IRS migration data does not lie, and right now it tells a brutal story for a handful of high-tax states. California alone shed $11.9 billion in adjusted gross income to outbound migration, and four other states are following the same script.
The Five States Hemorrhaging Taxable Income
The IRS tracks year-to-year address changes on filed returns and uses them to calculate net AGI flows between states. The most recent data available, as of late 2025, ranks the net AGI losers as follows:
- California: -$11.9 billion
- New York: -$9.9 billion
- Illinois: -$6 billion
- Massachusetts: -$4.18 billion
- New Jersey: also reporting significant negative net AGI flow
The common thread across all five states is a high marginal income tax rate. California's top rate sits at 13.3 percent. New York's combined state and city rate for New York City residents can reach 14.776 percent for the highest earners. Illinois has a flat 4.95 percent rate but pairs it with one of the worst overall fiscal environments in the country. Massachusetts recently added a 4 percent surtax on income over $1 million, bringing its effective top rate to 9 percent. New Jersey's top rate is 10.75 percent.
For a fuller breakdown of how capital gains stack up in these states specifically, see our Capital Gains Tax by State: A Full Breakdown.
Where the Money Is Going
The flip side of this data shows the states gaining the most in net AGI inflows. Florida, Texas, and Arizona consistently lead. Florida carries zero state income tax. Texas has no income tax either. Both states have benefited from the post-pandemic shift toward remote work, which severed the geographic tie between where someone earns income and where their employer is located.
Florida's net AGI inflow from other states has repeatedly exceeded $30 billion in recent measurement periods, with New York and California together accounting for a substantial share of that gain. The Florida vs. California: The Tax Reality breakdown on this site quantifies exactly what a high-income household saves by crossing that state line.
The states gaining residents are not all low-cost. Florida's property insurance market is under significant strain in 2026, and home prices in Tampa, Orlando, and Miami remain elevated. The draw is not overall affordability so much as the absence of a state income tax on wages, investment income, and capital gains.
States Trying to Respond
Several of the outflow states have acknowledged the problem, at least rhetorically. The concrete action has been limited.
Illinois is constitutionally constrained to a flat income tax rate, which limits its ability to create targeted relief for high earners without a ballot amendment. New York has implemented some business incentive programs but has not moved its top marginal rate. Massachusetts faced pushback after the millionaire surtax passed, though the legislature has not reversed it.
On the other side of the ledger, multiple states are actively cutting income taxes in 2026. Georgia moved to a flat 5.39 percent rate this year and is on a statutory path to 4.99 percent. Iowa's rate continues its scheduled phasedown. Mississippi has set a target of full income tax elimination, though the timeline extends past 2026. These competitive moves are not happening in a vacuum. They are a direct response to the IRS outflow pattern documented above.
For high-income retirees specifically, the tax picture extends beyond income. Estate taxes, property taxes, and treatment of retirement distributions all factor in. Our Best States for Retirees to Avoid Taxes guide covers those dimensions in detail.
What the Data Actually Means for Your Decision
IRS AGI flow data is a lagging indicator. It captures decisions people already made, not what they are planning. What it confirms is that the migration pattern away from California, New York, Illinois, Massachusetts, and New Jersey is not a one-cycle anomaly. It has repeated across multiple years and has accelerated since remote work normalized.
If you are a high-income earner in one of these five states, the math on what you keep versus what you pay deserves a direct calculation, not a rough estimate. Use our state tax calculator to run your specific income against the rates in your current state and any state you are considering.
Key Takeaways
- California lost $11.9 billion in net AGI outflows and New York lost $9.9 billion, the two largest figures in IRS migration records (as of late 2025 data)
- The five states with the largest net AGI losses all carry top marginal income tax rates between 4.95 percent and 14.776 percent
- Florida and Texas, both with zero state income tax, are the primary destinations absorbing those outflows
Sources
- Live or Die Here state tax calculator
- Live or Die Here, California: taxes, laws and costs
- Live or Die Here, New York: taxes, laws and costs
- Live or Die Here, Florida: taxes, laws and costs
- Live or Die Here, Illinois: taxes, laws and costs
Where to confirm these figures
These are the official and primary publishers for the topics in this guide. Check a figure against them before you act on it; laws and rates change, and their current page wins over ours.
- California Franchise Tax Board
- New York Department of Taxation and Finance
- Florida Department of Revenue
- Illinois Department of Revenue
- Federation of Tax Administrators, every state tax agency
- Zillow Research, home value and rent data
- NOAA National Centers for Environmental Information, Climate at a Glance