Senior Tax Breaks on the Move—but Are Seniors Actually Moving?

Every state in the United States with an income tax offers some kind of tax break to its older citizens. These breaks are often sizable, resulting in an elderly household owing substantially less in income taxes than a non-elderly household with the same income. In this brief, author Karen Smith Conway examines these state income tax breaks for the elderly, describing how they work, their distributional and revenue effects, and whether these policies affect migration. She reports that existing state income tax breaks for the elderly result in non-trivial reductions in state revenue and offer little relief to the most vulnerable elderly. Data on interstate migration yield little evidence that these tax breaks pay for themselves by inducing the elderly to remain in or move to the state. Proposed additional tax breaks would primarily benefit high-income elderly households, while the existing breaks primarily benefit middle- and high-income elderly households