Ellen Murphy SVP, Deputy General Counsel | realtors.com
When wealth advisor Clint McCalla, 37, lived in San Diego with his wife and kids, they enjoyed being close to the beach and the zoo.
“It was a beautiful city and great place to raise a family,” explains McCalla. “But the cost of living was far too high to justify staying.”
They were renting a house and struggled to find one to buy.
“Property tax rules in California are a travesty,” says McCalla. “You currently have a system that provides legacy real estate owners and investors with a disproportionate benefit relative to new buyers. Combine that with a state that has refused to build new housing in any significant way for 20 years, and it creates the problem we now see.”
This, along with income taxes, led the couple to leave California for Austin, TX, in September 2023.
Now settled in Austin, the McCallas are pleased with their choice.
“Almost everything costs less in Austin,” says McCalla. “Housing is the biggest savings for our family. We’ve been able to buy a wonderful home in an excellent school district with great neighbors, sunset views, and an exceedingly friendly deer population.”
Although he misses his friends and colleagues dearly, he knows the move was right for his family.
“I didn’t feel like we would ever be in the position to get ahead in California, with how things were trending,” McCalla says.
California’s mass exodus of wealthy millennials
McCalla is not alone. Many affluent millennials are moving to lower-tax states, described by the Wall Street Journal as a “high-tax state brain drain.”
SmartAsset analyzed IRS data from 2021 and 2022 ranking states based on net migration of young households earning at least $200,000 per year.
California topped this list losing 3,226 such households in 2022 alone.
“This can have an outsized effect on local economies and politics,” notes SmartAsset's study.
The average adjusted gross income for these departing California households is $480,776. For every household that leaves, California loses significant tax revenue both now and future earnings potential.
“This means the middle class in these states will inevitably have to pay higher taxes,” reports The Wall Street Journal.
Other states seeing similar trends include Illinois (losing 1,323 households), Massachusetts (losing 1,102 households), New York (losing 345 households), and Pennsylvania (losing 320 households).
Where prosperous millennials moved
Affluent millennials primarily relocated to Florida or Texas—states without income tax.
“High-earning households have the most to gain when it comes to minimizing income taxes,” notes SmartAsset's study.
Florida gained 1,786 millennial households averaging $526,273 gross income each; Texas gained 1,660 millennial households averaging $405,215 gross income each.
These lower-tax states will benefit from young professionals who will grow wealthier over time according to The Wall Street Journal's report.
Additional top destinations included Colorado (gaining millennial movers), North Carolina (gaining movers), and Washington (gaining movers).
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