Revisiting the Pandemic-Era Domestic Migration Surge—and What It Means for State Budgets

Pandemic-era domestic migration surge reshaped state budgets

Migration between states jumped in 2020 and remained elevated through 2022 as interstate relocation rates rose across all age and income groups. This temporary surge offers insight into how domestic migration can alter demographic trends and affect state fiscal situations. With birth rates currently hovering near record lows and the outlook for international migration uncertain, movement within the U.S. could play an increasingly important role in shaping population patterns for years to come.

States should pay close attention to domestic migration trends because of their effects on labor markets, tax bases, and long-term growth prospects. Elevated interstate relocation rates from 2020 to 2022 underscored the importance of these patterns as the pandemic and the rise of remote work spurred migration from large metropolitan areas to less densely populated regions, amplifying certain trends and effects.

To better understand the fiscal implications of this brief period of significant change, as well as the broader effects of domestic migration on state finances, The Pew Charitable Trusts analyzed IRS tax return data from 2017 to 2022 along with state documents such as long-term budget assessments and demographic analyses. This five-year window captures pre-pandemic patterns, the pandemic-era surge, and the early return toward more typical migration flows.

The data and fiscal analyses show that the elevated relocation rates accelerated many preexisting trends. States such as California and Massachusetts experienced increased out-migration, raising concerns about potential revenue loss and slower economic growth if those patterns persist. By contrast, states such as North Carolina experienced faster in-migration, contributing to labor force growth while potentially shifting demographic compositions such as the distribution across age groups and accelerating urban change. In some cases, trends ran counter to long-term patterns, though these shifts were often short-lived. Connecticut, for example, experienced a temporary easing of its persistent net outflows as remote workers from high-cost metropolitan areas such as New York City and Boston moved in, drawn in part by more affordable housing.

One of the most notable shifts occurred among higher-income residents. The number of primary tax-filers who reported adjusted gross incomes (AGIs) of $100,000 or more and moved across state lines increased by 40% during the two years after the pandemic began (2020-22) compared with the two years before the pandemic (2017-19). This was more than double the increase of any other age or income group tracked by Pew. This uptick helped Idaho, Florida, and South Carolina expand their high-income tax-filing populations by more than 15% in just five years. Montana also ranked among the top gainers, increasing its higher-income tax-filing population by 13.8% over the same period. In a 2023 analysis, Montana found that the inflow of higher-income residents bolstered its tax base but also increased the potential for revenue volatility if the share of income tied to capital gains continues to grow.

Where Are People Moving?

The number of states gaining tax filers through domestic net migration rose from 22 in 2017-18 to a peak of 28 in 2019-20. A key part of this trend was the movement away from large, dense population centers toward smaller cities, suburbs, and rural areas. This may partly explain the state-level shift away from places such as California and New York to smaller states such as South Dakota and Idaho. The number of states gaining tax filers declined slightly to 26 by 2021-22.

A multiyear perspective smooths short-term volatility and highlights the underlying migration patterns that shape long-term demographic and fiscal conditions. Examining five-year trends provides a clearer picture of both the pandemic’s temporary disruptions and more enduring state migration trajectories.

An analysis of each state’s compound annual growth rate (CAGR) in the 2017-22 tax-filing population shows that 27 states gained more residents through interstate moves than they lost. The largest increases occurred in Idaho (the equivalent of 1.81% per year), South Carolina (1.37%), Nevada (1.34%), Arizona (1.33%), and Delaware (1.15%).

The largest losses of tax-filing populations to domestic out-migration occurred in Washington, D.C. (-1.6% each year), New York (-1.34%), Alaska (-0.99%), Illinois (-0.94%), California (-0.74%), and Massachusetts (-0.72%). The seven metro areas with the highest rates of net out-migration from 2020 to 2022—San Jose, Calif.; San Francisco; Chicago; New York; Los Angeles; Washington, D.C.; and Boston—are all located in the five states (plus D.C.) with the highest rates of net out-migration, illustrating the connection between major metropolitan outflows and statewide population trends.

Domestic net migration had the smallest effect on tax-filing populations in Indiana (0.03% per year), New Mexico (0.05%), Wisconsin (-0.05%), Missouri (0.06%), and Kentucky (0.07%). Rates near zero indicate a balance between inflows and outflows, though annual changes show that several of these states may have been at potential inflection points. Around 2020, Kentucky, Missouri, and New Mexico shifted from largely consistent losses in the 2010s to slight gains. While New Mexico’s growth—possibly tied to fluctuations in the labor and economic demands of the oil market—proved temporary, Kentucky and Missouri continued their modest net gains through 2025.

States in the South and West gained the most tax filers from domestic migration, continuing a long-standing pattern that intensified during the COVID-19 pandemic. For more than half a century, people have gravitated toward these regions from the Midwest and Northeast. From 2017 to 2022, almost every state’s top destination for out-migrants was in the South or West. The only exceptions were West Virginia, whose top destination was Ohio; Massachusetts to New Hampshire; and North Dakota to Minnesota. Overall, Florida and Texas were the leading destinations for movers from two-thirds of states.

Large states dominated these interstate flows. California and New York were the top source of new residents for 35 states. Thirteen of the remaining 15 states, however, drew the most newcomers from a neighbor. New Hampshire, Rhode Island, and Vermont each gained the most residents from Massachusetts. Similarly, Iowa, Indiana, Michigan, Missouri, and Wisconsin drew the most from Illinois. Additionally, Delaware drew the most from Pennsylvania; Maryland from Washington, D.C.; Minnesota from North Dakota; Mississippi from Louisiana; and West Virginia from Maryland. These patterns underscore how proximity and shared borders help to shape migration patterns.

Who Is Moving Where?

States with positive net migration usually gained tax filers across all age and income levels, while those with net out-migration generally experienced declines across the board, though the degree of change varied across demographic groups.

Analyzing the composition of movers offers a more nuanced understanding of their effects on population and fiscal trends, as the inflows and outflows of different demographic groups bring varying combinations of fiscal risks and opportunities.

States often highlight how inflows of working-age residents can strengthen labor forces and tax bases. Yet the size of this group and its commuting needs mean they can drive costs associated with population growth, including transportation and housing. Young adults help fill entry-level jobs and are critical to addressing workforce needs, but their higher mobility can add volatility to demographic trends. Retirement-age in-migrants can bolster tax revenues but can also contribute to the fiscal challenges associated with aging populations.

An analysis of migration trends by age group from 2017 to 2022 shows that:

• Young adults (ages 20-25) were the most mobile age group of tax filers. They also diverged from the broader population trend in more states than other groups. Nowhere was the contrast sharper than in Washington, D.C., where the young adult population grew 5% per year from domestic migration, even as outflows reduced the overall tax-filing population by 1.6% per year.
• Working-age adults (26-65) made up nearly three-quarters of primary tax filers who moved across state lines—partly because they represent the largest share of the population. Their migration rate rose by about 12% after the outbreak of the pandemic, roughly in line with the overall tax-filing population. This increase reflected greater labor market flexibility and the rise of remote work.
• Retirement-age tax filers (66 and older) were less mobile than the overall population. Their migration peaked in 2019-20, two years earlier than the other age groups, coinciding with a surge in retirements. According to the Census Bureau, many people relocate soon after retirement in search of warmer climates, suitable housing, and better amenities.

Age and income are closely linked, with adjusted gross incomes (AGIs) typically rising through working years, peaking between 55 and 65, and falling as taxpayers head into retirement. Movement by income level is slightly more challenging to track than age, in part because people’s incomes often change when they move across state lines. Still, analyzing the income characteristics of tax filers can provide useful insights for states into how migration affects tax bases.

An analysis of migration by income level from 2017 to 2022 shows that:

• Lower-income tax filers (AGI less than $50,000) made up more than half of all movers—roughly in line with their share of the overall tax-filling population. Their rate of interstate migration increased by just over 0.5% from 2020 to 2022 compared with the pre-pandemic years, by far the smallest increase across all the groups tracked by Pew.
• Middle-income tax filers (AGI of $50,000 to $100,000) were the largest share of movers in only two states: Ohio and North Dakota.
• Higher-income tax filers (AGI greater than $100,000) were the most mobile income group, though they were also the smallest in number, so their impact on overall population shifts was often overshadowed by the less mobile but larger lower-income group.

Why Domestic Migration Matters to State Budgets

Strong inflows of people can often mean more workers and consumers to fill jobs and purchase goods and services—contributing to economic activity and generating additional tax revenue. States often recognize the importance of migration patterns and other demographic trends in their fiscal analyses. Florida’s long-term financial outlook, for example, describes population growth as “the state’s primary engine of economic growth,” noting that migration will probably account for all of the state’s population gains going forward.

From a more strictly fiscal perspective, Utah reported that growth in total tax collections had been “marginally enhanced” by the in-migration of working-age residents, while California’s Legislative Analyst’s Office estimated that the high out-migration of 2022 led to a revenue loss of 1.6%.

Although annual migration shifts rarely have major fiscal implications, their effects can compound over time. Oregon, which only recently began facing losses due to out-migration, built a “zero migration” scenario into recent long-term economic and revenue forecasts. Migration has historically been a key driver of the state’s economic growth, and while officials anticipate a rebound, they cautioned that the effects of small annual changes can accumulate “like a snowball just starting to roll down a mountain,” with implications for the long-term outlook.

Slow-growing and shrinking states often point to domestic migration as a driver of—and potential solution to—demographic challenges. New York’s 2024 long-term budget assessment warned that population decline—which is largely due to domestic outflows—poses long-term risks (such as fewer employees and wages) that could weaken economic growth and “exacerbate labor shortages.”

Vermont and West Virginia—two of the lowest-growth states in the nation—saw positive net in-migration in the early 2020s after years of losses to out-migration. Budget documents in both states emphasized the need to continue attracting new residents to counter the effects of low birth rates and aging populations. In a 2024 analysis, Vermont’s Joint Fiscal Office noted that migration is necessary to offset large deficits in the birth-to-death ratio, while West Virginia’s fiscal year 2026 executive budget stressed that “positive shocks to the economy are essential to encourage in-migration and reduce the severity of natural population decline.”

West Virginia and Vermont also recently offered financial incentives to attract new workers. They are not alone in experimenting with policy strategies to draw new residents and combat sluggish population growth. In 2024, Michigan established a Growth Office to “retain current and attract future Michiganders,” while Kansas launched a talent attraction campaign to boost its population. Such initiatives can be contentious: In Vermont, for example, some officials viewed a previous incentive program as a success, while others questioned its effectiveness and value to taxpayers.

While many states focus on the potential benefits of positive net migration, rapid growth can also create fiscal and economic pressures. A recent study by the National Bureau of Economic Research found that shifts to remote work accounted for about half of the housing inflation from 2019 through 2023, while other research suggests that the strongest increases occurred in states with high rates of domestic in-migration. Although rising home prices can bolster state and local revenues through higher property taxes, they can also reduce affordability and eventually lead to increased out-migration.

States experiencing rapid growth from migration must also expand public services to keep pace with rising demand. Utah’s “FY 2025 Long-Term Budget Report” noted that “demand for public services broadly tends to scale with the size of the population,” with recent growth especially driving higher transportation infrastructure costs. Similarly, the Texas comptroller’s office recently reported that the state’s population increases are requiring billions of dollars in investments to maintain and expand the state’s transportation, water, and broadband systems.

Long-Term Trends

Even as states manage the fiscal impacts of recent migration shifts, it’s important to view these changes within a longer historical context. Pandemic trends may have intensified attention on interstate migration, but it represents one chapter in a broader story of how residents have moved and how these movements have evolved over time.

Domestic migration during and immediately after the pandemic marked a sharp departure from the subdued rates of recent decades. For much of the nation’s history, the large-scale internal movements of residents—from westward expansion to the Great Migration and Dust Bowl exodus—played a central role in shaping the country and the demographic makeup of states. But the intensity of domestic migration weakened after 1964 in what became known as the Great American Migration Slowdown. The share of people who moved across state lines fell to record lows around 2010, shortly after the end of the Great Recession, and remained relatively muted until the pandemic, when interstate migration jumped.

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While the reasons Americans have moved less in recent decades are not fully understood, researchers cite labor market rigidity and rising housing costs as contributing factors. The pandemic temporarily upended these forces as the rise of remote work and low mortgage interest rates helped to unleash a surge in relocations. But, like many of the other economic and fiscal distortions from the period, the uptick in moves was short-lived. Analysis of census estimates show that domestic migration returned to pre-pandemic levels in 2023 and dropped to a decade low in 2024.

Domestic migration trends do not occur in isolation; they are always interacting with a complicated and shifting demographic landscape. State populations rise or fall through a mix of migration—within the U.S. and from abroad—and natural change, or the difference between births and deaths. As birth rates remain near record lows and state populations age, migration—both domestic and international—is playing an increasing role in determining whether state populations shrink or grow.

In 2023 and 2024, strong international migration overshadowed domestic flows. The population of the 50 states grew at its fastest rate in nearly 20 years in 2024, and almost every state gained residents as a result. This uptick ran counter to the decades-long slowdown in population growth that had affected most states leading up to the pandemic.

However, the pace of immigration fell sharply in the first half of 2025, returning the United States and most states closer to their slower long-term population growth trajectories. As a result, domestic migration is poised to reemerge as the primary driver of state population change, even if interstate migration remains subdued compared with pandemic-era levels.

Although most indicators point to several Sun Belt states continuing to lead the nation in both population and domestic migration growth, the rising cost of living associated with strong population change (such as increasing housing prices) and climate pressures add uncertainty to the outlook.

Conclusion

As migration patterns continue to evolve, states are closely assessing what these demographic shifts mean for their economies, tax bases, and long-term fiscal health. Despite the accelerated population gains across states in recent years, the longer-term U.S. trend is for slower growth—an outlook that most states already recognize as a fiscal risk as aging populations and historically low birth rates create ongoing demographic headwinds.

Domestic migration will probably play an increasingly important role in shaping population change and state finances in years to come. Policymakers who understand how domestic migration interacts with state ledgers—and how gains and losses bring about distinct fiscal risks and opportunities—will be better prepared for a future in which state-to-state movement remains a defining feature of state economies.

Alexandre Fall is a principal associate with The Pew Charitable Trusts’ Fiscal 50 project, and Gayathri Venu is an associate with Pew’s state fiscal health project. Joanna Biernacka-Lievestro is a former senior manager with Pew’s Fiscal 50 project.