New Jersey’s annual net loss of Adjusted Gross Income is reaching new heights.
The latest Internal Revenue Service data shows a record net outflow of nearly $5.3 billion in Individual Tax Return Adjusted Gross Income (AGI) for tax year 2021-2022.
That figure is 39% higher than the previous record net outflow of $3.8 billion in tax year 2020-2021 – although those numbers are not adjusted for inflation.
With this latest IRS data, New Jersey’s total non-inflation-adjusted net loss of AGI is approximately $45.5 billion dating back to tax year 2004-2005.
“While there are always different outlooks on New Jersey’s broader population trends, these new levels of net AGI loss are an increasing concern for New Jersey because it hits our state tax revenues and our ability to fund state services and programs,” said NJBIA President and CEO Michele Siekerka.
“As we continue to see many states in our region and around the nation receive a good portion of New Jersey’s out-migrated AGI, this data represents a growing strike against our competitiveness at a time when we are struggling to balance our annual budgets and compete with different tax rates.”
AGI is a measure of income that calculates how much total income is taxable. So, its importance is found in the fact that the continued net loss in AGI literally results in less taxable income for the state.
For 2021-2022, the outflow of U.S. and foreign adjusted gross income was approximately $17.6 billion, compared to an inflow of $12.4 billion.
One positive feature of the latest data shows New Jersey’s inflow of $12.4 billion continues an upward trend. That figure was $11.2 billion for tax year 2020-21 and $10.5 billion for tax year 2019-2020.
That positivity, however, is being continually surpassed by the state’s simultaneously growing outflow of AGI.
“This latest IRS data continues to point to interstate migratory trends that have concerned thought leaders in New Jersey for years,” said NJBIA Director of Economic Policy Research Kyle Sullender.
“Although the downstream economic effects of migration are not quite as simple as AGI in versus AGI out, the potential loss of taxable income and available spending power in the state remains a cause for concern.”
New Jersey experienced a positive net AGI total from seven states for 2021-2022, including New York (+$2.7 billion), Illinois (+$8.9 million), Kansas (+$3.9 million), North Dakota (+$1.2 million), Iowa (+$1.4 million), Minnesota (+$1.1 million) and Wisconsin (+$1.1 million).
The state’s largest net AGI losses were to Florida (-$4.4 billion), Texas (-$520.8 million), North Carolina (-$482.6 million), South Carolina ($-430.1 million), and Pennsylvania (-$302 million).
