These Five States Have Lost The Most Taxpayer Income

MOA’s analysis of Internal Revenue Service migration data found that Massachusetts lost roughly $4.2 billion in adjusted gross income (“AGI”) in 2023 as more people moved out of state than moved in.

But the Commonwealth wasn’t the only state to experience losses. When we analyzed how the rest of the country fared when it came to outmigration and AGI, a pattern started to form. High-tax states saw an exodus of people and income, while lower-cost, lower-tax havens grew.

Best and Worst States for AGI Migration

In 2023, Massachusetts saw the fourth-highest net outflow of AGI in the country. It joined California, New York, Illinois, and New Jersey on the list of states with the highest net loss of AGI. The same states also boast the highest taxes in the nation.

The Tax Foundation ranks California, New Jersey, and New York the worst in the nation for tax competitiveness, earning low marks for imposing high and complex overall taxes on residents. Illinois also falls in the bottom half of states for its taxes with some of the highest corporate and unemployment insurance tax burdens in the country.

By contrast, the states that saw the highest inflow of AGI in 2023 tended to have lower overall tax burdens. 

In 2023, Florida had the highest net gain of AGI due to people moving in – totalling over $20 billion in new taxpayer income, followed by Texas, South Carolina, North Carolina, and Tennessee.

The Tax Foundation ranks Florida, Texas, and Tennessee among the top 10 states for best-structured tax systems, followed closely by North Carolina. South Carolina also ranks in the top 10 states for low corporate tax rates, offering competitive tax rates for small businesses, and falls in the top half of states for individual income tax rates.

Why High Overall Taxes Hurt State Competitiveness

High tax burdens have real real consequences for state finances.

Rising taxes and a high cost of living push people and businesses to consider whether they might be better off financially in another state. Recent data from the MassCPAs 2026 Policy and State Competitiveness Report shows that 90% of CPAs say tax policy influences relocation decisions, with the 4% surtax playing a significant role. When residents ultimately decide to leave, they take their income with them. Similarly, when businesses scale back, relocate, or decide to invest elsewhere, the state loses not only jobs but valuable tax revenue.

This shrinking tax base leaves less revenue available to fund various key priorities. As a result, states are left with fewer resources and even stronger incentives to shift a greater share of the tax burden onto the residents and employers who remain. 

In contrast, states with lower tax burdens give households a better chance to keep more of what they earn and give employers more room to save, expand, and invest in the local economy. That helps attract new residents, new business activity, and a broader tax base over time. 

Conclusion

The latest migration data is about more than a population movement. It is a warning sign about competitiveness. 

People and income are moving away from high-tax states and towards states that prioritize affordability and opportunity.  Massachusetts is already experiencing this shift, as billions in income continue to leave the Commonwealth. Without changes, the state risks losing even more residents, income, and economic opportunity in the years to come.