This post originally appeared at https://www.bootsandsabers.com/2024/03/01/high-tax-states-continue-to-drive-away-high-income-earners/?utm_source=rss&utm_medium=rss&utm_campaign=high-tax-states-continue-to-drive-away-high-income-earners
In 2023, California’s population dipped below 39 million, the lowest count since 2015, according to the U.S. Census Bureau. Data shows the state lost 75,423 residents last year — continuing a dramatic trend that started with the onset of the COVID-19 pandemic in 2020.
What’s concerning is not how many people are leaving — the state has experienced lopsided out-migration for decades, according to the Los Angeles Times — but who is leaving.
Analysis of the approximately 750,000 people who have bid farewell to California over the last three years has revealed that thousands more high-earning, well-educated workers have left the Golden State than have moved in.
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It is not just wealthy residents leaving; businesses are also exiting the state — again due to high tax rates, punitive regulations, high labor, utility and energy costs, among other things.
That loss of vital income tax is very problematic for California, which is facing a record $68 billion budget deficit, largely due to an unprecedented drop in tax revenue.
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In tax years 2020 and 2021, the average gross income of taxpayers who moved from California to another state was about $137,000, according to IRS migration and personal income data.
That would place those individuals in California’s largest state income tax bracket — at 9.3% — which applies to single filers who earn between $61,215 and $312,686 per year, or married couples filing jointly with an annual income of $122,429 to $625,372.
If you earned $137,000 last year in California, your estimated state income tax for 2023 would be $9,896, according to the SmartAsset tax calculator. And if you reduced your taxable income by maxing out your 401(k) contribution at $22,500 (the 2023 total) and your IRA contribution at $7500 (for those aged 50 and older), your estimated state income tax would be around $6,827.