The sunshine state of Florida leads the pack of states wooing new high-income residents, mainly due to warm winters and more relaxed tax laws that let residents keep more of what they earn.
This, according to a study by Lending Tree using IRS data from 2016, has set Florida apart from the rest of the nation in adjusted gross income (AGI) – and, it's not even that much of a contest.
“IRS data shows that people who moved to Florida brought in a combined adjusted gross income (AGI) of about $30.2 billion to the state. Meanwhile, people who left took roughly $12.5 billion in income with them, leaving Florida to enjoy a net influx of about $17.7 billion in AGI,” Lending Tree wrote.
Other states that enjoyed an increase in resident income include South Carolina, Idaho, Oregon, and Montana.
Who are flocking to Florida (besides the birds)?
People between the ages of 55 and 65 represent the most common demographic of people moving to Florida to, in part, escape colder winters and punishing tax laws in other states. The relatively low cost of living in Florida helps draw in new residents to the state.
Among the benefits to living in Florida:
- No state income tax
- Property taxes are below the national average
- Warmer weather in most areas
Relatively high transportation costs (such as gas) and utilities (about 13% higher than the national average) cut into savings by moving to Florida.
Who is the biggest loser?
According to the Lending Tree study, the state of New York takes the crown for the biggest decrease in AGI. Despite the state serving as one of the most integral financial sectors in the nation, more than $20 billion in income left the state in 2016.
“New York is a hugely populous state with a massive economy and so the loss in residents only accounted for a small fraction – around 1.2% – of the state’s total amount of income,” Lending Tree added.
Are you thinking of moving to a different state?
Moving states is a big deal, though periods of transition (like new jobs or even retirement) can make the process easier to manage from a mental standpoint. When choosing your next state, keep several key factors in mind:
- How affordable is the state? This includes income and property taxes, but also the cost of gas, groceries and consumable goods. Some states have no income tax (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming), while other states have no sales tax (Alaska, Delaware, Montana, New Hampshire, Oregon). Check out City-Data for a wealth of information to consider about your future state.
- Employment opportunities. Unless you're retiring (for good), a solid job sector is a good sign that you'll be able to find work and enjoy a dependable income in your new state. For example, teachers are needed virtually everywhere, but if you're in the financial services sector, you might need to live around larger cities.
- Weather. As we age, most of us begin to appreciate the warm weather, but that doesn't mean warm winters and hot summers will be right for all of us. Pay attention to not only the nice weather but also the weather dangers in the area. New Orleans, for example – along with many coastal cities, may run significant hurricane risks.
- Crime rate. Clearly, most of us don't want to accidentally move into an area with high crime. Check out My Local Crime as well as Crime Spot for two good options to check the crime rates in the area.
- How close are your friends and family? If you're one of those people who get along well with your family, you'll probably take your proximity to them into consideration as you're looking for a new state. How long will it take to get to your friends and family for holidays, vacations or other get-togethers? On the same token, how far are you from a major airport so you can fly to see them?
- Culture. We won't necessarily feel comfortable in all areas, even if the crime isn't bad. Checking out the area several times in person will help assist you in determining whether the culture will align well with you and your family. Population density plays a role in this as well.
Steve Adcock is an early retiree who writes about mental toughness, financial independence and how to get the most out of your life and career. As a regular contributor to The Ladders, CBS MarketWatch and CNBC, Adcock maintains a rare and exclusive voice as a career expert, consistently offering actionable counseling to thousands of readers who want to level-up their lives, careers, and freedom. Adcock's main areas of coverage include money, personal finance, lifestyle, and digital nomad advice. Steve lives in a 100% off-grid solar home in the middle of the Arizona desert and writes on his own website at SteveAdcock.us.