(Bloomberg) -- Even before Covid-19 hit, the state of New York was facing an outflow of tax-paying residents.
The state had an average annual net out-migration of 28,700 part-year residents, or 0.3% of taxpayers, between 2015 and 2019, according to a report from New York State Comptroller Thomas P. DiNapoli. That means the state lost roughly 115,000 tax filers during the period, in a trend that’s likely to have continued after the pandemic with the rise of remote working.
Families looking for more space and wealthy individuals trying to save on taxes are leaving the state, which is among the most expensive places to live. That’s left a challenge for state and local officials and their ability to raise revenue.
“New York’s fiscal health is linked to attracting and retaining taxpayers,” DiNapoli said. “The personal income tax is the single largest state revenue source for New York, accounting for two of every three tax dollars.”
In the five years leading up to 2020, the largest number of movers were married filers, who left New York at twice the rate of all filers and five times the rate of those who are single. Married filers making between $100,000 and $500,000 per year made up the largest numbers of departures.
Meanwhile in 2019, about 3% of New York’s personal income tax filers were part-year residents -- another metric that may have grown after the outbreak of the pandemic when many people fled to second homes or back in with their parents.
Pre-pandemic, the typical part-year resident had a higher income than full-time residents. For instance, 23.3% of part-year residents had an income of at least $100,000 versus 18.7% of full-year ones.
Further, nonresidents comprised 10% of filers, or about 1.1 million tax returns, but were responsible for 15% of the personal income tax the state collect. This is because nonresidents must file New York income tax if they receive income from New York sources. Nearly half of all taxpayers with incomes of $1 million or more were nonresidents, according to the report.
© 2022 Bloomberg L.P.
