Trenton, NJ — New Jersey lost nearly 19,400 tax filers and more than $2.5 billion in adjusted gross income between 2022 and 2023 as higher-income residents continued leaving for lower-tax states, according to newly released IRS migration data analyzed by the Tax Foundation. The outflow places New Jersey among the nation’s biggest losers in domestic migration, alongside California and New York, and adds fresh pressure to concerns over the state’s long-term fiscal outlook.
The new data show the losses are not just about population decline. Wealthier households appear to be leaving at disproportionate rates, with New Jersey losing roughly $85,562 in adjusted gross income for every net resident who moved out during the period. States with lower tax burdens — particularly Florida, Texas, Tennessee, and the Carolinas — absorbed much of that migration.
High earners continue leaving high-tax states
The migration trends reinforce a pattern economists and fiscal analysts have tracked for years: residents with greater financial flexibility increasingly relocate to states with lower taxes, lower housing costs, and fewer overall expenses.
According to the report, New Jersey recorded the fourth-largest net loss of income tax filers nationwide, trailing only California, New York, and Illinois. Meanwhile, Florida gained more than 55,000 filers and added $20.6 billion in adjusted gross income from inbound migration. Texas added more than 56,000 filers.
The Tax Foundation analysis found a measurable relationship between top state income tax rates and migration losses. New Jersey’s top marginal income tax rate stands at 10.75%, among the highest in the nation. States without an income tax consistently ranked among the strongest migration gainers.
While taxes are not the only factor driving relocation decisions, the report argues they increasingly influence where people choose to build businesses, retire, or relocate families.
“States with higher overall tax burdens and less competitive structures overwhelmingly lost residents and taxable income,” the analysis stated.
Key Points
• New Jersey lost 19,370 tax filers between 2022 and 2023
• The state recorded a net adjusted gross income loss of $2.55 billion
• Higher-income households continued moving to lower-tax states like Florida and Texas
Fiscal pressure could intensify
The financial implications extend beyond census counts.
Because upper-income households contribute a disproportionate share of state income tax revenue, the departure of wealthy residents can create outsized effects on state budgets. Analysts warn that continued out-migration may reduce future tax collections while increasing pressure on lawmakers to raise revenue elsewhere.
The report describes a potential cycle facing outbound states: shrinking tax bases can make it harder to fund public services such as schools, transportation, and healthcare without increasing taxes further — a dynamic critics argue may push even more residents to leave.
New Jersey has long relied heavily on high-income earners to support state revenues. Treasury reports in recent years have shown that top earners account for a significant share of total income tax collections, making the state especially vulnerable to migration among affluent households.
The latest IRS data suggest those concerns are no longer theoretical.
The Tax Foundation noted that migration patterns increasingly show not just population movement but income concentration shifts. Florida, for example, gained roughly $184,771 in adjusted gross income per new resident, far above the national average. New Jersey, by contrast, saw substantial income losses tied to departing residents.
Cost of living compounds the issue
Taxes remain only part of the broader affordability picture confronting New Jersey residents.
Housing prices, property taxes, insurance costs, and commuting expenses continue to rank among the highest in the country. Those pressures intensified following pandemic-era inflation and expanded remote work flexibility, which gave many higher-income professionals more freedom to relocate without changing employers.
The report found that climate, economic opportunity, and housing affordability also shaped migration patterns, particularly across Sun Belt states. South Carolina posted the strongest population gains from domestic migration despite maintaining a moderate income tax rate, suggesting lifestyle and cost factors continue to play major roles alongside tax policy.
Even so, the broader trend remains difficult to ignore: states with lower taxes and lower costs generally gained residents and wealth, while high-tax Northeastern states continued losing both.
New Jersey policymakers have debated for years whether the state’s tax structure risks undermining long-term competitiveness. Supporters of higher tax rates argue the revenue funds critical public investments and social services, while critics contend wealthy residents increasingly view relocation as financially worthwhile.
The latest migration figures are likely to intensify that debate heading into future budget negotiations.
Outbound trend shows little sign of slowing
The IRS migration data cover moves tied to tax returns filed between calendar years 2022 and 2023, reflecting relocations from tax year 2021 filings to tax year 2022 filings. Analysts say the trends align with several consecutive years of outbound migration from high-tax states.
For New Jersey, the concern now centers on whether the state can retain enough high-income taxpayers to sustain revenue growth without further increasing tax burdens on remaining residents.
As lawmakers continue weighing budget priorities and tax policy changes, the newest migration data provide another warning sign that affluent residents may increasingly view leaving the state as a financial advantage rather than a personal disruption.
