By: Ted Dabrowski and John Klingner
The IRS has just released new domestic migration data for both 2017 and 2018* and it shows Illinoisans left the state in record numbers. In both years, Illinois lost more people and more taxable income than in any past year reported by the IRS.
The IRS data complements the new Census Bureau data** that shows near-record out-migration of Illinoisans in 2019.
Illinois lost a net of more than 130,000 residents (tax filers and their dependents) in 2017 and another 88,000 in 2018. The state’s tax base shrunk by $6.8 billion and $5.6 billion respectively, as those who left took their incomes with them.
In 2018, the $5.6 billion in lost taxable income cost the state approximately $230 million in additional income tax revenues alone. That number doesn’t include millions in sales, property, gas, and other taxes that weren’t collected as a result of fewer people living in Illinois.***
And the problem is deeper than that. The Illinoisans who fled in 2018 earned, on average, nearly $19,000 more than the new residents Illinois gained from other states. So not only is Illinois losing people outright, but the people moving in make far less than those who are leaving.
The state continues to be a national outlier when it comes to losing people and the money they earn. Only Alaska and New York lost more people on a per capita basis than Illinois did. And only New York lost more Adjusted Gross Income (AGI) per capita than Illinois.
Here are the facts from the latest Internal Revenue Service release:
- Illinois lost more than 130,000 tax filers and their dependents in 2017 and another 88,000 in 2018. Illinois’ 2018 loss was the third worst in the country, with only California and New York losing more residents, 153,000 and 160,000, respectively.
- Illinois lost $6.8 billion in Adjusted Gross Incomes to net out-migration in 2017 and $5.6 billion in 2018. Illinois’ 2018 loss was the third worst in the country, with only California and New York losing more AGI, $8.0 billion and $9.6 billion, respectively.
- The three biggest gainers nationally in 2018 of residents and their incomes were Florida, Arizona and Texas. Florida was the biggest winner by far, gaining a net 115,000 people and $16 billion in AGI. Arizona gained 65,000 people and $3.5 billion in AGI. Texas gained 77,000 people and $3.4 billion in AGI.
- When measured on per capita basis, only New York lost more AGI than Illinois in 2018. Illinois lost $435 in AGI per person while New York lost $484 per person.
- The biggest per capita winners of AGI were Nevada, up $766 per person, Florida, up $762 per person, and Idaho, up $646 per person.
- Illinois’ neighbors suffered far smaller AGI losses than Illinois in 2018, ranging from a loss of $145 per person in Iowa to just $52 per person in Missouri.
- Domestic in-migrants to Illinois earned far less than the Illinois residents who left the state. The average AGI of those who left in 2018 was approximately $85,000, while those who entered the state had incomes of just $66,000.
- The wealth gap between residents leaving and coming to Illinois has more than tripled since 2000. In 2000, those moving into Illinois earned on average $5,000 less than those leaving Illinois. In 2018, the gap is now nearly $19,000.
- Illinois was a net loser of people to 43 states in 2018, while it netted gains from just six states. The total gain from those six states, however, was trivial – just 667 net residents. In contrast, Illinois netted losses of 88,664 people to the other 43 states.
- Illinois’ biggest resident losses weren’t just to Florida and Texas, two of the nation’s biggest in-migration winners. Indiana and Wisconsin were the second and fourth largest net winners of Illinois’ residents.
- All of Illinois’ neighbors netted gains vs. Illinois. Indiana gained nearly 26,000 Illinois residents but gave up just 15,000 of its own. That left Indiana with a net gain of nearly 11,000 residents vis-a-vis Illinois. Wisconsin ended up with a net gain of more than 7,000 residents vs. Illinois. Kentucky, Iowa, Michigan and Missouri all netted gains of 1,200 to 2,900 residents vs. the Prairie State.
Any way the data is sliced, Illinois is chronically losing its population and its tax base. It is a national outlier along with New York, New Jersey and Connecticut. For full information on Illinois’ demographic and out-migration losses, see Wirepoints: Out-migration.
The outflow is particularly alarming given the state’s pension shortfall, which is already the highest in the nation. As the state’s population and tax base continue to shrink, the risk of insolvency for the state continues to rise.
Illinois’ legislature shows no signs of pursuing the spending and pension reforms needed to make Illinois competitive again. Until that changes, expect the Illinois exodus to only get worse.
*This new data set comes after the IRS did not release data for two years. Included in the current release was two years’ worth of data – for 2017 and 2018. The 2017 data contains a significant spike in both gains and losses for most states. The IRS did not comment on why the 2017 data was significantly different from previous years.
**IRS and Census Bureau out-migration numbers differ because they are based on different methodologies. The IRS compiles national state-by-state migration data by reviewing federal tax returns annually to track when and where people move. The Census Bureau compiles a separate data set based on surveys it conducts across the nation.
***Calculation based on $5.6 billion multiplied by 4.12 percent effective income tax rate. To see more details regarding methodology, see Wirepoints’ past work: Illinois’ shrinking tax base: $310 billion in accumulated losses from out-migration.
Read more about the flight of Illinoisans:
- New Census data shows Illinois lost population for the sixth year in a row
- Illinois’ shrinking tax base: $310 billion in accumulated losses from out-migration
- Illinois’ demographic collapse: fewer immigrants, fewer babies and fleeing residents
- Neighbors improve on migration numbers while Illinois worsens
- It’s not just property taxes Illinoisans should be worried about. It’s home values, too.