This month, financial advisors SmartAsset examined the most recent publicly available IRS data in order to try and determine where young professionals (aged 26-35) who earn $200K per year or more have been moving.
The study considered data from all 50 states and Washington DC, defining "high-earning households" as ones with adjusted gross incomes of $200,000 or more. Specifically, the study looked at
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.
What they found was that rich young people are flocking to New Jersey and Connecticut. 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, the report showed.
Smartasset also found that 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.
Despite losses, Washington DC remains exceptionally young and rich, the report said. 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.
And to the surprise of likely no one, Florida and Texas are once again No. 1 and No. 2. 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.
The top 10 locations that high income young people are moving, per SmartAsset, are:
Florida: 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: 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.
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.
Colorado: 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.
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.
Connecticut: 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: 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.
Tennessee: 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: 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.
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.
You can read the full study here.
