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Thursday, November 14, 2024

9,100 high-earning millennials left California in 2022, seeking lower taxes and living costs

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Young high earners are leaving California.

High-income millennials are leaving California and New York for Florida and Texas, according to a recent study by online financial information website SmartAsset, based on data from the Internal Revenue Service (IRS).

The company defined high-income millennials as those between the ages of 26 and 45 who earn more than $200,000 a year. According to the report, more than 9,100 young high-income households left California between 2021 and 2022. This is the highest number among the 50 states. This is more than double that of New York, which came in second with 4,251 households.

Laguna Beach Aerial View
Millennials with high income move out the most from California, with the most popular destination being Florida and Texas.

 

Illinois (3,163 households), Massachusetts (1,927 households), and Pennsylvania (609 households) rounded out the top five. Except for California, the top five were dominated by Eastern metropolitan areas.

Most of the young high earners, including California, moved to states with lower costs of living and lower taxes, such as Florida and Texas. Florida was the most popular destination, adding 6,188 households. With an increase of 5,151 households, Texas was also a preferred destination for young high earners. Other high-income millennial relocations included North Carolina (1,970 households), Colorado (1,227 households), and Tennessee (1,197 households).

Experts cite the high cost of living and corporate relocation as reasons for high-income millennials to leave their home states. In fact, a family of four would need an annual income of $140,000 to afford the cost of living in California. That’s about $33,000 more than the national average.
Additionally, 222 large companies with 100 or more employees moved out of California between 2019 and 2023.

“Economic factors such as cost of living, taxes, and government regulations are likely the dominating reasons for the exodus,” said Jaclyn DeJohn, analyst at SmartAsset.

However, despite the outflow, the state still had the highest number of high-income millennials. There were 589,524 high-income millennial households in California, more than second-place Texas (261,892) and third-place New York (242,762) combined.

SmartAsset noted that high-income millennials are more economically influential than other generations due to their high disposable income and purchasing power.

BY WONHEE CHO, HOONSIK WOO [cho.wonhee@koreadaily.com]