TEXAS, USA — This article was originally published by our content partners at the Dallas Business Journal. You can read the original article here.
How much you need to make to be in Texas' top 1% of earners has grown sharply in recent years.
Texans needed to make at least $676,271 in 2021 to be included among the state's most wealthy, according to a new Business Journals analysis of the latest IRS data. The data is based on the 2021 tax year and percentiles are based on total tax filers, so they don’t distinguish by marital or household status.
The cutoff for being in the top 1% in Texas increased by $132,792, or 24%, from $543,479 in 2020. That was No. 15 among all 50 states and Washington, D.C. Nationally, the amount to be among the top 1% of earners in the U.S. grew by 25% between 2020 and 2021 to $699,008.
Since 2016, the minimum cutoff to be in the top 1% of earners in Texas has climbed by $212,963, or 46%. In 2021, 126,128 tax filers made the cut of being a top 1% earner, a 12% increase from five years earlier.
Surging salaries that accompanied the post-pandemic labor shortage and the turnover tsunami helped fuel the growth in Texas and across the country. Texas, has also benefitted from new residents and companies that have relocated to the state.
Dallas-Fort Worth and Austin in particular have seen huge increases in wealthy residents. Dallas and Austin both ranked among the fastest-growing hubs for millionaires in a report by consulting firm Henley & Partners Holdings Ltd. earlier this year.
Henley & Partners ranked Dallas ranked fourth with a 75% increase in the number of millionaires from 2013 to 2023. And overall, Dallas has the sixth-most millionaires in the U.S. with 68,600. Austin ranked as the fastest-growing millionaire hub, with a 110% increase in the past decade.
Additionally, 43 Texans made the most recent Forbes 400 list released in October. The magazine ranks the 400 wealthiest Americans annually using estimates based on both public and private investments. The 43 Texans had a collective net worth of $777 billion. Of those, 19 are known to live in DFW.
The national picture
While 1,518,179 Americans made the top 1% cut in 2020, that number dropped to 1,486,807 in 2021 — a decline of 2%.
Washington, D.C., once again had the highest salary threshold for its top 1% of earners at $1,071,426, while Connecticut was again not far behind at $1,022,499.
At the other end of the spectrum, West Virginia ($373,106), Mississippi ($391,112) and New Mexico ($422,572) had the lowest thresholds for the top 1%.
Follow the money
Since 2016, the national adjusted gross income cutoff to be part of the top 1% has since increased by 45%.
The increases were the highest in Idaho (73%), Wyoming (73%), Washington (71%), Montana (69%) and Nevada (67%).
Oklahoma (26%), Mississippi (28%) and West Virginia (29%) had the smallest increased between 2016 and 2021.
Several of the states with the largest increases also saw significant net migration during the pandemic — including a surge of new residents to mountain towns across the West.
Those moves were part of a broader Great Migration that saw millions of Americans relocate during the height of the Covid-19 pandemic. However, high interest rates and increasing housing costs eventually cooled the trend.
Jeffrey Roach, chief economist for LPL Financial noted in a recent report that the Great Migration dynamics no longer exist.
“The geographic reshuffling may be over in earnest as opportunities for remote work are likely shrinking in response to an overall cooling of the labor market and as corporate policies are getting less flexible on work arrangements.”
The Great Migration may be over, but the trend did result in a significant amount of wealth — and millionaires — moving to new states. The trend had a substantial effect on home prices, tax bases and development trajectories.
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