Who’s leaving Massachusetts? According to new data from the Internal Revenue Service, it’s young workers.
The Internal Revenue Service released its “Statistics of Income” state migration data that that looks at both net migration and the net income of people moving within the United States.
It’s one of the first data sets to look at the actual amount of wealth coming in and out of the state since the 4% surtax on income over $1 million was enacted, rather than focus on the numbers of people leaving. It was originally set for release in June 2025, but delays in data from the federal government held it back until now.
The IRS data shows that in 2023, though the net outmigration in Massachusetts was down, the state lost high earners and young workers—a key demographic.
Is the so-called ‘millionaires tax’ to blame?
A study of the data from the Pioneer Institute found that the state lost $4.18 billion in adjusted gross income (AGI) in 2023.
The Pioneer Institute said that the outmigration is a result of tax policy in the state, specifically the 4% surtax on income over $1 million and the estate tax.
Massachusetts ranked fourth in the nation in overall loss of AGI, trailing only California, New York and Illinois. And although outmigration dropped from just over 24,000 in 2022 to just over 16,000 in 2023, the $4.18 billion AGI loss was larger than 2022’s $3.9 billion.
“The out-migrants have a much higher income, higher than any other state in the nation, even higher than California,” said Jim Stergios, executive director of the Pioneer Institute.
The largest portion of filers leaving the state were in the 26 to 35 age range, more than five times the net loss recorded a decade earlier. Stergios said that though they didn’t make up the majority, there were more highly educated and higher earners in the 26-35 range than the average in other age groups.
“When you do a comparison to the general population in that category, we are losing more [young] higher earners,” he said.
Another major driver of the AGI loss was those between 54 and 65 years old. Those pre-retirement outmigrants took $1.3 billion in AGI with them, despite only 3,304 filers being in that group.
The majority of the AGI went to Florida and New Hampshire, with filers bringing a total of $2.75 billion to those states, a total of 66%.
Is cost of living, not the surtax, driving people out?
The Massachusetts Budget Policy Center, which backs the surtax, said that the using AGI to measure money movement doesn’t capture the entire picture. According to Kurt Wise, a senior tax policy analyst, measuring AGI can make it seem like lost economic activity, but the story is more complicated.
“When [someone] leaves their job, the job stays here,” he said. “When somebody sells a dentistry business, those customers stay here. Somebody else, another dentist or another hardware store or coffee shop, or you name it, picks up those customers. That income overwhelmingly remains in the state. It is a measure of the income that person generated when they were in the state.”
Wise said that 9 out of 10 of the filers that moved out of the state in the study made under $200,000 a year. He said that those households were more concerned with affordability, rather than tax policy.
“Those households, their concerns are not about taxes on millionaires, their concerns are about affordability of housing, childcare, education, transportation and healthcare,” he said.
Outmigration leaves state with emptier pockets
Massachusetts still brought in people, especially immigrants. But many of the newcomers earned significantly less income, meaning the state has less income collections to fill its coffers, which means that the state will have to find other means to round out its tax base. With international immigration expected to drop because of the Trump administration’s policies, that could leave the state in a dire situation.
“[Those outmigrants] are your major taxpayers, and if they’re not here to pay the taxes, someone else is going to have to pay them,” Stergios said. “What we’re doing is putting a drag on our tax base, and even as we are increasing our revenues through any means possible, it’s on a smaller base. That is a huge amount of pressure.”
Wise said that to fill in the budget crunch, the state needs to build an economy that provides support for entrepreneurship.
“”What you want is a dynamic economy that attracts and retains young people,” Wise said. “The way we do that is by making investments that support affordable housing, affordable healthcare and childcare, the things that allow people to take chances and see a future for themselves here.”
The IRS is scheduled to release similar data pertaining to 2024 in June.
