New York State Sees Taxpayer Exodus

Image by Brian Flynn / Spectrum News 1 Albany via MGN Online.

(WNY News Now) – A report by State Comptroller Thomas P. DiNapoli reveals that over 1% of resident personal income tax (PIT) filers left New York state in 2020, marking a fourfold increase in net out-migration compared to the previous year. Despite a decline in 2021, the net number of departing taxpayers remained one-third higher than pre-pandemic averages.

New York, NY – A recent report released by State Comptroller Thomas P. DiNapoli sheds light on the significant impact of the COVID-19 pandemic on taxpayer movement in New York. The report, which analyzed PIT filings for 2020 and 2021, discovered a notable surge in net out-migration during the height of the pandemic, with rates quadrupling compared to 2019. Although 2021 witnessed a partial return to pre-pandemic patterns, the net out-migration still exceeded historical averages.

PIT, constituting New York’s largest revenue source, accounted for $60 billion in tax liability from 10.9 million taxpayers in 2021. The recession of 2020 surprisingly saw an increase in filers, attributed to elevated financial market levels and augmented unemployment benefits. In 2021, the number of filers slightly decreased but remained higher than 2019 levels.

The report highlights that the majority (87% in 2021) of PIT filers are residents, while 10% are non-residents and 3% are part-year residents. The 2020 surge in filers was primarily driven by full-year resident taxpayers, whereas the 2021 decline was concentrated in the same group. Notably, lower-income filers experienced a decline in 2021, offset by an increase in higher-income filers.

The pandemic-induced changes in taxpayer movement were stark. From 2015 to 2019, an annual net out-migration averaged around 28,700 taxpayers. However, in 2020, this number ballooned to nearly 112,500, reducing in 2021 but still surpassing pre-pandemic averages by over one-third. Out-migration rates, while decreasing from 2020 to 2021, remained higher than 2019 levels.

Single filers comprised the largest share of state PIT taxpayers and contributed significantly to the 2020 net out-migration. Families, including married and head of household taxpayers, also left New York at elevated rates in 2020, doubling those in 2019. This trend persisted in 2021, with married filers earning between $100,000 and $500,000 experiencing the highest out-migration.

The impact of the pandemic on New York City was particularly pronounced. In 2020, a surge in taxpayers leaving the city drove the state’s net out-migration. However, in 2021, the city experienced a net gain of 2,221 taxpayers, primarily from other parts of the state. The majority of taxpayers leaving the city typically relocated to downstate regions, with Long Island being the preferred destination.

“The pandemic upended everyone’s life and caused a big shift in the movement of New York taxpayers in 2020,” DiNapoli said. “While patterns shifted closer to pre-pandemic trends in 2021, net out-migration rates remained higher, particularly for families. Policy makers need to make sure the state remains an attractive, affordable place to work and to live. Doing so will help maintain the state’s largest revenue source to ensure vital services continue in order to provide a high quality of life for all New Yorkers.”

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