Recent data show that Americans are steadily moving out of some higher‑tax, higher‑cost states into jurisdictions with lower overall tax burdens and housing costs. While the decision to move is never only about taxes, migration trends are making it clear: tax policy and cost of living matter more than ever for both individuals and business owners.
National migration trends and “millionaire tax” states
The Tax Foundation’s state migration data highlights a pattern: states with high combined tax burdens and expensive housing have seen persistent net out‑migration, while many lower‑tax states in the South (Texas), Mountain West (Wyoming, Nevada, etc.) and East (Florida) continue to gain residents. Core “millionaire tax” states—including California, New York, New Jersey, Connecticut, and Maine—layer higher top brackets or surtaxes on higher‑income filers, intensifying that pressure at the top end.
- California: Adds about a 1% surtax on income above 1 million dollars, on top of already high marginal rates.
- New York: Uses a steeply progressive structure with very high brackets for incomes above roughly 1 million dollars.
- New Jersey: Applies a top rate around 10.75% on income over 1 million dollars.
- Connecticut and Maine: Impose elevated top brackets that fall heavily on high earners.
For high‑income taxpayers and closely held business owners, these differences can translate into five‑ and six‑figure annual tax deltas, which over a decade become hard to ignore. Many are choosing to “vote with their feet,” relocating primary residence, business activity, or both to more tax‑friendly jurisdictions while keeping economic ties (or real estate) in their former home states.
New York: Higher‑income focus and the new pied‑à‑terre tax
New York provides a vivid example of how policy is responding to these trends. While the state and New York City have faced ongoing concerns about out‑migration and budget gaps, policymakers are also doubling down on asking the ultra‑wealthy to contribute more. In April 2026, Mayor Zohran Mamdani and Governor Kathy Hochul announced New York’s first pied‑à‑terre tax—a surcharge on luxury second homes valued above 5 million dollars when the owner’s primary residence is outside the city.
Philadelphia and other big‑city dynamics
Cities like Philadelphia are facing a slightly different mix of issues: slow population growth, modest in‑migration, and concerns about economic competitiveness and wage‑tax differentials relative to surrounding suburbs and neighboring states. Recent Pew and census‑based analyses cited by local media note progress on some social indicators (like reductions in gun violence and poverty) but continued challenges around job growth and tax‑base expansion. For many households, the calculus becomes: stay in a city with higher wage and property tax burdens and slower growth, or move to a nearby suburb—or a different state altogether—with lower recurring costs.
What this means for high‑income taxpayers and business owners
For higher‑income individuals, pass‑through owners, and closely held businesses, the environment is shifting in three key ways:
- State tax differentials are now a major planning driver. The gap between a high‑tax state and a no‑ or low‑tax state can be dramatic over a 10‑ to 20‑year horizon, especially when combined with property and local wage taxes.
- “Millionaire tax” policies are proliferating. States like California, New York, New Jersey, Connecticut, and Maine increasingly lean on top earners through surtaxes and steep brackets, while other states emphasize broad bases and lower rates.
- Mobility gives taxpayers leverage. Remote work and flexible entity structures make it easier to legitimately shift domicile and, in some cases, where business income is sourced—provided the move is properly documented and supported.
For clients considering a move, the decision should never be “taxes only,” but a serious plan will:
- Confirm true residency and domicile (days, facts, and ties).
- Address entity structure and where business income is earned.
- Coordinate property, estate, and gift planning with the new state’s rules.
If you are weighing a move from (or to) a higher‑tax state—especially one with a “millionaire tax” regime or city‑level surcharges—this is the time to model the multi‑year impact and make sure your tax, legal, and financial planning all line up with where you actually intend to live and work.
Tax Foundation Link – Americans Are Moving to States with Lower Taxes and Sound Tax Structures
Philadelphia Inquirer – Philly makes progress on gun violence and poverty, while economic growth stagnates, Pew report finds
Penn Report – Philadelphia 2026 State of the City
