Why High Earners Are Secretly Moving to Illinois

There's a scene in every personal finance thread where someone making $150,000 announces they're moving to Texas or Florida to "keep more of their paycheck," and everyone nods approvingly like they've just witnessed someone hack the tax code. Meanwhile, a smaller, quieter group of people — often making the same money or more — are looking at Illinois and thinking "actually, yeah."

This sounds insane. Illinois has a state income tax. A flat 4.95% state income tax, in fact, which means if you make $200,000, you're sending nearly $10,000 to Springfield every year. Texas has no state income tax. Florida has no state income tax. The math seems obvious. Except it isn't, because the thing about taxes is they're never just one number — they're a constellation of numbers that only make sense when you see them together, and sometimes the constellation looks completely different than you expected.

The people moving to Illinois aren't doing it because they love taxes. They're doing it because they've looked at the actual cost of living in Chicago or the suburbs versus Austin or Miami, factored in property taxes (which Texas has plenty of), considered what their housing dollar actually buys, and realized that the supposed tax savings evaporate somewhere between the mortgage payment and the summer electric bill. Or they've looked at their effective tax rate — not their marginal rate, not the scary number people throw around at dinner parties, but the actual percentage of their income that disappears — and discovered it's not that different. Or, in some cases, they've realized that Illinois is one of the few states where your retirement income is completely tax-free, which matters a lot if you're 45 and thinking more than five years ahead.

Here's what's actually happening: high earners are doing the math that everyone says they should do, and the math is leading them somewhere nobody expected.

The Property Tax Sleight of Hand

Texas loves to advertise its lack of income tax, but it funds state services somehow, and that somehow is property taxes that would make a Connecticut hedge fund manager wince. The median effective property tax rate in Texas is around 1.6%, which sounds abstract until you realize that on a $600,000 house — which in Austin or Dallas barely gets you a three-bedroom with a decent school district — you're paying $9,600 a year. In some suburbs, it's closer to 2% or higher. That's $12,000 annually, and it's based on assessed value, which in hot markets means it keeps climbing.

In Illinois, the property tax situation is complicated and varies wildly by county, but in many Chicago suburbs, you're looking at effective rates between 1.8% and 2.5%. So yes, higher. But here's the thing: a comparable house in a comparable suburb outside Chicago might cost $500,000 instead of $600,000, because housing prices in Illinois haven't exploded the way they have in the no-income-tax migration destinations. That $500,000 house at 2% property tax costs you $10,000 a year. The $600,000 house in Texas at 1.6% costs you $9,600 a year. You're paying $400 more in property taxes but you also didn't need to come up with an extra $100,000 for the down payment, and your mortgage payment is proportionally smaller every single month.

When you're making $180,000 and paying 4.95% Illinois income tax, that's about $8,910 going to the state. If you moved to Texas and bought a comparable house, you'd save that $8,910 in income tax but potentially pay it right back — or more — in higher housing costs, property taxes on a more expensive home, and the reality that everything in a booming migration state costs more because demand is insane.

The SalaryHog calculator is useful here because it lets you model both scenarios with actual numbers — $180,000 in Chicago versus $180,000 in Austin, with real property tax inputs and cost-of-living adjustments — and see what you actually take home after all expenses, not just after state taxes. Sometimes the gap is huge. Sometimes it's a rounding error. Sometimes Illinois wins.

The Retirement Calculation Nobody Talks About

Illinois does something genuinely unusual: it doesn't tax retirement income. Not pension income, not Social Security, not distributions from 401(k)s or IRAs. You could have $200,000 a year coming from retirement accounts, and Illinois will take exactly zero dollars of it in state income tax.

If you're 28 and thinking about where to live, this probably sounds irrelevant. If you're 42 and maxing out retirement contributions and planning to stay in one place for the next thirty years, this is the kind of detail that completely changes the math. You're paying Illinois income tax now, yes, but you're building equity in a house that costs less than it would in Austin, you're contributing to retirement accounts that will eventually generate tax-free income in retirement, and you're betting that the total tax burden over your entire adult life — not just the next five years — is actually lower.

Florida also doesn't tax retirement income, because Florida doesn't tax any income, but Florida has gotten so expensive that the cost-of-living difference might offset the tax savings anyway. A retiree living in Illinois on $150,000 a year from retirement accounts pays zero state income tax. A retiree living in Florida on the same income also pays zero state income tax, but also pays 15% more for housing, significantly more for homeowners insurance (if they can even get it), and higher property taxes in many areas than they expected.

Texas, meanwhile, does not tax retirement income either, but also does not have a state income tax to beginove avoided in the first place, so the "benefit" is the same as it was during your working years — except your property taxes are still high, and they don't go away when you stop earning a salary.

The Illinois retirement tax exemption is one of those things that financial advisors know about and regular people don't, which means it doesn't show up in the viral Twitter threads about tax migration. But it's a real number. If you're going to spend twenty-five years in retirement drawing down $120,000 a year from your 401(k), that's $3 million in income that would be taxed at 4.95% in most states but is completely exempt in Illinois. That's $148,500 in state taxes you never pay. Suddenly the income taxes you paid during your working years look like a pretty reasonable trade.

The Chicago Salary Premium That Somehow Still Exists

Here's a weird one: Chicago still pays more for a lot of white-collar jobs than you'd expect, given that it's supposedly a "declining" Midwest city that everyone is fleeing. Tech salaries aren't San Francisco, but they're often 10-15% higher than Austin or Nashville when you're comparing the same role at the same company. Finance salaries are legitimately high because Chicago is still a major financial center. Law, consulting, healthcare administration — all of these pay at big-city rates, but you're living in a place where $200,000 still feels like $200,000, not like $140,000 after you adjust for costs.

If you're making $190,000 in Chicago and you move to Austin for the same job, you might get a pay cut to $175,000 because your company adjusts for cost of living. Except Austin's cost of living has now caught up to Chicago in a lot of categories, so you just took a pay cut and didn't actually save money. You saved on state income tax, sure — about $9,405 — but you're also making $15,000 less, so congratulations, you played yourself.

This doesn't happen in every case. Plenty of people move and keep their salary or even get a raise. But it happens enough that it's worth modeling. The SalaryHog calculator won't predict your specific salary negotiation, but it will show you what your take-home pay actually looks like at different income levels in different states, which at least gives you a baseline to argue from when your employer says "we're adjusting your comp for your new location."

The Real Reason This Migration Is Quiet

The high earners moving to Illinois aren't writing Medium posts about it. They're not posting "we did it!" photos on Instagram. There's no aspirational narrative around moving to the Midwest. Nobody's building a brand as an Illinois influencer. The people who move to Austin or Miami get to tell a story about optimizing their taxes, escaping blue states, living in the sun, joining a community of other strivers. The people who move to Illinois — or who stay in Illinois when everyone said they should leave — are just doing the math and making a decision that doesn't fit neatly into anyone's narrative.

And maybe that's the whole point. The story everyone tells about taxes is simple: high-tax states bad, no-income-tax states good. The reality is infinitely more complicated and depends entirely on your income, your housing budget, your family situation, your timeline, and what you actually value. For some people, the answer really is Texas or Florida, and they'll save a ton of money and be happier. For others — more than you'd think — the answer is a quiet three-bedroom in Oak Park with good schools, a 4.95% state income tax, and a retirement plan that involves paying zero state taxes on a $180,000 annual distribution thirty years from now.

The math doesn't care about the narrative. It just sits there, waiting for you to actually run the numbers instead of assuming you already know the answer.