Domestic migration in the US: States with lower taxes are the most popular

"People vote with their feet," is a phrase attributed to Charles Tiebout, although it was later popularized by Milton Friedman, winner of the Nobel Prize in Economics. The concept attempts to explain, in a didactic way, how people express their political and economic preferences when choosing where to move, work,or invest, seeking environments that are most favorable to them. This decision reveals what they really value in their daily lives, sometimes more than what they vote for at the ballot box.

As it does every year, U-Haul, a leading truck rental and moving trailer company, released its internal migration report. This shows where customers have their equipment moved to, resulting in the "Growth Index," which ranks each state according to the number of customers who chose them as their final destination. In other words, which states people chose to move to and which ones they left.

Specifically, states are ranked based on their net gain or loss from U-Haul rentals from one-way trips, although from the company they paddled that the service was not used in all cases for moves.

Americans prefer lower taxes

This time around, the report found that Americans mostly chose to move to states with lower income taxes, while those in higher-tax states experienced greater out-migration.

The ranking of states that attracted the most new residents was as follows:

1- Texas (R)

2- Florida (R)

3-North Carolina (D)

4- Tennessee (R)

5- South Carolina (R)

6- Washington (D)

7-Arizona (D)

8- Idaho (R)

9- Alabama (R)

10- Georgia (R)

In turn, these are the states at the bottom ten of the index:

50- California (D)

49- Illinois (D)

48-New Jersey (D)

47- New York (D)

46- Massachusetts (D)

45- Maryland (D)

44-Pensylvania (D)

43- Ohio (R)

42- Connecticut (D)

41- Michigan (D)

In addition to weather and other personal factors that lead people to move, there's a tax factor that's hard to ignore. Coincidentally, the top 10 states in the index have significantly lower personal income tax rates than the bottom 10 states.

As reported by Americans for Tax Reform, a think tank focused on tax issues, the average income tax rate among the top ten states was 3.5%, while among the bottom ten it was 7.2%, almost double.

They also pointed out that, as a group, the five lowest-ranked states impose a top personal income tax rate almost five times higher than that of the five top-ranked states.

Currently, only seven states have no state income tax, while fourteen operate a flat tax, meaning a single tax rate for all taxpayers. For example, in Georgia, all taxpayers pay 5.09% state income tax, regardless of their income.

California, the state that lost the most people in 2025, has the highest income tax rate in the country at 13.3%. With this latest last-place finish, the state governed by Gavin Newsom has now ranked at the bottom of the list for six consecutive years.

As for the political color of the states at the top and bottom of the ranking, Republicans are among the most elected by Americans. In contrast, people are choosing to move out of those territories governed by Democrats, associated with high state taxes.

"Blue-to-red state migration, a hotly debated political topic that became more pronounced after the pandemic of 2020, continues to be a discernible trend. Seven of the top 10 growth states currently feature Republican governors, and nine of those states went red in the last presidential election," U-Haul noted.

"Conversely, nine of the bottom 10 growth states feature Democrat governors, and seven of those states went blue in the last presidential election," they added.

You can view the full report here.