New York and California continue to lose more residents to other states than they attract, as households search for cheaper housing, lower everyday expenses, and greater financial flexibility.
Both states still offer large economies, high salaries, major universities, and extensive public services. However, those advantages increasingly compete with the costs of expensive homes, high rents, taxes, child care, insurance, and other expenses.
The movement is not limited to millionaires seeking lower tax bills. Research indicates that lower- and middle-income households are often more likely to leave because housing costs consume a larger portion of their earnings.
California and New York continue losing residents
California recorded a net domestic migration loss of about 203,000 people between July 2024 and July 2025, while New York lost approximately 181,000.
Net domestic migration measures the difference between people moving into a state from other parts of the country and those moving out. It does not include births, deaths, or international immigration.
California and New York remained the country’s first- and fourth-most populous states, respectively. However, repeated domestic losses can gradually affect their workforces, tax bases, school enrollment, and representation in Congress.
Housing affordability is a major factor
Housing is one of the clearest reasons people leave expensive coastal states.
The Public Policy Institute of California found that almost 900,000 more people had left California than had entered since 2015, with housing as their primary reason for moving. About 34% of Californians surveyed had seriously considered leaving because of housing costs.
Lower-cost states may offer larger homes, lower rents, and a more realistic path to homeownership. About half of the people leaving California purchase homes in their destination states, compared with roughly one-third of people moving into California.
Lower-income households leave more often
Public attention often focuses on wealthy executives relocating to Florida, Texas, or Nevada.
However, California’s largest proportional losses have been among lower-income adults and people without college degrees. Over the past 10 years, the state recorded a net loss of about 532,000 lower-income adults, equal to more than 10% of its current lower-income adult population.
Higher-income households have also left, especially since remote work made it easier to live outside major employment centers. Their departures remain relatively small compared with the total number of affluent residents who continue living in the state.
Taxes can influence some moves
California and New York impose relatively high state income taxes, particularly on high earners.
Moving to a state without a personal income tax can produce meaningful savings for wealthy households. Taxes may therefore influence retirees, business owners, investors, and remote workers who can change their residence without changing jobs.
The Tax Foundation argues that recent IRS data show income and taxpayers continuing to move from high-tax states toward states with more competitive tax systems. It also acknowledges that taxes are usually one of several considerations rather than the only reason for relocating.
Migration data cannot reveal motivation
IRS migration records are based on address changes reported on federal tax returns.
They show where taxpayers moved and how much adjusted gross income was associated with those returns. They do not ask why a household relocated or establish the exact date of the move.
The Tax Policy Center noted that New Yorkers frequently moved to nearby New Jersey and Connecticut, both of which also have relatively high taxes. Washington residents also commonly moved to California and Oregon despite Washington having no broad personal income tax.
Family, jobs, retirement, housing, weather, services, and lifestyle can all affect migration decisions.
The SALT cap has changed
The 2017 Tax Cuts and Jobs Act limited the federal deduction for state and local taxes (SALT) to $10,000.
That limit increased to $40,000 for many taxpayers beginning in 2025. In 2026, the cap rose to $40,400, although it begins phasing down for households with modified adjusted gross income above $505,000 and can return to $10,000 for higher earners.
The higher cap provides relief to some homeowners in New York and California. It does not fully restore the unlimited deduction available before 2018, particularly for the highest-income households.
The 800,000 forecast was not established as a fact
Economists Arthur Laffer and Stephen Moore previously predicted that 800,000 people would leave California and New York over three years because of the original SALT cap.
That estimate was a forecast rather than an official government projection. Other researchers rejected the idea that tax changes alone could reliably predict such a large movement.
Stanford sociologist Cristobal Young found that millionaire earners were generally less likely to move than the overall population because their businesses, professional networks, families, and social connections tied them to particular locations.
Migration did continue, but current evidence does not support attributing every departure to one federal tax provision.
High-cost states still generate wealth
New York and California continue to produce large numbers of wealthy households, successful businesses, and high-paying jobs.
Technology, entertainment, finance, health care, education, tourism, and professional services remain major economic strengths. These industries can create more wealth and tax revenue even while some residents move elsewhere.
The larger risk is that continued housing shortages and high everyday costs could make it harder to retain workers who do not earn top salaries. Addressing housing supply, transportation, energy, insurance, and child care may therefore matter more to broad population trends than focusing only on millionaire tax rates.
TL;DR
- California lost about 203,000 residents through net domestic migration from July 2024 to July 2025.
- New York recorded a domestic migration loss of roughly 181,000.
- Housing affordability is one of the strongest reasons households leave California.
- Lower-income residents are proportionally more likely to depart than wealthy households.
- Taxes can influence some high earners, retirees, and business owners, but they are not the only factor.
- The federal SALT deduction cap increased to $40,400 for many taxpayers in 2026.
- The earlier prediction that 800,000 people would leave because of tax changes was disputed and should not be presented as a confirmed fact.
