IRS: Illinois loses $9.9B in income as 87,311 residents move out in 2022

IRS: Illinois loses $9.9B in income as 87,311 residents move out in 2022

New data shows $9.9 billion flowed from Illinois to other states because people moved out in 2022. Most of those leaving earned $100,000 or more.

When Illinoisans move away, they take their money with them: $9.9 billion in 2022, according to new data from the Internal Revenue Service.

Tax returns for 2021 and 2022 show Illinois lost 86,693 individuals and $9.9 billion because of outmigration. Most of them were high-income Illinoisans.

While Illinoisans of all income levels left the state, the heaviest losses were among those earning more than $100,000 annually. Those tax filers represented 56.4% of the state’s net migration losses. The loss of these taxpayers is even greater when it comes to their economic impact: filers making more than $100,000 annually took 88.4% – nearly $8.8 billion – of Illinois’ net income losses with them.

The massive decline in economic potential because of outmigration is not simply a result of losing more residents than the state attracts. Comparing the differences in migrants who move into the state to those who move out of the state reveals massive disparities as well.

The average tax return of those moving into Illinois earned $86,086 in adjusted gross income in 2022, while the average tax return of those who left the state earned $124,008. In other words, those who left the state earned $37,922 more than those who moved in, further exacerbating the state’s economic losses because of outmigration.

Perhaps the most concerning stat was Illinois lost residents in every age and every income bracket. There was not a single demographic reported by the IRS from which Illinois gained residents. The state is failing Illinoisans across the board.

The bulk of those who left the state are Illinoisans in their prime working ages. Tax filers between the ages of 26 and 54, along with their dependents, represent 64% of those who left the state in 2022, totaling 55,714 individuals. Illinois is also losing many residents as they approach and reach retirement age: 55- to 64-year-olds represent 18%, or 15,522, of those who left. Those age 65 and above were responsible for 13% of the decline, tallying 11,264 in lost residents. Those under 26 represented 5% of those leaving the state, or 4,193 individuals.

Where are Illinoisans moving? IRS data shows where Illinoisans who left the state are going – and, on rare occasion, where Illinois is attracting residents from.

Illinois is losing residents on net to 40 states, including every neighboring state. The largest number of residents are being lost to Florida (19,099), Texas (12,259) and Indiana (9,196). Illinois is only gaining residents on net from seven states, but the number of residents gained from these states pales in comparison to the losses. Illinois gained the largest number of residents on net from New Jersey, adding 272 residents in 2022.

With Illinois losing residents of every age and income level to nearly every other state, it is clear Illinois is experiencing one of the largest outmigration crises in the nation. In terms of the net domestic migration across all states, Illinois ranked third-worst after losing 87,311 residents to other states on net.

Only California (-307,117) and New York (-222,702) lost more residents to other states than Illinois. The biggest gainers were Florida, which added 245,334 residents, and Texas, gaining 180,870.

The total income gained or lost in each state because of migration largely followed these same patterns, as the raw number of individuals who moved to or from each state on net was the largest factor in the migration of income.

Comparative analysis of the incomes of in-migrants and out-migrant in each state shows the states whose economies are benefiting most from migration. That means even worse news for Illinois because it has the biggest gap between poorer newcomers and well-off movers.

Those who move into Illinois earn nearly $38,000 less than those who move away from the state, the worst discrepancy in the nation. Even if Illinois were able eliminate its population losses from people moving out, the state would still be experiencing wealth flight. Those moving out earn far more than those moving in.

The opposite is true for states such as Wyoming and Florida, whose economies are benefitting most from resident flows. Those who moved into Wyoming earned over $66,000 more than those who left the state, while those who moved to Florida earned nearly $60,000 more than those who left.

These trends have important implications for the future of each state’s economy. States that attract higher-income residents can expect to see their economic potential rise, leading to greater improvements in living standards. Meanwhile, those whose economic profiles are declining because of migration run the risk of reduced economic growth and declining standards of living compared to other states. This, combined with the fact that the bulk of those leaving the state are prime working-age Illinoisans and their dependents, poses serious challenges for the future of Illinois’ economy.

With the latest IRS data providing further proof Illinois’ population decline continues to be driven exclusively by people moving away, political leaders should focus their attention on turning the situation around before it’s too late.

Historically, high taxes have been the No. 1 reason Illinoisans considered moving out. 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 found 47% of Illinoisans wanted to leave the state in 2016. It also found “taxes are the single biggest reason people want to leave,” with 27% citing that motive. The Lincoln Poll conducted for the Illinois Policy Institute in 2023 substantiated these sentiments.

The loss of Illinoisans of every age and income group should show how pressing this crisis has become. It should spur state leaders to begin working on solutions. They should start with tax reform.

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