Last month, I noted that, in 2025, Census Bureau data showed that Minnesota saw positive net domestic migration for first time since 2018. Is this an endorsement of our state’s high tax, high spending model? A look at the data suggest that the answer is “No, not really.”
Last October, the Tax Foundation released their 2026 State Tax Competitiveness Index. Minnesota ranked 44th out of 50 states, down from 42nd in 2025’s listing. Wyoming held onto top spot with a score of 7.74 — up from 7.67 the previous year — and New York remained at the bottom, with a score of 3.65, actually up from 3.60. Minnesota ranked 44th out of 50 states on the Tax Foundation’s ranking for 2026, with a score of 4.44, down from 42nd with a score of 4.49 in 2025’s.
Do these tax scores have any relationship with where people move to? If so, do they move to higher or lower tax states, on average?
Figure 1 shows the relationship between state scores on the Tax Foundation’s 2025 State Tax Competitiveness Index and their rate of net domestic migration in 2025 per 100,000 of their 2024 population. What we see is a positive relationship, that is, as state Tax Foundation scores increase so do their rates of net domestic migration. The relationship is statistically significant, with a p-value of 0.01, and the R2 value tells us that variations in state Tax Foundation scores explain 13.9% of the variations in rates of net domestic migration.
Figure 1: Relationship between taxes and domestic migration, 2025
Indeed, as Table 1 shows, we find that, of the top ten states on the Tax Foundation’s ranking, only one — Alaska — recorded negative net domestic migration in 2025. The other nine all gained residents from other parts of the United States for a total net gain for all ten of 157,000. Of the bottom ten states on the Tax Foundation’s ranking, by contrast, only two — including Minnesota — recorded positive net domestic migration in 2025. The other eight all lost residents to other parts of the United States for a total net loss for all ten of 447,600.
Table 1: Taxes and domestic migration, 2025
And, for a bit of fun, the cells in the first column are shaded red for states with a Republican trifecta, blue for those with Democrat trifectas, and white for split control. Nine of the top ten states for tax rankings had Reoublican trifectas and eight of the lowest ranked had Democratic ones.
As I have said many times before, taxes are not the only reason people choose to live in a place. But they are a reason, and they are a reason which state governments have control over, unlike the climate. To the extent that these flows will drive apportionment in the House of Representatives in 2030, the extent to which taxes drive these flows ought to give Democrats something to think about.