Americans Fleeing Overtaxed States, Moving to Florida

Florida attracted the most refugees from high tax states in 2022

A boutique-style oceanfront resort in the Florida Keys. (Dreamstime/TNS)

Recent data shows that Americans are fleeing high-tax states, and a vast number of them are headed for Florida.

A report released on Jan. 30 by the National Association of Realtors (NAR) shows that 26 states saw more people moving in than out. The rest saw people leaving for other states. The top five states, attracting the largest number of new residents, were Florida (318,855), Texas (230,961), North Carolina (99,796), South Carolina (84,030), and Tennessee (81,646).

Conversely, the five states that lost the most residents were California (-343,230), New York (-299,557), Illinois (-141,656), New Jersey (-64,231), and Massachusetts (-57,292).

A map (pdf) composed by Americans for Tax Reform shows that, of the five states that drew in the most residents, all had Republican-controlled legislatures, and all but North Carolina had Republican governors. Of the five states that lost the most residents, Democrats controlled all but Massachusetts, which had a Republican governor and a Democrat-controlled legislature.

Data released by the Census Bureau confirmed that Florida was the fastest-growing state in the country in 2022, with an annual population increase of 1.9 percent.

NAR report author Nadia Evangelou noted that 2022 “was the first time since 1957 that Florida’s population grew faster than anywhere else across the United States.” The southern region of the Sunshine State—which over 9 million of Florida’s residents call home—also continues to be the most populated and is seeing the fastest growth.

The Taxes

Data compiled by The Tax Foundation, an independent tax policy non-profit, shows that New Yorkers faced the highest burden in 2022, with 15.9 percent of the net product in the state going to state and local taxes. California’s tax rate was 13.5 percent. Illinois had a tax rate of 12.9 percent. New Jersey’s tax rate was 13.2 percent and the tax rate for Massachusetts was 11.5 percent.

While Florida’s overall tax rate was 9.1 percent, the Sunshine State is one of nine states that have no individual income tax. Texas is another. So is Tennessee.

There were some additional tax breaks enjoyed throughout Florida in 2022.

Florida’s legislature passed a bill, signed into law by Gov. Ron DeSantis on May 6, 2022, that provided residents with 10 sales tax holidays.

From July 25, 2022, to Aug. 7, 2022, the state’s Back-To-School Tax Holiday (pdf) provided tax breaks on items like clothing, school supplies, learning aids, and computers. Tax-free items during the May 28, 2022, to June 10, 2022, Disaster Preparedness Tax Holiday period (pdf) included things like portable generators, portable self-powered light sources, non-electric food storage coolers, and supplies required for the evacuation of pets. During the Freedom Week Tax Holiday (pdf) that ran from July 1, 2022, to July 7, 2022, taxes were eliminated on retail items related to boating, water activities, camping, fishing, and general outdoor activities. Taxes were also eliminated for tickets to live music events, movies, and entry fees for museums, state parks, and the ballet.

In 2022, Floridians also enjoyed a Tool Time sales tax exemption (pdf), and a Children’s Books sales tax exemption (pdf). They are also currently enjoying a year-long Baby and Toddler Clothing and Children’s Diapers sales tax exemption (pdf), a year-long Energy Star sales tax exemption (pdf), and a two-year Impact-resistant Windows and Doors sales tax exemption (pdf). In addition, the Florida Motor Fuel Tax Relief Act of 2022 (pdf) reduced the price of motor fuel in the Sunshine State by 25 cents per gallon during the entire month of October.

Florida’s homeowners also received tax breaks. The Save Our Homes Act (pdf) provides homestead exemptions to Florida’s homeowners, decreasing the property’s taxable value by as much as $50,000.

Florida’s business owners have tax breaks as well.

Florida’s business-related tax breaks provide another incentive to move to the Sunshine State. The state does not impose corporate income tax on limited partnerships or subchapter S-corporations. There is no corporate franchise tax on capital stock and no property tax on business inventories or goods that are in transit for up to 180 days.

Other business tax benefits include Florida’s Capital Investment Tax Credit (pdf)—a credit of up to 5 percent against the corporate income tax, available for up to 20 years—available to attract high-impact, capital-intensive industries, such as silicon technology, transportation industries, or solar panel manufacturing facilities. The Research and Development Tax Credit Program provides corporate income tax credits to eligible businesses for certain research expenses in areas such as aviation and aerospace, nanotechnology, and cloud information technology.

The Jobs

According to the NAR report, the populous areas in the Sunbelt that saw high growth in 2022 shared a common characteristic: “a robust job market recovery after the pandemic.”

Florida is no exception: the state is known for its robust jobs market. Unless they are independently wealthy or retired with benefits, people need an income to spend money and to subsequently enjoy the tax break incentives and tax holiday benefits.

Data released by the Bureau of Labor Statistics (BLS) shows Florida had an unemployment rate of 2.5 percent at the end of December 2022, down from 2.7 percent recorded five months earlier in July. BLS data shows the national average in December of 2022 was 3.5 percent.

By way of contrast, New York saw an unemployment rate of 4.3 percent, which has remained virtually unchanged since July 2022. Illinois had an unemployment rate of 4.7 percent, up from the July 2022 rate of 4.4 percent. California’s unemployment rate was 4.1 percent, an increase from the July rate of 3.9 percent.

Housing

Closely tied to taxes and jobs is the housing market. The NAR report noted that 46 percent of moves in 2021 were made for housing-related reasons, an increase of six percentage points from 2020. Although moves slowed in 2022, the report notes that affordability continues to be “the primary reason that people continue to relocate from ... big city centers to less dense and more affordable areas.”

Based on NAR’s 2022 data, Evangelou concluded that many people are leaving states like California and New York because they are looking for “a better neighborhood, cheaper housing and ... a newer/better/larger home.” Post-pandemic, she concluded, “migration trends only go one way and affect every area’s demographics.”