Wealthy Americans who move to Austin from New York can save more than $250,000 a year, thanks to lower taxes and a lower cost of living, according to a new study.
Financial information provider SmartAsset analyzed the amount of money people with six-figure salaries in New York, San Francisco and Chicago could save if they were to relocate to the Texas capital.
A Manhattan resident earning $650,000 would save as much as $258,212 in Austin, the findings show. Wealthy New Yorkers pay some of the steepest taxes in the nation, facing a combined 45% effective rate when accounting for federal, state and local levies. That effective rate drops to about 35% in Texas, which does not have a statewide income tax.
That same New Yorker who makes about $150,000 would also see the value of their pay increase, saving about $64,811 annually.
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Wealthy San Francisco residents wouldn’t receive as much benefit as New Yorkers, but higher earners making the move would still experience a significant increase in the value of their pay. Those earning over $650,000 could save roughly $212,301 by relocating to Austin – or about 32% of their salary – the study showed.
The story changes for well-off Chicago residents, who would save far less – $76,362 – if they were to move, because the cost of living in the Windy City is cheaper.
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The cost of living in Chicago is just 13% higher than it is in Austin, contributing to the overall lower savings rate. However, high earners would save on taxes, which range from 32% to 40% in Chicago.
The study comes as a growing number of Americans migrate from predominantly blue states with steep taxes, like California and New York, to red states with lower taxes like Florida and Texas.
Florida saw the biggest rush of new residents, with about 319,000 Americans relocating there in 2022, according to data from the National Association of Realtors (NAR). That amounts to a population increase of nearly 2% – well above the 0.4% national growth rate recorded in the U.S. between July 2021 and July 2022.
Other red states that led in population growth include Texas, North Carolina, South Carolina, Tennessee, Georgia, Arizona and Idaho.
On the other end of the spectrum, California, New York and Illinois, which have some of the highest tax burdens in the country, saw the biggest population declines in 2022. California saw its population tumble by more than 343,000 people in 2022, although New York had the overall largest decline in its population with a 0.9% drop.
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“This population shift paints a clear picture,” said Janelle Fritts, a policy analyst at the Tax Foundation. “People left high-tax, high-cost states for lower-tax, lower-cost alternatives.”