Tax Hell: 3 States Americans Fled and 2 They Moved To


Do you know about the states Americans fled from in 2023?

Yes, there are states Americans fled from, and most of the time it was due to the taxes they had to pay. Let’s be honest, not all states are the same, and when it comes to taxes, there are obvious states that are going to be more favored due to the fact that the taxes people have to pay are smaller.

However, last year we saw an interesting phenomenon where even states notorious for their high tax rates saw an increased number of people pack their stuff and leave in favor of other states. Sure, no one likes it when the taxman comes knocking on their door, but last year we saw more and more people move since taxes are way too high for them.

And we cannot blame them! Some states have really high taxes, and when it comes to retirement, you do not want taxes to be the thing that is going to eat away at your carefully and painstakingly gathered nest egg!

If you want to know which states Americans live in and which are the ones that gained the most income residents last year so you can have an idea of where you should steer clear of in retirement, make sure you keep reading!

Does your state have high-income taxes? Is that enough of a reason to convince you to relocate in retirement? Have you moved states due to high taxes? Share your answers and opinions in the comments below!

states americans fled
Image By W. Scott McGill From Shutterstock

Fled from #3: Hawaii

While a lot of people have been thinking the Aloha state may be their best choice due to the low property taxes, when it comes to income tax, a lot of people have not been as sure of it. In total, last year, Hawaii lost about 0.8% of its population to interstate migration in particular, which is not a small number.

Since the income tax ranges anywhere from 1.4% to 11%, it is not something that everyone can afford to pay on a yearly basis.

The state is notorious when it comes to income tax rates; it is going to be among the biggest ones out there, and it seems like last year almost 1% of the population agreed that it was too much and left the state.

When it comes to retirees, Aloha State is not the best one either. The good part is that the state does not tax any form of income that originates from private or public pensions.

However, that’s where the good news stops. Any other form of retirement income is going to be taxed in the previously named income tax range, and there are no specific types of deductions available for retirees.

So if you have been thinking about this sunny state, take a look at their retirement tax situation before making the move.

Fled from #2: California

The next one on our list, which has seen a higher net population migration as people left (about 0.9%), is California.

The Golden State is notoriously known to be the state with some of the highest income taxes in the country, and their range between 1% and 13.3% has one of the highest upper margins in the entire United States.

So we cannot say we are surprised that this is among the states Americans fled last year. If anything, it was an expected situation, as the last few years have shown us that a lot of the population here has decided that they need to relocate somewhere where it is cheaper to live.

The sad part is that the high-income taxes are the root of that for most, and it is most likely one of the reasons why the state is losing some of its charms.

Retirees here do not have it better either, as while Social Security income is not going to be taxed at all, any other forms of income coming from retirement accounts are going to be taxed in full, and the marginal state tax is sitting at about 2.2%. It is definitely not a state to relocate to unless you know you can cover the high-income taxes.

Even though California is a high-tax state, it offers some of the best road trips you could take. If you are interested in these types of trips and need a starting point, we recommend you get Lonely Planet California’s Best Trips book from Amazon!

states americans fled
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Fled from #1: New York

Have you been able to guess the number one state where Americans fled last year?

By far, the Big Apple has been bleeding residents over the last few years, but experts have shown that this year it was the state that has seen the biggest exodus thus far. The net population that has relocated in interstate migration has been 1.1%, putting it 0.2% above the last state we have covered.

Given the trend, it is no surprise, as discussions about how expensive the state and the Big Apple in particular have become in the last couple of years have become a staple.

Although many people aspire to move to this city, equally as many are departing and seeking residences in other states.

Additionally, there are renters who are unable to sustain the cost of living in the city, not to mention the taxation circumstances.

Income taxes start at 4% and go up to 10.9%, which may not be as high as California’s, but the low end of the range is definitely higher! And when you compare the range with the states that have gained residents, it is no wonder why people have been fleeing this region.

For retirees, the situation may be a bit better, as Social Security income is not going to be taxed, and if you have a private pension or a retirement account, they are deductible up to $20,000. Despite this, any withdrawals are going to be taxed as regular income when you make them.

Keep reading to discover the two states that gained the most people last year!

states americans fled
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Relocated to #2: Delaware

One of the most popular states Americans fled to from the high-tax ones is Delaware, which saw a net population increase of about 1% due to interstate migration. This may come as a surprise, as a lot of the fastest-growing states are in the South and the West, yet this Mid-Atlantic state has captured the hearts of many who have chosen it to relocate to.

In terms of income tax rates, in 2023, we have observed them to be in a range between 2.2% and 6.6%, making them quite affordable. Yet, we can expect that more retirees will open their hearts to this state soon due to how relatively low their retirement taxes are.

When it comes to retirement taxes, Delaware does not have a tax on income coming from Social Security, and it also has no sales taxes. If you are over the age of 65, you can expect to have more deductions available during tax season, and the low property taxes have proven to be quite interesting for a lot of people.

The low property taxes seemed to have been what attracted a lot of Americans to move to the Diamond State, as Newark, Delaware, was one of the most popular cities searched on Zillow.!

Relocated to #1: South Carolina

The number one state to which people have moved in the past year is South Carolina! With the net population increase due to migration between states being up to 1.6% last year, we can definitely say that this state has been popular with people who have decided that they need a new forever home.

When you take into consideration that the income tax here can be anywhere between 0% and 6.5%, we can see why it would appeal to both the older and younger population.

The state also holds the city with the biggest population increase, as it seems like Columbia, South Carolina, is attracting quite a lot of Gen Z-ers to it. So if you are looking for a quiet town, it may not be for you.

Otherwise, South Carolina is a great state to relocate to if you are retiring soon or already retired. They do not tax Social Security income at all; if you end up making withdrawals from a retirement account, those will be only partially taxed, and retirees are looking at a marginal state tax rate of about 3%, making it a very tax-friendly state for retirees.

This, along with the fact that the Palmetto State is full of history and has an amazing climate, makes it one of the best states to relocate to in the eyes of many!

If you are close to retirement or already retired and are considering leaving your state, why not consider a retirement community? For a lot of retirees, this is the best choice when it comes to income and keeping an active social life. If you have been eyeing beach retirement communities, make sure you read our article about the best ones we have found!

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