High Taxes and Living Costs Drive Young Adults and Billionaires Out of California
Sacramento, Wednesday, 21 October 2026.
California lost a nation-leading 58,109 Gen Z adults alongside prominent billionaires, driven away by excessive living expenses and tax burdens toward more affordable states like South Carolina and Missouri.
Generational Shift in Migration Patterns
The exodus of Generation Z from California represents a significant demographic realignment, with the state experiencing the nation’s largest net loss of young adults in 2024 [1]. Approximately 58,109 young adults left California during this period, contributing to a broader national trend where nearly 11 million Gen Z adults moved across state lines [1]. This figure constitutes 0.528 percent of the total Gen Z interstate migration volume, highlighting California’s disproportionate loss relative to other states [1]. Primary destinations for these young migrants include South Carolina, which saw a net gain of 22,843 Gen Z adults, Missouri with 14,063, and Tennessee with 13,537 [1]. Economic pressure is a primary driver, as a Bank of America study released in May 2026 found that 42% of Gen Z live paycheck to paycheck, with nearly 50% citing the high cost of living as a primary barrier to financial success [1]. Unlike older demographics, young adults possess greater mobility, allowing them to relocate quickly in search of affordability without the burden of moving children or established family networks [1].
High-Net-Worth Departures and Tax Policy
Parallel to the youth migration, California is witnessing a notable departure of high-net-worth individuals, including prominent billionaires such as Larry Page, Peter Thiel, and Travis Kalanick [1]. This movement is partially attributed to opposition against the proposed Prop 40, often referred to as the billionaire tax, which was reported on October 9, 2026 [1]. The convergence of tax burdens and housing costs creates a compounding effect on the state’s economic ecosystem, potentially impacting talent retention in the tech and business sectors [1]. While California continues to attract new residents according to U-Haul’s 2026 Midyear Migration Trends report, the nature of this inflow differs from the outflow, with implications for state revenue and economic composition [1]. The U-Haul 2025 Growth Index, released in January 2026, further underscores these shifting patterns as households weigh housing affordability and employment opportunities against living expenses [5].
Regional Variations and Economic Outlook
Migration data reveals nuanced regional variations within California, where some counties experience net gains despite the statewide trend [4]. For instance, El Dorado County recorded a net migration gain of 307 residents according to 2025 Census PEP estimates, driven by both domestic and international movement [4]. IRS data from 2022–2023 indicates that 9,500 people moved into El Dorado County while 9,400 moved out, resulting in a net migrating Adjusted Gross Income of $90,867,000 [4]. However, the broader state context remains challenging, with residential mobility data from 2020–2024 ACS estimates indicating that only 0.96% of residents moved from another state into similar California counties [4]. As policymakers and economists monitor these trends through late 2026, the interplay between tax policy, housing affordability, and labor mobility will likely define California’s economic trajectory in the coming years [1][5].