IRS Migration Data provides insight to where Iowa loses and gains residents.
The IRS has released their annual migration data that outlines how people, and their incomes, moved from state to state. The newest data, measuring changes from 2021 to 2022, tracks closely with last year’s release. For Iowa, that means we again realized the most inward migration from Illinois, California, and Nebraska. On the other hand, Florida, Texas, and North Carolina were the most popular destinations for outward migration.
The net change of domestic migration was a loss of 5,444 individuals. The financial impact of that migration is the loss of nearly $517 million in income, highlighting why it is so important that Iowa continues to improve its tax and business climate. The table below outlines net domestic migration changes by state, including the number of individuals and the total of their adjusted gross incomes.
What we wrote last year appears to still hold true:
Speculation can lead us to some conclusions of why people are moving from these states. Many believe California’s high tax and cost of living environment are contributing to their out migration. While other states like Florida and Texas have the draw of zero income tax, a warm climate, and an affordable cost of living.
None of these explanations are grounded in concrete data (yet). However, policymakers need to be aware in today’s economy that many of the decisions they make can make a difference as states are more in competition with each other than ever before. We cannot control Iowa’s geography nor the weather, but we can control other things like taxes and regulations.
Before drawing any firm conclusions, it should be noted that Iowa’s income tax code has been on a steady march toward lower rates and fewer brackets in recent years. These tax cuts will culminate in a single, flat rate of 3.8 percent in 2025. It is likely that a more welcoming tax code will impact the decision making of individuals and businesses, but even those trends may take time to develop.
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