are Leading the Exodus of High-Tax States
While large swaths of everyday workers and real estate investors have decided to give up on higher-tax states, it is billionaires and multimillionaires who are making the headlines, encouraging others to follow suit.
“You’re driving away at the top earners, and you saw that with Washington State…which has lost Jeff Bezos as well as Howard Schultz (founder of Starbucks), entrepreneurs who started their businesses in Washington State,” Finley said in the podcast.
Jasper County in South Carolina Is the Fastest-Growing County in The U.S.
The loss of tax revenue is directly linked to housing supply, with Sunbelt states not only having the additional cash to support housing initiatives but also residents to absorb the new construction of condos and apartments.
One of the immediate beneficiaries of the exodus from high-tax states has been South Carolina’s Jasper County, where the U.S. Census Bureau shows the population has increased by 9,000 in the last six years to 38,000 residents, making it the fastest-growing county in the U.S. centered on its main city, Hardeeville. That has resulted in a housing boom, according to the New York Times.
“Our goal is not to get to 100,000 people, although that may happen someday,” Hardeeville Mayor Harry Williams told the Times. “Our goal is to bring job opportunities to our young people.”
What This Means For Investors
The equation is simple: The wealthier the state, the more people will pay for rent, and the greater the population, the greater the incentive to build more housing, which in turn will help equalize home prices.
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The IRS data shows that Florida’s Palm Beach County received about $3.04 billion in income in 2023, with residents’ average income around $178,085. The greater the diversity of migrants in a state, the greater the need for diverse housing that supports mom-and-pop landlords rather than just deep-pocketed investors buying pricey condos or second homes to rent out on a short-term basis when they are not there.
“Texas is growing fast, but its migration story is broader and more working- and middle-class than Florida’s,” journalist Jack Salmon wrote on The Unseen and The Unsaid Substack when commenting on the same 2022-2023 IRS data as Realtor.com.
While much of the country struggles with affordability, Forbes notes that the rising share of wealth held by the top 1% “has reached a new record,” which, when combined with the migration patterns across the U.S., portends high rent growth and property values, though it must be noted that many of the extremely rich will buy rather than rent. Still, the increase in property values, like an incoming tide, causes all else to rise up with it.
Final Thoughts: Using the Migration Map to Create a Practical Investment Game Plan
If you are not looking for a simple, safe place to park your cash but rather to leverage it, there’s no point in investing in Miami and the other pricey metros attracting high-income residents. The rental market generally won’t support cash flow from rentals.
Instead, look to more affordable markets in North Carolina and away from the big tourist attractions, where a mix of retirees, remote workers, and future first-time homeowners might want to rent for flexibility or to save. There are also higher-end homes here that could double as short-term rentals. But again, the more expensive, the less sense it makes to leverage.
Elsewhere, Tennessee, Georgia, and Arizona will also offer pockets of investor-friendly real estate that might not cash flow given current interest rates but could look like a prescient move when the hallowed day of sizable rate drops finally arrives, or you simply hold on to them long enough to pay down the mortgage while rents increase.
