HOUSTON – (By Dale King, Realty News Report) – A new analysis from Redfin finds that low-tax states—including Texas, Florida, Nevada and South Carolina—are attracting significantly more domestic migrants than high-tax states. Redfin compared estimated migration flows among the 48 continental U.S. states from 2013 to 2020 with combined measures of sales, income and property tax rates in 2020, and found a clear pattern: states with lower overall tax burdens are drawing more newcomers.
Texas stands out among these destinations. With one of the lowest effective tax rates in the country, Texas saw roughly five people move in for every person who left during the study period. By contrast, Redfin reports that high-tax states saw net outflows: on average, 2.5 people departed for every new arrival. Redfin has been monitoring these domestic migration trends since 2013, and the COVID-19 pandemic only intensified public interest in where and why people relocate.
Low-Tax States Lead Inflows
Redfin economist Dana Anderson highlights Nevada, Florida, South Carolina and Texas as prime examples of low-tax states gaining residents. Nevada, which ranks among the states with the lowest tax burdens, experienced especially strong net gains: for every nine people who moved into Nevada between 2013 and 2020, only one person left. Because Hawaii and Alaska are extreme outliers in migration patterns, they were excluded from the analysis.
Across states with the lowest combined tax rates, the average inflow was about four people for every one person who left, according to Redfin’s estimated migration figures. Florida, with one of the nation’s lower tax burdens, recorded one of the highest absolute increases in residents—gaining more people than all but four other states during the 2013–2020 period. In Florida’s case, roughly seven people moved in for every one person who left.
The Migration Super-Highway Leads to Austin
Austin, Texas, illustrates how tax policy and corporate relocation influence local housing markets. Local Redfin agent Andrew Vallejo reports that roughly three-quarters of his clients come from the Bay Area, with many others relocating from elsewhere in California or from New York. Vallejo cites the absence of a state income tax as a major draw. He also notes that some businesses and entire companies have relocated operations to Texas, driven in part by lower overall tax burdens—spurring further inbound migration and job creation.
One direct consequence of migration motivated by lower taxes is rising home prices in destination markets. Vallejo says the typical out-of-state buyer in Austin had about a 32% higher budget than local buyers, and home prices were up more than 42% year-over-year, reaching a median near $465,000 in April of the referenced year. Although Texas lacks a state income tax, property taxes tend to be relatively high, so rising home values can increase residents’ property tax bills and overall cost of living.
Redfin’s analysis finds similar dynamics in other popular states. In Jacksonville, Florida, agent Heather Kruayai says remote work trends and lifestyle factors—beaches, warmer weather, and no state income tax—are luring buyers from higher-cost areas. Many of these newcomers sell expensive homes in places like California and purchase Florida properties with cash, tightening supply and driving up competition and prices.
Low Taxes Correlate with Higher In-Migration but Not Exclusively
South Carolina registers as the state with the lowest combined tax rate in Redfin’s analysis and also ranks among the stronger in-migration performers, with five people moving in for each one departing from 2013 to 2020. On the other end of the spectrum, New York—one of the highest-tax states—experienced outsized domestic outflows: for roughly every eight people who left New York during the period, one person moved in. Redfin notes, however, that this migration analysis focuses only on domestic moves and does not account for international immigration, births or deaths, which together contributed to unexpected population growth in New York during the decade.
Both Illinois and New Jersey are examples of states that combine relatively high tax burdens with strong net out-migration. California, which has the highest combined tax rate in this dataset, also saw more people leave than arrive between 2013 and 2020, though its net outflow ranked mid-pack relative to other high-tax states—about one person moving in for every three who left.
Why People Move: Taxes and More
Redfin asked relocating buyers about their motivations and found that 21% cited lower taxes as a reason to move—making tax considerations an important factor, though not the only one. More commonly cited reasons included proximity to family, lower housing costs, and the desire for larger living space. “Tax rates are one factor for homebuyers deciding whether to move and which state they ultimately land in, but how important they are varies,” said Redfin lead economist Taylor Marr. Other influences include job opportunities, cultural amenities, climate and outdoor recreation.
There are notable exceptions to the correlation between low taxes and migration. Arizona, Idaho and Colorado have relatively high combined tax rates yet also rank among the states with the strongest in-migration. Arizona, for example, has one of the larger tax rates but posted the second-highest in-migration rate, with roughly seven people moving in for every one leaving. Idaho and Colorado similarly attracted about seven arrivals for every departure, despite tax rates in the top half of the national distribution, underscoring that housing affordability, lifestyle and employment prospects can outweigh tax considerations for many movers.
Redfin’s findings highlight a consistent pattern: while tax policy influences migration, it interacts with housing markets, employment shifts, remote-work trends and lifestyle preferences to shape where Americans choose to live. The combined effect of these forces has helped low-tax states like Texas, Florida and Nevada emerge as prominent destinations for domestic migrants during the 2013–2020 period.
May 20, 2021 Realty News Report Copyright 2021
For more about Texas real estate, check out the book Houston 2020: America’s Boom Town – An Extreme Close Up by Ralph Bivins. Available on Amazon
Caption: Texas State Capitol in Austin on Congress Avenue. Photo credit: Ralph Bivins, Realty News Report Copyright 2021.
File: Population. Migration. Low Taxes Draw People to Texas, Fla., Nev. Redfin.