Trenton, NJ – New Jersey continued to rank among the nation’s biggest losers in interstate migration as residents moved to lower-tax states, according to a new report by Tax Foundation policy analyst Abir Mandal, who analyzed the latest Internal Revenue Service migration data.
The report, Americans Are Moving to States with Lower Taxes and Sound Tax Structures, found New Jersey experienced a net loss of 19,370 income tax filers between 2022 and 2023, placing it behind only California, New York, and Illinois for outbound migration. The state also recorded a net loss of approximately $2.55 billion in adjusted gross income as taxpayers relocated elsewhere.
IRS data show continued outflow
Mandal wrote that while employment, housing costs, family ties, and climate all influence where people relocate, state tax policy remains an important factor in migration decisions. The analysis found states with lower tax burdens, including Florida, Texas, North Carolina, South Carolina, and Tennessee, continued attracting the largest numbers of new residents.
According to the report, Florida gained more than 55,000 tax filers and nearly $20.6 billion in adjusted gross income during the same period, while Texas added more than 56,000 tax filers and approximately $5.5 billion in income.
New Jersey among highest-tax states
The report notes New Jersey’s top marginal individual income tax rate of 10.75 percent ranks among the highest in the country. Mandal found a negative correlation between higher state income tax rates and interstate migration, although he emphasized taxes explain only part of why people move, with affordability, economic opportunity, and quality of life also influencing relocation decisions.
The analysis estimates that differences in state tax competitiveness account for roughly 11 percent of interstate migration patterns, suggesting tax policy is one of several factors considered by households evaluating where to live.
Why it matters
The report warns that sustained population and income losses can reduce a state’s tax base over time, placing additional pressure on budgets and public services. For New Jersey policymakers, the findings are likely to add to ongoing debates over taxation, affordability, and the state’s long-term economic competitiveness.
