Millionaires fled New York during COVID pandemic: IRS data

December 27, 2022

Wealthy New Yorkers fled the Empire State in droves after the COVID pandemic hit — with more than 2,000 millionaires ditching Manhattan, according to the latest Internal Revenue Service data.

Tax filings show that the number of New York state residents who reported an adjusted gross income of more than $1 million fell to 54,370 in 2020 from 55,100 in 2019 — a 1.3% decline.

Manhattan saw an even higher net loss of millionaires in 2020 with 2,393 leaving the borough for the suburbs or moving out of state — more than 10% higher than the number of seven-figure earners who relocated in 2019, according to researcher E.J. McMahon of the Albany-based nonpartisan think tank Empire Center for Public Policy.

The exodus followed a “millionaire’s tax” by disgraced Gov. Andrew Cuomo in 2020 as part of COVID-relief budget that hiked the top rate to 9.65% from 8.82%, making New York the highest-taxed state in the country.

“It’s preposterous to deny that it isn’t one of the key determinants,” McMahon told the Lockport Union-Sun & Journal. “And it’s the variable that the state government controls.”

The state’s plunge in millionaires comes despite a spike in the number of wealthy earners nationally by some 10% — to 608,540 from 554,340, the tax data show.

New York saw a decline in the number of millionaires while most of the country saw a net increase in seven-figure earners, according to IRS data.

New York’s share of the national pool of millionaire tax filers shriveled from 9.9% in 2019 to 8.9% in 2020 — and plummeted 12.7% from 2010. The state joined Oklahoma and Louisiana as the only three states that saw an absolute decline in the number of millionaire income tax filers in 2020.

“The continuing decline in New York’s share of the nation’s income millionaires … should be a vivid warning sign for Gov. [Kathy] Hochul and the Legislature,” McMahon said.

Experts have blamed a confluence of factors for the Big Apple emptying out, including the overall cost of living, pandemic-era lockdown policies and rising crime rates.

Overall, an estimated 300,000 New Yorkers reportedly left the city in 2020 — taking roughly $21 billion in income with them.

Nassau County, which ranks second behind Manhattan in the number of millionaire residents in the state, lost 12 filers in 2020, according to the study of the IRS data by McMahon’s think tank.

Other suburban areas saw gains in millionaire filers, led by Suffolk County, which includes the Hamptons. There was an increase of 722 millionaire filers, or 21%, in 2020 compared to 2019.

The IRS data corroborate anecdotal and statistical findings indicating a flight of wealth from New York during the pandemic.

The Hudson Valley also saw a net increase in wealthy earners. Westchester County became home to 233 more millionaires in 2020, while Dutchess County reported an additional 147 millionaires. Dozens more millionaire filers moved to Ulster, Putnam and Columbia counties in 2020.

The ramifications of the flight of wealth to other states could be significant for New York City and the state. A shrinkage of the tax pool could likely have an adverse impact on the funding of vital public services like schools, mass transit, and police and fire departments.

New York, California, and Illinois saw a net loss of residents during the pandemic, according to data. — New York, California and Illinois saw a net loss of residents during the pandemic, according to data.

McMahon cited state data which shows that New York’s top 1% of income earners who report incomes of at least $655,835 — and resided in the state the whole year — paid 46% of state income taxes as of 2020.

It wasn’t just high earners fleeing. In 2020, the number of New Yorkers who earned between half-a-million dollars and $1 million dropped by 2,600 tax filers, or 2.8%, according to the IRS data.

The trend ran counter to the national figures, which indicated 67,290 tax filers in this wage bracket in 2020 — or an increase of 5.8% compared to 2019. The only other states to lose filers in the $500,000-to-$1 million range in 2020 were Louisiana, Oklahoma and West Virginia.

Florida has been one of the biggest beneficiaries of the escape from New York saga — along with other Sun Belt locales like Texas, Tennessee, Georgia and the Carolinas. The Sunshine State is positioned to supplant New York as home to the second-highest number of millionaires in the country behind first-place California.

“With 53,190 millionaire filers in 2020, reflecting a gain of 170% over the previous 10 years, Florida moved closer to displacing New York as the state with the second-largest population in this category,” McMahon said.

McMahon’s findings do offer a silver lining for New York: Millionaire tax filers in the Empire State reported that their 2020 adjusted gross income rose by around 10% compared with the previous year.

New York's high cost of living has been cited by experts as a reason for the shift in population. — New York’s high cost of living has been cited by experts as a reason for the shift in population.

Notably, the number of part-time residents of New York who earned more than $1 million in 2020 rose — with Florida accounting for the largest share of nonresident filers, according to McMahon.

In 2020, there were 7,218 Floridians who owed taxes to Albany — up from 6,471 in 2019, according to McMahon.