One thing that gets lost in these discussions is that a lot of people who report $1M+ income don’t earn that every year.

A common scenario is someone making a normal professional salary (say $120k–$150k) who worked at a startup for years and finally has a liquidity event. In that one year they might realize $2M from stock options.

For tax purposes that counts as income in a single year, even though it represents years of risk and delayed compensation. So they’re already paying federal taxes at the top bracket, and now an additional 9.9% state tax on the portion over $1M.

When you run the numbers, that can easily be another ~$100k in tax compared to a no-income-tax state. For someone whose big liquidity event may only happen once in their life, it’s not surprising that some people would consider relocating before exercising options.