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The number of U.S. households reporting an annual income of $1 million or more has more than doubled in the past decade, with uneven distribution heavily favoring coastal and Mountain West states. According to an analysis of 2022 IRS data, approximately 800,000 taxpayers reached this seven-figure income threshold, a significant increase from 470,000 in 2013. This concentration of wealth is a primary driver of luxury real estate markets, creating distinct affordability challenges in high-demand regions.
The Northeast corridor, often associated with "old money," dominates the list for the highest share of million-dollar earners. Adjusted Gross Income (AGI) is the measure used by the IRS, which includes wages, salaries, interest, and other earnings, but notably excludes assets like home equity or investment portfolios. Connecticut leads the nation with nearly 90 seven-figure tax returns per 10,000 filers. Massachusetts (76.43) and New York (71.44) follow closely. This financial dominance directly fuels steady demand for high-end housing. As ok.com® senior economic research analyst Hannah Jones notes, "Strong financial and tech sectors feed upper-tier demand, keeping prices high in prime city and suburban markets like Manhattan, Boston, and Fairfield County."
| State | Million-Dollar Returns per 10,000 Filers | Total Returns (Approx.) |
|---|---|---|
| Connecticut | 89.51 | 16,320 |
| Massachusetts | 76.43 | 27,270 |
| New York | 71.44 | 69,780 |
| Florida | 69.78 | 77,670 |
| California | 69.72 | 128,900 |
| Source: IRS Data, 2022 |
While established states have the highest concentrations, the most dramatic growth is happening westward. Montana saw a 254% increase in million-dollar earners since 2013, the highest growth rate of any state, followed by Idaho at 209%. This trend is largely driven by migration. Based on our experience assessment, factors like the absence of a state income tax, lifestyle amenities, and the flexibility of remote work have made these states increasingly attractive to wealthy buyers. This influx has, in turn, caused sharp increases in home prices, often outpacing local income levels.
The migration of high earners has a profound effect on housing affordability. Montana, for example, was identified as having the nation's largest affordability gap. In July, the typical household income was $72,066, nearly $100,000 less than the recommended income needed to comfortably afford a median-priced home of $649,900. Hannah Jones explains, "Limited supply in amenity-rich areas keeps prices elevated and affordability strained for locals. The result is a sustained luxury market alongside displacement pressures for middle-income households." This pattern is evident in other high-growth areas, creating a two-tiered market.
For prospective buyers or investors, understanding these demographic shifts is crucial. The concentration of wealth continues to shape real estate dynamics, reinforcing high prices in traditional economic hubs while creating new hotspots in regions offering tax advantages and lifestyle benefits.
