Local Income Taxes and County-Level Migration: New Evidence From Indiana and Maryland

This paper documents the growing significance of local income taxes in US states that authorize them. Using new tax data from Indiana and Maryland, county migration statistics, and a quasi-experimental design, it analyzes how local income tax changes affect migration. The findings show that large tax increases reduce outmigration in the short term but also discourage inbound migration, though the latter effect is statistically significant only for Indiana. The study contributes to the literature on state and local tax policy and migration and outlines directions for future research on the broader effects of local income taxation.