A growing number of Americans are leaving high-tax states, such as California and New York, for states with lower taxes, such as Florida and Texas, according to a Bank of America analyst note.
The analysis is based on aggregated and anonymous internal customer data constructed near real-time estimates of domestic migration flows. The data suggest that pandemic migration trends are not reversing, and cities that saw a large influx of people during the pandemic have still been growing faster than other cities in recent quarters.
Austin, Texas, saw the most significant influx of people among the country's top 23 major metropolitan areas during the first two years of the pandemic and over the past four quarters. The net population of the Texas capital jumped by more than 1.5% at the beginning of 2023 compared to the same time one year ago.
In the two years from 2020 to 2022, Austin's population grew by 5%. Tampa, Florida, also saw its population grow by a little less than 1% in 2023, compared with a more than 2% increase in the previous two years. Orlando, Florida, also notched a spot in the top three with similar growth rates to Tampa.
Bank of America data suggests that Baby Boomers are relocating to Las Vegas and Tampa, while Millennials prefer Austin. Both groups are leaving the larger cities of San Francisco and New York. Other towns with favorable growth rates include Cleveland, Dallas, Charlotte in North Carolina, Houston, Phoenix, Las Vegas, Philadelphia, and Atlanta.
On the other end of the spectrum, San Jose, California, saw a large outflow of people over the past few years. In early 2023, the city's population slid by more than 1%, following a decline of nearly 4% in the previous two years. San Francisco, plagued by a spike in property crime, likewise experienced a drop in population, with a more than 1% drop in the first quarter of 2023 and a more than 3% decline from 2020 to 2022, according to the California Department of Justice's Criminal Justice Statistics Center. New York City posted the third-largest population decline, losing about 1% in early 2023 and 3% in the prior two years.
The findings from Bank of America echo Census Bureau data released earlier this year that indicated Republican-controlled states saw an influx of residents in 2022. Florida saw the biggest rush of new residents, with about 319,000 Americans relocating there in 2022. That amounts to a population increase of nearly 2%, well above the 0.4% national growth rate recorded in the U.S. between July 2021 and July 2022. Other red states that led in population growth include Texas, North Carolina, South Carolina, Tennessee, Georgia, Arizona, and Idaho.
"This population shift paints a clear picture," said Janelle Fritts, a policy analyst at the nonpartisan Tax Foundation. "People left high-tax, high-cost states for lower-tax, lower-cost alternatives." Three states, including Texas, Florida, and Tennessee, do not tax regular income, according to a separate analysis from the Tax Foundation, a group that advocates for lower taxes.
Conversely, California, New York, and Illinois saw the most significant population declines in 2022. California saw its population tumble by more than 343,000 people in 2022, although New York had the most significant reduction in its population with a 0.9% drop.
"The Census data and these industry studies cannot tell us exactly why each person moved, but there is no denying a very strong correlation between low-tax, low-cost states and population growth," Fritts said. "With many states responding to robust revenues and heightened state competition by cutting taxes, these trends may only get larger."
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