Georgians have been getting a lot of new neighbors. Our population boom reflects tens of thousands of people moving here each year from other states, particularly high-tax states.
But these new Georgians don’t arrive empty-handed. They bring their family, their belongings – and their incomes.
Each year, the IRS releases data about the movement of taxable income from state to state. Last month, the agency published data comparing 2022 to 2021. The report shows that over 51,000 more people moved into Georgia than out of it.
And they brought with them about $715 million more in adjusted gross income (AGI) than ex-Georgians took.
To put that in context, the total AGI on tax returns filed with the state of Georgia in 2022 actually decreased by about $12 billion, according to the state Revenue Department’s annual report. So, the net inward migration helped soften the blow as incomes fell back to earth from their inflated 2021 levels (though still higher than in 2020).
In 2022, the state collected about 10.5 cents in net revenue per dollar of AGI; that’s not just income tax but sales tax and all other sources. So, we can roughly estimate that the influx of income boosted the state’s coffers by almost $75 million.
Even more interesting is what we can learn from the other states that lost more people to Georgia than they gained – and vice versa.
The IRS didn’t ask each of these tax filers why they moved, but comparing Georgia’s tax policies to those of other states tells an interesting story.
Using data from the nonpartisan Tax Foundation, we can compare the average tax burden across states. If we look at the 10 places where people in 2022 paid the most state and local taxes of all types – Connecticut, New York, the District of Columbia, California, New Jersey, Hawaii, Illinois, Virginia, Vermont and Washington – all but D.C. had a net loss of residents to Georgia.
That year alone, these states lost a collective $1.36 billion in net AGI to Georgia.
Then there’s the other end of the spectrum. The 10 states whose average resident paid the least total state and local taxes were Alaska, Tennessee, Mississippi, West Virginia, Oklahoma, Alabama, South Carolina, Kentucky, Wyoming and Michigan.
Seven of these states still lost more people to Georgia than they took in, showing that taxes aren’t the only factor in people’s decisions. Still, Georgia lost out to these states fiscally, with a net AGI decline of $386 million.
The total level of taxation matters – but so does the method. Personal income tax is especially damaging.
The 10 states where the average person pays the most income tax are California, New York, Massachusetts, Oregon, Connecticut, Minnesota, Hawaii, Delaware, Virginia and New Jersey. These states all had a net loss of residents to Georgia, with a net AGI loss of $1.24 billion – similar to the list of overall high-tax states.
However, there’s a stark difference when it comes to the low-tax states.
The 10 lowest states for average income taxes paid include nine states that don’t tax wages (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming) plus North Dakota. Georgia gained residents from eight of them.
But we lost a whopping $903 million in net AGI to them – more than twice as much as we lost to the 10 states with the lowest overall taxes.
Income tax matters more to people, especially higher earners. If you want to pay less sales tax, you can buy fewer things. If you want to pay less gas tax, you can drive less. But the only way to pay less income tax is to earn less, which isn’t appealing.
It’s good to be a low-tax state, but it’s even better to be a low-income-tax state. Georgia has cut its income tax rate, but there’s more to be done.