4 of 5 top states Americans moving to have flat or no income tax
Of the states most Americans are moving to, 4 of 5 have a flat or no income tax. The states losing the most residents? There again, 4 of 5 have progressive taxes. Illinois’ flat tax is an advantage it should keep.
Of the states Americans are picking for their new homes, 4 of 5 have a flat income tax or no state income tax.
Of the states losing residents, 4 of 5 have progressive state income taxes. Illinois is the exception with its flat state income tax, but some state lawmakers are again trying to change that.
The latest data from the U.S. Census Bureau shows the states attracting the most new residents via domestic migration are those with either flat income taxes or those with no income tax at all. Conversely, the states losing the most residents to other states mostly have progressive income tax structures.
Texas, Florida and Tennessee have consistently been among the most popular states for movers and each has no individual income tax. North Carolina, which added more than 82,000 residents from other states last year, has a flat income tax which dropped from 4.5% in 2024 to 4.25% in 2025 and is scheduled to drop to 3.99% by 2026. That is lower than Illinois’ flat income tax rate of 4.95%. South Carolina is the only state in the top five with a progressive income tax structure.
On the losing end are states that commonly have progressive income tax structures. California, New York, New Jersey and Massachusetts each have progressive state individual income tax structures with top tax rates that are among the highest in the country. Illinois is the only state in the bottom five with a flat income tax.
This isn’t just a theme among states at the extremes. Of the 23 states losing residents to domestic outmigration, 16 of them, or 70%, have progressive income taxes. Only 11, or 41%, of the 27 states that gained residents from other states last year have progressive income taxes.
Among all states, those with no state income taxes added more than 218,000 new residents last year. States with flat income taxes added nearly 84,000 residents from other states even when including Illinois, which lost more than 56,000 residents to domestic outmigration. States with progressive income taxes lost more than 302,000 residents through domestic outmigration.
Domestic outmigration has been the sole cause of Illinois’ population decline, which had occurred for nine consecutive years until a massive influx of new international arrivals boosted the state’s population in 2023 and 2024. The state’s flat income tax is one of the lone bright spots in the state’s tax code that makes the state competitive for businesses. Unfortunately, there have been renewed proposals by state lawmakers to eliminate Illinois’ constitutionally protected flat income tax.
Senate Joint Resolution Constitutional Amendment 04, introduced Feb. 5 by Sen. Robert Martwick, D-Chicago, and a similar constitutional amendment filed in the Illinois House, House Joint Resolution Constitutional Amendment 08, filed by state Rep. Curtis Tarver, D-Chicago, both seek to replace Illinois’ flat income tax with progressive income tax structures.
The state’s unfriendly tax structure has already contributed to the underlying factors that have made Illinois a difficult place to buy a home or find a job. Illinois is home to the second-highest property taxes and the third-highest unemployment rate in the nation.
High taxes were the No. 1 reason why Illinoisans considered leaving, according to several polls. Polling from NPR Illinois and the University of Illinois found 61% of Illinoisans thought about moving out of state in 2019, and the No. 1 reason was taxes. The Paul Simon Public Policy Institute in 2016 found 47% of Illinoisans wanted to leave the state, and “taxes are the single biggest reason people want to leave.” More recent polling conducted for the Illinois Policy Institute in 2023 substantiated those sentiments.
State lawmakers should pay attention to the common themes among states who are growing, or shrinking, because of domestic migration. If state leaders refuse to acknowledge these realities and ignore why so many Illinoisans are leaving – taxes and business regulations that make life harder – the state can expect to see the continued exodus of residents to other states.