IRS: Illinois lost $6 billion to outmigration in 2023

A net of nearly 56,000 people and $6 billion in income left the state in 2023, according to IRS data.

Illinoisans who leave take a lot of money with them.

Federal tax returns show the state lost 55,609 people and $6 billion in adjusted gross income on net in 2023, the most recent IRS data available.

Most of those people were high-income. While people of all income levels left Illinois in 2023, the heaviest loss was among those making more than $100,000 a year. They made up 60% of the state’s net migration losses.

The economic impact of those departures is even greater: Filers making more than $100,000 took more than $5.5 billion with them — 90% of the state’s income loss.

Illinois lost residents to 38 states and the District of Columbia in 2023. By far the largest share of individuals and income was lost to Florida, which gained 10,583 residents and $2.4 billion in income from Illinois.

Texas was No. 2, adding 7,795 residents and $488 million in income from Illinois.

Illinois lost 5,966 residents and $279 million in income to Indiana, and 5,280 residents and $369 million in income to Wisconsin.

The vast majority of residents and income that left Illinois went to lower-tax states, further evidence of what Illinoisans routinely tell pollsters: High taxes are the No. 1 reason residents consider leaving.

Polling from NPR Illinois and the University of Illinois Springfield found that 61% of Illinoisans thought about moving out of the state in 2019, with taxes the No. 1 reason.

Back in 2016 the Paul Simon Public Policy Institute found that 47% of Illinoisans wanted to leave the state, and “taxes are the single biggest reason people want to leave,” with 27% of those respondents citing that as why.

More recent polling by Echelon Insights in 2023 substantiated that sentiment, as did polling conducted last year by M3 Strategies.

Illinoisans face one of the highest state and local tax burdens in the nation, including the second-highest property taxes and eighth-highest sales taxes. In 2017 Illinois residents endured the largest permanent income tax hike in state history, when lawmakers increased the rate by 32%, from 3.75% to 4.95%.

Despite Illinois’ continued outmigration amid an onslaught of taxes, state lawmakers are again pushing for higher income taxes in the current legislative session, including the potential to tax retirees.

A proposal that would add a 3% additional income tax on income above $1 million is scheduled for a hearing April 23. If it passes out of committee, it could get a full House vote.

That proposal comes at a time when Illinois is already pushing out tens of thousands of high-income residents who are taking billions of dollars with them to lower-tax states.

It’s not just individuals who might pay more. More than 22,000 small businesses — s-corporations and partnerships — which “pass through” their business income to their owners and pay taxes as individuals would suffer the tax hike, too.

Small businesses are Illinois’ primary job creator, both historically and in the recovery from the COVID-19 downturn. Illinois is already pushing more businesses out of the state than anywhere else. This tax hike could make the situation even worse.

Contact your state representative to stop the Small Business Tax Hike here.