Blog > The Millionaire Tax Exodus: Why High Earners Are Fleeing to Austin in 2026
The Millionaire Tax Exodus: Why High Earners Are Fleeing to Austin in 2026
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Something significant is happening in the American tax landscape right now — and if you're a high earner living in Washington state, New York, or California, it affects you directly. A wave of new millionaire taxes, wealth taxes, and exit taxes is sweeping through blue states, and the migration data tells a clear story: high-income earners are voting with their feet, and many of them are landing in Austin, Texas.
Here's what's happening, what it means for the Austin real estate market, and why 2026 may be the most important year yet for luxury buyers making this move.
Washington State's New 9.9% Millionaire Tax
On March 20, 2026, the Washington state legislature passed what is officially known as the "millionaires' tax" — a new 9.9% state income tax on personal income exceeding $1,000,000 per year. Governor Bob Ferguson has indicated he will sign the bill into law. The tax takes effect on January 1, 2028, with taxes due beginning in 2029.
For context: Washington state previously had no personal income tax. That era is ending.
Under the new law, a Washington resident earning $1,000,000 in annual income will owe $0 in state income tax (the first $1M is deducted). A resident earning $2,000,000 will owe $99,000. A resident earning $5,000,000 will owe $396,000. Every year. The bill is projected to raise over $3 billion annually by 2029.
The tax is already facing legal challenges. The Citizen Action Defense Fund has stated it is "prepared to take prompt legal action" if the bill becomes law. But even with legal uncertainty, the signal to high earners is clear: Washington is no longer a tax-free state for the wealthy.
Source: K&L Gates, "Washington Legislature Adopts Income Tax and Changes to Estate Tax," March 20, 2026 — klgates.com
New York City's Pied-à-Terre Tax on Luxury Second Homes
On April 15, 2026, Governor Kathy Hochul and newly elected New York City Mayor Zohran Mamdani jointly announced a proposal for New York State's first-ever pied-à-terre tax — a recurring annual surcharge on luxury second homes in New York City valued at $5 million or more.
The proposal targets wealthy property owners who maintain a New York City residence but do not live there full-time — think hedge fund managers, tech executives, and international investors who keep a Manhattan apartment while living elsewhere. If passed, it would impose a yearly tax surcharge on these properties, adding to an already high-tax environment in which New York City residents already face some of the highest combined tax rates in the country.
New York City and New York State are also exploring additional millionaire surtaxes. The city's combined top marginal income tax rate for high earners already exceeds 14% when combining federal, state, and city taxes.
Source: NYC Mayor's Office, "Mayor Mamdani, Governor Hochul Announce State's First Pied-à-Terre Tax," April 15, 2026 — nyc.gov
Source: New York Times, "What Is the Pied-à-Terre Tax? 5 Things to Know," April 15, 2026 — nytimes.com
California's Billionaire Tax Act
California is pushing a ballot initiative known as the Billionaire Tax Act, which would impose a one-time 5% tax on the total net worth of individuals with net worth of $1.1 billion or more as of January 1, 2026. For individuals with net worth between $1 billion and $1.1 billion, the rate phases in gradually.
The Tax Foundation has noted that the effective rate on some California billionaires could be significantly higher than the stated 5% due to the structure of the calculation. The initiative is currently in the signature-gathering phase for the 2026 ballot.
California already imposes a top state income tax rate of 13.3% — the highest in the nation. Combined with the proposed wealth tax, California's high-net-worth residents face a tax environment that is increasingly difficult to justify when Texas offers zero state income tax, zero capital gains tax, and no wealth tax.
Source: Tax Foundation, "The Proposed California Wealth Tax Is Far Higher than 5 Percent," January 14, 2026 — taxfoundation.org
Source: California Office of the Attorney General, Billionaire Tax Act Initiative Text — oag.ca.gov
The Broader Picture: 10+ States Exploring Exit and Wealth Taxes
Washington, New York, and California are not alone. As of April 2026, at least ten states are now exploring or have already passed some form of exit tax, wealth tax, or high-earner surtax. Michigan, Illinois, and Massachusetts are among those with active proposals.
The pattern is consistent: states that have historically relied on high-income earners to fund their budgets are watching those earners leave — and responding by trying to tax them more before they go, or even after they leave (exit taxes).
Source: KOMO News / The National Desk, "Growing Number of Blue States Proposing Wealth, Exit Taxes," April 7, 2026 — komonews.com
The Migration Data: Where the Money Is Going
The IRS Statistics of Income migration data tells the story in dollars and cents. Based on the most recent available data:
States Losing Adjusted Gross Income (AGI) to Outmigration:
|
State
|
AGI Lost
|
|
California
|
$11.9 billion
|
|
New York
|
$9.9 billion
|
|
Illinois
|
$6.0 billion
|
|
Massachusetts
|
$4.0 billion
|
|
New Jersey
|
$2.6 billion
|
States Gaining AGI from Inmigration:
|
State
|
AGI Gained
|
|
Florida
|
$20.6 billion
|
|
Texas
|
$5.5 billion
|
|
South Carolina
|
$4.1 billion
|
|
North Carolina
|
$3.9 billion
|
|
Tennessee
|
$2.8 billion
|
Texas gained $5.5 billion in adjusted gross income from people leaving high-tax states. A significant portion of that income is landing in Austin — particularly in the luxury real estate market.
A household earning $250,000 can save $15,000–$30,000 annually by moving from a high-tax state to Texas. Those earning $500,000 or more can save $40,000 or more per year. At $1,000,000 in income, the savings against Washington's new 9.9% tax alone reach $99,000 annually.
Source: Kiplinger, "People Are Leaving High-Tax States: Here's Where They're Moving Instead in 2026," April 6, 2026 — kiplinger.com
Source: Tax Foundation, "State Migration Trends: Taxes & State Population: IRS Data," 2026 — taxfoundation.org
What This Means for Austin's Luxury Real Estate Market
Austin is the direct beneficiary of this migration wave. The Austin Business Journal reported in February 2026 that the luxury housing market is showing "strong momentum," with agents once again seeing a "frenzy" of millionaires and billionaires buying in the Austin area. Texas is now home to 88 billionaires — four more than last year — and the richest person on Earth calls Texas home.
For buyers relocating from Washington state specifically, the timing is critical. The new 9.9% millionaire tax does not take effect until January 1, 2028. That gives high earners a roughly 18-month window to establish Texas residency before the tax kicks in. Those who act now — buying a home in Austin, establishing domicile, and meeting Texas residency requirements — can potentially avoid the tax entirely.
For buyers from New York and California, the calculus is even more straightforward. Texas has no state income tax, no capital gains tax, and no wealth tax. The financial case for making the move has never been stronger.
In Austin specifically, the luxury market offers something no other Texas city can match: the combination of a tech-driven economy, world-class lifestyle amenities, Hill Country terrain, and a landlocked premium zip code like 78731 that protects long-term property values through constrained supply.
The Bottom Line for High Earners
If you are earning $1 million or more per year and you currently live in Washington, New York, or California, here is the math in plain terms:
•Washington state: $99,000/year in new state income tax starting 2028 → Austin: $0
•New York City: Combined top marginal rate exceeds 14% → Austin: 0% state income tax
•California: 13.3% state income tax + potential wealth tax → Austin: $0
The question is not whether the math works. The math is obvious. The question is whether you act before the next wave of buyers from these states drives Austin luxury prices higher.
I specialize in helping high earners from Washington, New York, and California navigate this move and find the right Austin luxury property for their budget and lifestyle. If you're thinking about making this move, I'd love to show you exactly what your budget gets you in Austin right now.
Contact Real Estate Randy
Austin Luxury Real Estate Specialist
210.910.2222 | realestaterandy007@gmail.com | www.sellwithrerandy.com
DM me the word TAX on Instagram or TikTok for a free side-by-side tax and home value comparison for your specific situation.
Sources:
1.K&L Gates, "Washington Legislature Adopts Income Tax and Changes to Estate Tax," March 20, 2026 — klgates.com/Washington-Legislature-Adopts-Income-Tax-and-Changes-to-Estate-Tax-3-20-2026
2.ITEP, "Historic Millionaires' Tax in Washington Will Make State's Tax Code Fairer," March 30, 2026 — itep.org
3.Washington State Standard, "Washington State Senate Approves Tax on Personal Income Over $1M," February 16, 2026 — washingtonstatestandard.com
4.NYC Mayor's Office, "Mayor Mamdani, Governor Hochul Announce State's First Pied-à-Terre Tax," April 15, 2026 — nyc.gov
5.New York Times, "What Is the Pied-à-Terre Tax? 5 Things to Know," April 15, 2026 — nytimes.com
6.Tax Foundation, "The Proposed California Wealth Tax Is Far Higher than 5 Percent," January 14, 2026 — taxfoundation.org
7.California Office of the Attorney General, Billionaire Tax Act Initiative — oag.ca.gov
8.KOMO News / The National Desk, "Growing Number of Blue States Proposing Wealth, Exit Taxes," April 7, 2026 — komonews.com
9.Kiplinger, "People Are Leaving High-Tax States: Here's Where They're Moving Instead in 2026," April 6, 2026 — kiplinger.com
10.Tax Foundation, "State Migration Trends: Taxes & State Population: IRS Data," 2026 — taxfoundation.org
11.Austin Business Journal, "Austin's Luxury Housing Market Shows 'Strong Momentum,'" February 8, 2026 — bizjournals.com/austin