The losses accelerated the trend of high-earners relocating to lower-tax states like Florida and Texas.
New York and California lost over $90 billion in income during Covid, according to new IRS data.The income losses for California and New York in 2021 were more than three-times their combined losses in 2019, before the pandemic took hold in the U.S.
The data shows that the income flight from high-tax states to low-tax states, which has been happening for years, picked up steam during Covid. The income losses for California and New York in 2021 were more than three-times their combinedExperts say that while the income migration from states likely slowed in 2022 and 2023 from the pandemic highs, higher-tax states will continue to see outflows of high earners, thanks in part to remote work and white-collar job growth in the sun belt.
Nearly a third of Florida's gain — or about $10 billion — came from New York. California, Illinois and New Jersey each lost over $4 billion in income to Florida in 2021. The income gains are rippling through the Florida economy, with a recent Bureau of Labor Statistics report showing Florida with more total jobs than New York since the Bureau started tracking the numbers in 1982.
The losses in the high-tax states also tended to be higher earners, which will have an outsized impact on tax collections over time. The average income of the households leaving New York reached an all-time high of $130,000 in 2021. The average income of New Yorkers moving to Florida was even higher, at $223,245 — a 64% jump from the average income of those who moved out between 2019 and 2020, according to McMahon.
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