Iowans flocking to states with no state income tax: IRS data

(The Center Square) – Migration data from the Internal Revenue Service shows that thousands of Iowans are leaving the state for Texas and Florida, which have no state income tax.

Texas drew nearly 5,000 residents from Iowa but 3,475 Texans left for the Hawkeye state. The state lost a net $68.3 million in adjusted gross income due to more people leaving Iowa for Texas, according to the data.

Just over 4,200 residents left Iowa for Florida, while 2,535 left the Sunshine State to make Iowa their home. The data showed that the net AGI loss from the moves is $213.1 million.

The data shows migration between 2021 and 2022 but does not specify why people leave. A report published last year by the Tax Foundation shows that taxes are at least an indirect reason for migration. Nine of the ten states with the most significant population influx from 2019 to 2020 were low or no-income tax states, the organization said.

The Iowa Legislature passed a bill earlier this year that implemented a 3.8% flat tax in 2025, one year earlier than expected.

The flat tax will save Iowa families an average of $800 annually, Senate Majority Leader Jack Whitver said during the session.

Iowa had an overall net loss of 5,444 residents and $519 million in AGI, the data showed.

Nearby Illinois was the top destination with 7,630, but the state had a net gain in Illinois residents as 8,368 moved into Iowa, according to the data. The state’s AGI from the moves increased by a net $62.2 million.

Iowa also had a net gain of residents from Nebraska as 5,154 moved out, but 5,571 moved across the state line to Iowa, a net AGI gain of nearly $10 million, the data showed.

The data shows that just 238 individuals left the state for another country, with 289 choosing to leave their country and move to Iowa.