Young professionals under the age of 35 who are making more than $100K per year are fleeing California and New York. Find out why they’re leaving and where they’re going to make the most of their finances.
With all the good things that both California and New York have to offer, apparently, it’s not enough to convince young professionals to stick around, particularly those who make more than $100,000 per year.
According to an analysis by the Census Bureau and Harvard University taken earlier this year, 80% of young adults now live less than 100 miles from where they grew up, Yahoo reported.
However, a separate study undertaken by SmartAsset examined both the inflow and outflow of wealthy young professionals from state to state between 2019 and 2020. They looked at what states they left and which states they flocked to. The two states young professionals were fleeing the most were California and New York.
On the surface, some of the reasons anyone, not just higher-earning young professionals, would leave California and New York are high living expenses and taxes.
California has the highest potential state income tax bracket at 13%. New York has the third-highest with 10.90% as its highest bracket. Hawaii is second, at 11%. New Jersey is fourth at 10.75 %.
Some of the destinations young professionals are flocking to are those states that do not collect state income tax. There are currently seven states in the US without state income taxes: Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. Two other states, New Hampshire and Tennessee, only tax dividends and interest income, while regular income is not subject to state tax, according to world population review.
Texas was the most popular destination for young professionals, with roughly 15,000 flocking to the state between 2019-2020. The benefits are no state income taxes and fewer personal restrictions on its citizens than in California and New York.
The second most popular destination for young professionals was Florida, which also has no state income tax. Roughly 3,400 young professionals moved to the state during 2019-2020. Florida has a 6% sales tax compared to California’s 7.25%. However, sales tax is higher in certain cities, such as 9.5% in Los Angeles and 8.875%in New York City.
Washington was another popular destination, with 3,400 young professionals moving there between 2019-2020. Washington has no state income tax. Sales tax is 6.5% plus local levies, which brings the total to 8.8% in Seattle, and an additional rate for food and beverages that pushes it up to 9.3% in restaurants and bars. Washington also has sky-high housing costs in places like Seattle and other hot metro areas.
Colorado saw an inflow of 2,641 young professionals during 2019-2020. Colorado has a flat state tax rate of 4.63%. As of 2022, Millennials make up the largest proportion of the population. Colorado has plentiful job opportunities, with Boulder now a high-tech hotbed.
Roughly 2,500 young professionals moved to New Jersey, and the reason is clear: Those who are working Big Apple jobs but don’t want to pay Gotham’s steep prices can save money by moving across the river.