The past few years have really put the squeeze on cash strapped states to find new sources of revenue. This environment has generated a level of tax aggression from certain states, which in turn has resulted in a near daily migration into more tax advantageous areas. Residents have begun voting with their feet, deciding to move out of their tax heavy states and entering ones with a more favorable structure.
As a follow up to our previous article, Voting With Our Feet: Top 5 States Losing Residents
, we thought it would be appropriate to let everyone know where those households are migrating. So which states are bringing in new residents? And how does it impact you if you live in one of them?
We tracked migratory patterns through our residency product data, and while some of the states are no-brainers, others may surprise you. Following are our top five "growing" states in ascending order:
Tennessee: The Volunteer State is gaining some serious momentum after repealing their estate tax not long ago. Their weather isn’t too hot, nor is it too cold, and you still enjoy four seasons unlike some of the more geographically southern states. Couple this with the fact that there is no income tax in Tennessee, and quite frankly, it is easy to see why it would be so appealing. Memphis in May, Nashville, sweet tea, and the list goes on!
North Carolina: Migration to the Carolinas has been nothing short of incredible. It began well before the real estate bubble burst and still continues today. Charlotte has become a banking hub attracting industry, jobs, and most importantly, new residents. Similar to Tennessee, the weather is the right mix and the folks there are as kind as it gets. Even though North Carolina does have estate and income taxes, the difference of having a nice long coastline has given it a big leg up on its western neighbor.
South Carolina: The front-runner of the Carolina Cluster (NC-TN-SC) is the Palmetto State. Sharing the same "Goldilocks" seasons as its brethren, the state appeals to all tastes. From Charleston, Hilton Head, and Myrtle Beach on the coast to the foothills of the Appalachians in Greenville, the corporate presence along the interstate corridors is impressive. Long thought of as backwoods country, the state has made huge leaps forward over the past few decades and is arguably one of the biggest up and comers despite its income tax.
Florida: One of the easy guesses for sure. Florida has long been a stalwart in the new resident arena. And as baby boomers age, it will only become more so. The sun, sand, and surf appeal to many, but the summers can be hot. Conversely, because there is no estate or income tax there, buying an air conditioner is a much less costly proposition!
Texas: This shouldn’t come as much of a surprise, but Texas has seen a huge inflow of residents. Just like Tennessee and Florida, there is no estate or income tax. And while it is only one small segment of the migrating contingent, Texas is home to the largest full-time RVer population in the country. The Lone Star state is the most flexible of all the states named here in regard to residency (with Florida a very close second), and it also has an ideological independence that many folks can relate to these days.
Local economies clearly thrive on new residents. Building a better base to tax through low tax incentives is working for states like Texas and Florida (and their coastlines don’t hurt, either). Cities and states always have an ebb and flow in population, but if you are in a state with a growing population, it could impact you in the way of lower taxes (as opposed to staying in your higher tax state), a more robust economy (more people to buy products and invest locally), and possibly more pay in your pocket (as a result of increasing business revenues).
This "magnetic effect" of residents being attracted to the state can become a self-fulfilling feedback loop. Success begets success, and happy residents willingly tell family or friends about how good their new life could be. If you can better your personal balance sheet by decreasing your tax burden, enjoy a healthier economic environment locally, and wear a bathing suit 75% of the time, making a change becomes an easy proposition... which we are sure is why these states have done so well and are expected to continue well into the future!
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