A new statewide migration study reveals that California continues to experience one of the highest outbound migration rates in the nation, with taxes, housing costs, and overall affordability ranking as the top reasons residents are relocating to other states. The report shows that middle-income families, retirees, and small business owners are among the groups most likely to leave.
According to the study, more than 338,000 residents moved out of California last year, marking the fourth consecutive year of significant population decline. States such as Texas, Arizona, Nevada, Idaho, and Florida remain the most common destinations, driven by lower taxes, more affordable housing, and fewer regulatory burdens.
High Taxes Remain a Primary Driver
Researchers found that California’s state income tax rates — the highest in the country — continue to push earners away, especially small business owners and high-skill workers who say their tax burden has become unmanageable.
“The tipping point isn’t just high taxes — it’s high taxes combined with declining affordability and deteriorating public services,” one policy analyst noted.
Housing Costs Create Additional Pressure
The study points out that the median home price in many California counties is now two to three times higher than comparable homes in neighboring states. Renters face similar challenges, with many paying more than 40% of their income toward housing.
For families and young professionals, these costs are increasingly unsustainable.
Businesses Are Leaving Too
The report also highlights a growing trend of small and mid-sized businesses relocating operations to lower-tax states. Factors include:
- High corporate and personal income tax rates
- Increased labor and regulatory costs
- Rising commercial property expenses
- Difficulty hiring workers who can afford to live locally
Long-Term Risks for the State
Economists warn that continued population loss could reduce California’s tax base, strain public budgets, and accelerate economic inequality between those who can afford to stay and those who cannot.
Calls for Reform Gain Momentum
Taxpayer advocates argue that California must address the core drivers of outbound migration if it hopes to stabilize population trends.
Proposed solutions include:
- Reducing or restructuring income tax brackets
- Pausing automatic gas tax increases
- Expanding housing development and reducing regulatory barriers
- Increasing transparency in state spending
As more Californians make the difficult decision to leave the state they once called home, the debate over affordability and tax reform continues to grow.
Tax Freedom California will monitor how lawmakers respond in the months ahead.
