By Stephanie Horan, CEPF® via Smart Asset
Young professionals are generally staying close to home, according to new research. The Census Bureau and Harvard University recently found that 80% of young adults live less than 100 miles from where they grew up. Meanwhile, just 10% had moved more than 500 miles away. This means that while big cities like New York and Los Angeles have been millennial hotspots for years, the tides may be changing.
In this study, we investigated the movement of rich young professionals, considering individuals younger than age 35 with adjusted gross incomes (AGIs) of at least $100,000. We examined the inflow and outflow of these wealthy young professionals from each state between 2019 and 2020 to determine the states losing and gaining the most. Our Data and Methodology below has more details our sources and how we ranked states.
This is SmartAsset’s fourth annual look at the states where rich individuals under the age of 35 are moving. Check out the 2021 rankings here.
- Rich young professionals are leaving California after several years of even migration patterns. In the two previous versions of our study, the migration of rich young professionals in and out of California was relatively level. In 2018, California saw a net outflow of about 400 rich young professionals, and in 2019, the Golden State saw a net inflow of around 20 rich young professionals. In stark comparison, California had a net outflow of 7,960 rich young professionals in 2020, the second-highest net outflow across all 50 states and the District of Columbia.
- Two states without income tax take the top spots for where rich young professionals are moving. Texas and Florida rank as the No. 1. And No. 2 states where rich young professionals are moving. In 2020, both states had net inflow of upwards of 3,400 young professionals earning $100,000 or more.
States Losing Rich Young Professionals
Over the past several years, rich young professionals have continued to leave New York. Most recently, the Empire State saw a net outflow of nearly 15,800 high-earning young professionals in 2020, significantly more than any state in our study. Specifically, about 28,700 rich young professionals left the state between 2019 and 2020 while fewer than 13,000 moved there.
California follows behind with a net outflow of 7,960 rich young professionals. Specifically, 20,568 people under the age of 35 making at least $100,000 moved into the state, while 28,528 moved out.
Illinois, the District of Columbia and Massachusetts had the third-, fourth- and fifth-largest net outflows of high-earning young workers in 2020, followed by Louisiana, North Dakota, Virginia, Oklahoma and Nebraska. Relative to its population, the District of Columbia saw the largest proportion of rich young professionals moving elsewhere, with a net outflow of almost 2,100.
States Gaining Rich Young Professionals
Between 2019 and 2020, Texas was the most popular destination for wealthy millennials. More than 15,000 millennials making at least $100,000 moved to the state, while only about 11,200 left. In total, there was a net inflow of roughly 3,800 wealthy millennials – the highest of any state and the District of Columbia.
Florida and Washington rank as the second- and third- states gaining the most rich young professionals in this year’s study. In 2020, the states experienced net inflows of roughly 3,400 and 2,800 rich young professionals, respectively.
Colorado and New Jersey follow with net migrations of 2,641 and 2459 wealthy millennial workers, respectively. North Carolina (+2,048), Arizona (+1,437), Connecticut (+1,425), Tennessee (+1,147) and Oregon (+897) round out the top 10 states with the largest net migrations of young professionals earning $100,000 or more.
Data and Methodology
To find where rich young professionals are moving and leaving, we considered data from all 50 states, as well as the District of Columbia. We defined rich young professionals as individuals under the age of 35 who have adjusted gross incomes of $100,000 and above. More specifically, we closely examined the following two metrics:
- Inflow of rich young professionals. This is the number of young professionals with adjusted gross incomes of at least $100,000 who moved into the state.
- Outflow of rich young professionals. This is the number of young taxpayers with adjusted gross incomes of at least $100,000 who moved out of the state.
Data for both metrics comes from the IRS, and compares 2019 and 2020 tax returns.
To rank the states, we determined each state’s net inflow of rich young professionals. This is the inflow minus the outflow. We then ranked the states according to net inflow in descending order. States losing the most rich young professionals have the largest net outflow while states gaining the most rich young professionals have the largest net inflow.
Tips for Moving to Another State
- Understand the tax implications. Income, sales, property and other forms of taxes vary by state. If you are moving to a new place, make sure to understand how your pay and finances will be affected. Our paycheck calculator accounts for the locality where you are based if you want to get a sense of changes in income taxes paid.
- Buy or rent? When you’re moving to a new city or state, you need to decide if you are going to rent or buy. If you are coming to a city and plan to stay for the long haul, buying may be the better option for you. On the other hand, if your stop in a new city will be a short one, you’ll likely want to rent.
- Have a financial advisor help you make the move. An advisor can help you get your financial affairs in order, which can ensure that your move goes smoothly. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
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