(The Center Square) – An analysis of Internal Revenue Service data shows Tennessee attracted 43,000 new residents from other states between 2022 and 2023, pumping billions into the state’s economy.
Overall, low-tax states in the South were big winners as people left higher-tax western and northeastern states, according to the Tax Foundation.
Tennessee ranked second in the American Legislative Exchange Council’s recent Rich States, Poor States report in part because of its low tax burden. While the sales tax is one of the highest in the country, the state does not levy an individual income tax.
“We continue to lead the nation with a booming economy, strong growth and a skilled workforce for the future,” Gov. Bill Lee said in a social media post where he shared the report.
The Tax Foundation report shows that the state added more than 24,000 new taxpayers between 2023 and 2024, ranking fifth among states.
The influx of residents added $2.75 billion of net adjusted gross income to the economy.
“Interstate migration has significant fiscal and economic consequences for states,” said Senior Policy Analyst Abir Mandal, the author of the Tax Foundation report. “When residents move out, states lose not only population but also the tax revenue those individuals generate over time. Conversely, states that attract new residents gain additional taxpayers and economic activity without the need to raise tax rates.”
Texas gained the most tax filers, followed by Florida, North Carolina and South Carolina. California lost the most tax filers, followed by New York, Illinois and New Jersey.
