Young Americans earning six-figure incomes are still abandoning New York and California for greener (and more affordable) pastures in other states.
Iconic hotspots California and New York saw the largest exodus of high-income young people in 2021, according to SmartAsset's latest analysis of Internal Revenue Service (IRS) income and migration data.
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The states where the most high-income people move have relatively cheap housing and low taxes, highlighting how the cost of living remains a top priority for even the wealthiest Americans.
According to Zillow, the median rent for all apartments in New York, NY was $3,650 per month in October. In Los Angeles, California, that amount was $2,947.
If you're considering a similar move, regardless of your tax bracket, here's what you need to know about where these wealthy young Americans are going and why.
Where are America's young people going?
According to IRS numbers used in SmartAsset reports, only 2% of taxpayers between the ages of 25 and 34 earn more than $200,000 annually.
Although this group is small, it can have a positive impact on your chosen place of residence. Young wage earners benefit the state's job market and economy. They are likely to have more disposable income to spend and invest, thereby benefiting the economy of their chosen state or city.
But some states are at a disadvantage, with 10 states experiencing a net exodus of young, high-income workers in 2021. California and New York led the list in terms of net immigration losses, followed by Massachusetts and Illinois by a wide margin. The states with the largest net increases in immigration were Texas and Florida, followed by New Jersey and Colorado by a wide margin.
New Jersey saw the sharpest trend reversal across all age groups, according to SmartAsset. While many high-income earners left, there was a large influx of young people in the same year. A similar trend, albeit to a lesser extent, was observed in Connecticut.
It's important to keep these numbers in context. SmartAsset says the total number of high-income young people in New York and California remains higher than any other state.
Nevertheless, this migration pattern revealed in their study begs the question: Why is this major demographic moving on such a large scale?
Although there are many reasons that influence the decision to migrate, such as job opportunities and family obligations, there are two important economic factors to consider. That's taxes and housing costs.
read more: Wealthy young Americans are losing faith in the stock market and betting on these three assets instead.Take advantage of powerful long-term tailwinds now
why are they moving?
There are nine states that do not impose state income taxes on their residents. By comparison, New York state's top marginal tax rate is 10.9%, while California collects a 13.3% tax from its top-income residents.
In fact, young people with annual incomes of $200,000 or more can easily save thousands of dollars (worth five figures) in taxes simply by moving to another state, especially one that doesn't impose income taxes at the state level, such as Florida or Texas. .
Housing costs also vary widely between these states. The national median home price in the United States rose to $430,300 in the third quarter, according to the latest data from the Federal Reserve Bank of St. Louis. At the state level, a typical home in Texas costs just $303,414, while a typical home in Florida costs $407,219, according to Zillow data.
By comparison, a typical home in New York costs $425,011, compared to $760,526 in California. This is more than twice as high as her in Texas and nearly 90% higher than in Florida.
To put things into perspective, data from Redfin shows that today's homebuyers need an annual income of $114,627 to afford a median-priced home in the U.S., which is an increase of $15,285, or 15% more than a year ago. % Increased has.
With home prices and mortgage rates across the country still at all-time highs, if you want to preserve your hard-earned salary for the long term, take inspiration from America's affordable locations that attract wealthy and young people. Well, it might work. Run.
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This article is for information only and should not be construed as advice. PROVIDED WITHOUT WARRANTY OF ANY KIND.
