Texas attracts young and wealthy relocators who are turning their backs on California and New York
Make room for old Texas money as the nouveau riche move to the Lone Star State.
As the state attempts to reclaim its crown as the financial center of the United States, Texas now ranks second in the nation in attracting young and wealthy people. The state saw a net gain of 1,660 new young and wealthy households, according to a SmartAsset study using 2021 and 2022 IRS data.
People aged 26 to 35 who earn more than $200,000 are considered wealthy, according to the study. Only Florida narrowly surpassed Texas, with a net increase of 1,786 new young and wealthy residents.
Still, it underscores the growing affection of wealthy people toward states like California and New York, both of which were among the five states with the lowest net migration rates. California lost 3,226 young and wealthy households, while 345 young and wealthy households left New York.
California and New York rank first and fourth, respectively, in the loss of young and wealthy households.
Between 2010 and 2019, Texas attracted over 25,000 companies to set up shop in the state. Many say this is due to the state’s pro-business climate when it comes to tax issues. The state does not impose an income tax; a move that may also attract young and wealthy people.
Half of the other states that attract the newest generation of young spenders, such as Florida, Tennessee and Nevada, also have no income tax. Nine states in the U.S. have no income tax, and five of them made SmartAsset’s top 10 list for young, wealthy newcomers.
Because the wealthy have the most to gain or lose from an income tax, it’s likely a major reason many households move to Texas, says Jaclyn DeJohn, director of economic analysis at SmartAsset.
“Although this study does not provide data to say exactly what is driving this move, there are several economic incentives that could encourage young and wealthy people to move to Texas,” she said. “In particular, the state and local governments do not collect income tax from their residents, which could provide a significant income tax savings for young, high-income people living in states that collect income taxes.”
More companies focusing on cash-intensive industries like technology, finance, real estate and more are also a major factor attracting young talent to the state, according to DeJohn. Areas like Dallas, Austin and Houston are largely responsible for attracting companies like SpaceX, AECOM, CBRE and others.
Winning over the rich and young is an economic victory for the state, Dejohn said.
“Overall, the increasing wealth coming to Texas helps boost profits for local businesses. Although there is no income tax on these newcomers, they still impact Texas’ tax base through sales, excise and property taxes,” she said. “The age group of high-income immigrants also impacts which businesses, services and amenities are in demand, potentially leading to changes in supply.”
The move of young and wealthy people to Texas is also part of a larger trend that is increasing the state’s youth workforce. According to a study by Zillow Group Inc., Texas is attracting more Gen Z people to Texas than any other state. It also reinforces Dallas’s already existing reputation as a haven for wealthy people.
Dallas ranks 22nd among the richest cities in the world and 6th among the richest cities in the United States, according to a report by London-based private investment migration consultancy Henley & Partners.
