Exodus From New York Happening At Alarming Rate As Income Sinks Nearly $16B Compared To Pre-COVID

New York’s pandemic-induced exodus is killing the state’s bottom line.

The Empire State’s pool of adjusted gross income shrunk by nearly $16 billion in 2021 when compared to just two years ago — representing a major loss in potential tax revenue compared to pre-COVID levels, according to newly released data from the Internal Revenue Service cited by the Wall Street Journal.

The data shows New York lost a shocking $24.5 billion in state adjusted gross income in 2021 as residents relocated to other states. That marked a major upswing from the state’s loss of $19.5 billion in 2020 and just $9 billion in 2019.

Much of that has wound up in Florida, which has seen a $10 billion windfall in 2021 stemming from newly arrived New York transplants, according to the data.

Adjusted gross income is used to help calculate how much a person owes in income tax.

“The overall income subject to tax in New York is going down because people are moving out,” said Andrew Cohen, senior manager for state and local tax group at Eisner Advisory Group, LLC.

Cohen said the overall hit to the state’s coffers is hard to calculate because residents are taxed at variable rates depending on their income. New York’s top earners are taxed at the highest rate in the nation at 10.9%.

“I’ve had a lot of clients calling about leaving New York for lower-tax states, especially Florida,” Cohen added.

New York wasn’t the only blue state hit hard by outflows of income and the resulting hit to tax revenue.

California lost out on $29.1 billion in adjusted gross income in 2021 – or more than triple the state’s loss in 2019, according to the IRS data. Fleeing residents cost Illinois $10.9 billion in lost adjusted gross income in 2021, up from $8.5 billion in 2020 and $6 billion in 2019.

The largest recipients of the enormous exodus were states that have taken on more tax-friendly policies, such as Florida and Texas.

The Sunshine State, which does not have a state income tax, gained $39.2 billion in resident income in 2021 – an increase when compared  to its gain of $23.7 billion in 2020 and $17.7 billion in 2019.

Texas, another state that doesn’t levy an individual income tax, gained net inflows of $10.9 billion in adjusted gross income in 2021. The Lone Star State took in a net increase of $6.3 billion in 2020 and $4 billion in 2019.

The changing shift in income is the latest signal in an ongoing exodus of New Yorkers to Florida and other low-tax havens.

Earlier this month, data from the Florida Department of Highway Safety unveiled that more than 10,000 New Yorkers have exchanged their licenses for the Sunshine State’s version.

The statistic is considered a solid measure of migration patterns because it demonstrates a long-term relocation plan.

In February, data from the Bureau of Labor statistics showed Florida had surpassed New York in total employment for the first time in 40 years.

Data put out by the IRS late last year unveiled that millionaires were leaving New York in droves – a trend that coincided with an increase in tax rates.

Tax filings showed that the New York state residents who reported an adjusted gross income of more than $1 million dropped to 54,370 in 2020 from 55,100 in 2019 — or a decline of 1.3%.