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The ‘Great Wealth Transfer’ has begun. By 2045, $72.6 trillion will move from Baby Boomers and The Silent Generation to Gen X and Millennials.
In fact, Millennials are on track to become the wealthiest generation in US history within the next two decades.
Some Millennials, born between 1981 and 1996, are already ahead of the curve. While the average household income in the U.S. is around $75K, some Millennial households earn $200K or more.
The IRS classifies these households as “high earners.” According to a recent study by Smart Asset, Florida and Texas are the top choices for these high-earning Millennials.
The study doesn’t delve into why they’re choosing these states, but the reasons are pretty clear. Here’s a key finding from Smart Asset:
“Florida and Texas gained the most wealthy Millennial households. When looking at the inflow and outflow of wealthy Millennials, Florida had the highest net immigration of high earners in this age group with 6,188 households. Texas ranked second with a net gain of 5,151 households. Trailing behind in third was North Carolina with a net of 1,970 households moved in.”
California and New York lost the most wealthy Millennial households. California saw a net loss of 9,181 Millennial households, while New York lost 4,251.
Illinois and Massachusetts were also on the losing end with net losses of -3,163 and -1,927 respectively.
Why Millennials Choose Florida And Texas Over California And New York
As someone who grew up in Florida and lived in NYC for ten years before returning to Florida, I can tell you that it’s not just about the weather.
Yes, Florida’s weather is better than New York’s during winter months, but New York offers four distinct seasons. Plus, Florida’s humidity is no joke.
The real reason? Taxes. More specifically, state income tax—or lack thereof.
States like Florida, Texas, Nevada, New Hampshire, South Dakota, Tennessee, Washington, and Wyoming have no state income tax.
If you’re earning $200K/year in New York City, you’re paying an additional 9.7% in taxes (state + city). Sure, NYC offers unparalleled access to museums, nightlife, concerts, events, culture—but it comes at a hefty price.
San Francisco’s city tax is only 0.38%, but California’s state tax is another story. Anyone earning over $68K pays at least 9.3% in state income tax.
This bracket goes up to 12.3% for those making over $698K/year.
It’s wild that someone earning $349K pays the same rate as someone making $68K/year! There are five separate brackets below that 9.3% tier—seems crazy not to break it down further. Rich Millennials are flocking to Florida and Texas while leaving California and New York behind. But it’s not about culture wars as some might suggest.
As they benefit from the Great Wealth Transfer, wealthy Millennials want to keep more of their money—and states like Florida and Texas make that possible.
A CNBC study recently found that Texas ranks #3 and Florida ranks #5 as the ‘Most Business Friendly States.’ Many high-paying job opportunities for high-earning Millennials are found there—again boiling down to taxes.
With political shifts on the horizon as Millennials take on more positions of power…
