The U.S. Census Bureau recently published the latest domestic migration data, and a clear pattern emerges: States with the least competitive tax codes lost the most people.
The biggest exodus was from California, which saw a net loss of 229,000 residents to other states from 2024 to 2025. Connecticut, Hawaii, Maryland, Massachusetts, New Jersey and New York were also among the 10 states with the greatest numbers of departing residents.
What do those seven states have in common? Each of them also appeared in the bottom 10 on the Tax Foundation’s most recent state tax competitiveness index. New York has the least competitive tax code on the list, followed by neighbor New Jersey. Then come California, Connecticut and Maryland. Massachusetts’s tax code is eighth from the bottom and Hawaii’s is tenth.
That high taxes drive away residents isn’t rocket science. States can’t control everything about their economies, but an uncompetitive tax code is a choice with natural consequences, including pushing away businesses and jobs. America’s system means people can vote with their feet, and tax-and-spend blue states are losing that ongoing referendum. According to the U-Haul growth index, California has had the largest exodusof “do-it-yourself” movers for six straight years.
But the state is also losing residents who can afford to hire people to do the heavy lifting. Mark Zuckerberg is the latest billionaire apparently headed for Florida, which the Tax Foundation ranks as the fifth most competitive state. (The index is based on each state’s income taxes, corporate taxes, sales taxes, property and wealth taxes and unemployment insurance taxes.) As California considers putting a billionaire’s tax on the ballot in the midterms — putting its fiscal fate in the hands of residents who can leave most easily — the Meta founder’s departure is a reminder of the likely consequences.
Blue states tend to justify their high taxes by touting generous public services, but bigger budgets don’t always correlate with quality. While states like Massachusetts boast about their education and health care systems, the state overestimates how much businesses and residents are willing to pay for them. The state had a net loss of more than 30,000 residents to other states according to the Census data. Most went to Florida.
Americans have diverse preferences for where they’d like to live, but economic incentives can’t be wished away. Philosophers can debate the justice of this or that tax system. The data show what is working to attract residents and what isn’t.
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