Which US States Still Tax You After Moving Abroad

Which States Have No Income Tax at All?

Nine US states impose no personal income tax whatsoever. If you leave for Portugal, Spain, Thailand, or anywhere else from one of these states, your state tax situation is resolved before you board the plane.

1. Alaska
2. Florida
3. Nevada
4. New Hampshire (fully no-income-tax since January 1, 2025, after the Interest & Dividends tax was phased out)
5. South Dakota
6. Tennessee (Hall Tax on interest and dividends fully phased out January 1, 2021)
7. Texas
8. Washington
9. Wyoming

If you already live in one of these nine, skip ahead to the sections on income types states can still tax and 4 USC §114 retirement protections. The rest of this guide is about the 41 states that do have income taxes, with particular focus on the 7 that make leaving hardest.

What Makes a State "Sticky" for Tax Purposes?

Two residency concepts determine whether your former state can still tax you: domicile and statutory residency. Understanding the difference is the first step to cutting free.

Domicile is your permanent legal home. It means the place you intend to return to. Most states consider your domicile unchanged until you affirmatively establish a new one somewhere else. Moving abroad, by itself, does not automatically change it.

Statutory residency is a mathematical test. The typical threshold is 183 or more days of physical presence in the state plus maintaining a "permanent place of abode." You can be classified as a statutory resident even if your domicile is officially elsewhere.

The term "sticky" is informal. Most US states with an income tax use domicile-based taxation. The states we call sticky combine three things: aggressive enforcement, high tax rates, and rules that make it difficult to prove departure. California's Franchise Tax Board, for example, has a documented track record of checking social media accounts and credit card statements when auditing former residents.

One point that catches people off guard: the burden of proof is almost always on you to prove you left. The state does not have to prove you stayed.

How Does California Tax Expats Who Move Abroad?

California charges the highest state income tax rate in the country and enforces residency rules more aggressively than any other state. If you leave California for another country, expect the Franchise Tax Board to scrutinize every detail of your departure.

California uses a "closest connections" test outlined in FTB Publication 1031. The factors include: driver's license, voter registration, bank accounts, property ownership, professional licenses, family location, and social ties. No single factor is dispositive, but the FTB weighs them collectively.

The 546-Day Safe Harbor

This is the rule most expat blogs reference, and most of them get a critical detail wrong. The 546-day safe harbor is available only for individuals who leave California under an employment-related contract for an uninterrupted 546+ consecutive days outside the state. During those 546 days, return visits to California cannot exceed 45 days in any single tax year.

Two conditions that disqualify you automatically: intangible income exceeding $200,000 in any tax year during the contract period, or the FTB determining that the principal purpose of your absence is to avoid California income tax. Your spouse or registered domestic partner is also considered nonresident while accompanying you under the same safe harbor.

The limitation nobody warns you about: self-employed expats, retirees, and digital nomads without employment contracts do not qualify. They must rely on the multi-factor closest-connections test instead, which has no bright-line rule and no guaranteed timeline.

California-Source Income After Departure

Even confirmed nonresidents still owe California tax on income sourced to the state:

• Services physically performed in CA (prorated: CA workdays divided by total workdays, multiplied by total income)
• Rent from California real property
• Capital gains on the sale of California real property
• Income from a California-based business, trade, or profession
• Equity compensation (RSUs, stock options): CA taxes the portion that vested during CA residency
• Independent contractor income, taxed based on where the client receives the benefit, not where the contractor works

That last point trips up remote workers constantly. If you leave California and go freelance in Lisbon but keep serving California-based clients, the FTB considers that California-source income.

How Does New York Tax Expats Living Abroad?

New York has two independent paths to taxing you, and failing either one means you're still on the hook. Add NYC's 3.876% surcharge on top of the 10.9% state rate, and a New Yorker moving abroad faces a combined top rate of nearly 14.8%.

Path 1, the domicile test: New York is your domicile until you demonstrate with "clear and convincing evidence" that you abandoned it and established a new one.

Path 2, statutory residency: Maintain a permanent place of abode in NY for substantially all of the year plus spend 184 or more days in NY, and you are a statutory resident regardless of where your domicile is. Any part of a day counts as a full day for this purpose.

Two Exceptions That Actually Work

Exception Group A (the 30-day rule): If domiciled in NY, you are NOT a resident if all three conditions hold: (1) no permanent place of abode in NY, (2) you maintained a permanent place of abode outside NY for the entire year, and (3) you spent 30 days or fewer in NY.

Exception Group B (the 548-day foreign country rule): If domiciled in NY, you are NOT a resident if: (1) you spent at least 450 days in a foreign country during any 548 consecutive day period, and (2) you, your spouse, and minor children spent 90 days or fewer in NY during that 548-day period. A proportional formula applies for tax years that overlap with the 548-day window.

NYC residents face the additional 3.876% city income tax on top of state rates, using the same residency definitions. A move from Manhattan to Portugal or Spain means potentially escaping both layers at once.

What Are New Jersey's Tax Rules for Expats?

New Jersey's top rate of 10.75% and a 30-day bright-line test make it one of the more straightforward sticky states to escape, but the convenience of the employer rule creates an unusual trap for remote workers.

NJ considers you a nonresident if any of these apply:

1. No "permanent" home in NJ, you maintained one outside NJ, and you spent 30 days or fewer in NJ during the year.
2. NJ was not your domicile and you spent 183 days or fewer in NJ.
3. NJ was not your domicile, you spent 183+ days in NJ, but you had no permanent home in the state.

A warning for property owners: if you maintain a home in NJ (even a rented-out property you still own) and spend more than 30 days there in a year, NJ may still classify you as a resident. Part-year residents who earned income as a NJ resident AND had NJ-source income as a nonresident must file both a part-year resident return and a nonresident return.

The Convenience of the Employer Rule

Enacted on July 21, 2023 under P.L.2023, c.125, NJ can now tax nonresident employees who work remotely from outside the state for a NJ-based employer, if the remote work is for the employee's convenience rather than the employer's necessity. The rule applies retroactively to January 1, 2023.

Currently it targets only residents of states with similar rules: Delaware, Nebraska, and New York. It does not apply to Pennsylvania residents (reciprocal agreement).

Will Virginia Still Tax You After You Move Abroad?

Virginia's top rate of 5.75% is the lowest among the sticky states, but its domicile rules are among the most explicit. The Virginia Department of Taxation's own website contains language that should concern every Virginia-based expat.

Virginia defines two types of residents: actual residents (183+ non-consecutive days in VA with a place of abode) and domiciliary residents (those whose legal domicile is Virginia, regardless of physical presence).

Read what Virginia's tax authority actually says:

"A resident of Virginia who accepts employment in another country is a domiciliary resident, unless appropriate steps are taken to abandon Virginia as the state of domicile."

Virginia Department of Taxation, Residency Status

"The fact that a person has been absent from Virginia, whether in the foreign service of the United States or in the exercise of private enterprise, does not in any way cancel out their Virginia citizenship or legal domicile. As a matter of law, he or she is as much liable to income taxation in Virginia as residents who are physically present in Virginia throughout the year."

Virginia Department of Taxation, Residency Status

That second quote is worth reading twice. Moving abroad, even for years, does not end Virginia domicile. You must take affirmative steps to establish domicile elsewhere. And if you return within 6 months, Virginia considers that evidence you never intended to leave.

The Virginia FEIE Silver Lining

Virginia does conform to IRC Section 911. The state's official website confirms it: "Those persons qualifying to exclude certain foreign income from their federal returns in accordance with Section 911 of the Internal Revenue Code will receive the same exclusion on their Virginia returns."

Multiple expat tax blogs incorrectly claim Virginia does not recognize the FEIE. The Virginia Department of Taxation's own published guidance says otherwise. At 5.75% with full FEIE conformity, Virginia's actual tax burden is much lower than California or New York for most expats.

The catch: Virginia does not allow credits for foreign taxes paid (except on foreign-source pension income). If you earn above the FEIE exclusion amount, you could face double taxation with no Virginia-side relief on that excess.

How Do New Mexico and South Carolina Handle Expat Tax Residency?

Neither state makes the headlines like California or New York, but both use broad domicile interpretations that catch expats who leave without formally cutting ties. New Mexico in particular has documented rulings showing just how far the state will reach.

New Mexico (Top Rate: 5.9%)

New Mexico uses domicile-based taxation with a broad interpretation and a 185-day physical presence threshold (per NMSA Section 7-2-2). A Taxation & Revenue ruling (21-08, Donald K Pauly) illustrates the state's approach. The taxpayer's spouse worked in Virginia for years but retained NM voter registration, a driver's license, home ownership, and a mailing address in New Mexico. The state ruled she remained an NM resident and owed NM tax on all income.

The lesson: if you keep NM ties (home, voter registration, driver's license), New Mexico will likely still consider you a resident even if you live in Lisbon or Bangkok.

South Carolina (Top Rate: 6%, Temporarily Reduced Through June 2026)

SC uses a three-prong domicile test. You are a South Carolina resident when: (1) your intention is to maintain SC as your permanent home, AND (2) SC is the center of your financial, social, and family life, AND (3) when away, SC is the place you intend to return. Nonresidents must have a permanent home outside SC for the entire year and meet none of the above criteria.

SC's Department of Revenue provides a detailed Domicile Guide PDF for determining residency status. The graduated rate was reduced from previous years under H.4880.

How Does Connecticut's Convenience Rule Affect Expats?

Connecticut's stickiness comes from a specific mechanism rather than aggressive domicile enforcement. The convenience of the employer rule (Conn. Gen. Stat. §12-711) targets remote W-2 employees, not all departing residents.

If you work remotely from outside CT for a CT-based employer, and that remote arrangement is for your convenience rather than the employer's necessity, Connecticut can tax that income as if you worked in the state. The top rate is 6.99%.

At least seven states currently impose some form of convenience rule: Alabama, Connecticut, Delaware, Nebraska, New Jersey, New York, and Pennsylvania. CT's version is reciprocal, meaning CT only applies it to residents of states that impose similar rules. If you move to a state (or country) without a convenience rule, CT generally does not apply theirs.

A new development effective July 1, 2025: Connecticut established a credit for taxpayers who successfully challenge the application of another state's convenience rule. This matters for the multi-state remote work situation but has limited relevance for someone moving abroad entirely.

The distinction from other sticky states matters. CT's challenge is the convenience rule targeting remote workers, not the aggressive domicile enforcement California, New York, or Virginia practice. If you sever CT domicile properly, the remaining risk is limited to convenience-rule taxation on W-2 income from CT employers.

How Do the 7 Sticky States Compare?

This table puts all seven states side by side across the factors that matter most: tax rate, residency test type, departure rules, and whether the FEIE actually reduces your state tax bill.

What Income Can States Still Tax After You Leave?

Establishing nonresidency does not end state taxation on all income. States retain the right to tax income sourced within their borders, even when you live on the other side of the world.

These categories apply broadly, though California enforces them most aggressively:

1. Deferred compensation, stock options, and RSUs. California and other states can tax the portion that vested during residency, even if you exercise or sell after departure. This is one of the most common audit triggers for tech workers leaving the Bay Area.
2. Rental income from in-state property. Nonresidents owe state income tax on rental income from real property within the state. No exceptions.
3. Business income sourced to the state. Income from an in-state business, trade, or profession remains taxable regardless of where you live.
4. Independent contractor income (California-specific). CA taxes based on where the client receives the benefit, not where the contractor performs work. Serving California clients from abroad means California-source income.
5. Services performed during visits. Any days physically worked in the state generate taxable income, prorated by the workday formula: state workdays divided by total workdays, times total income.
6. Capital gains on in-state real estate. Selling property in the state generates state-sourced capital gains, regardless of your residency at time of sale.

Retirement income is the major exception. Federal law protects it, and that protection is worth understanding in detail.

How Does 4 USC §114 Protect Retirement Income from State Tax?

Congress solved the retirement income problem in 1996. The Pension Income Tax Limits Act (4 USC §114) prohibits any state from taxing retirement income of an individual who is not a resident or domiciliary of that state. All 50 states must comply.

The statute is direct: "No State may impose an income tax on any retirement income of an individual who is not a resident or domiciliary of such State."

What PITLA Protects

• 401(k) plans (IRC §401(a) qualified trusts)
• Traditional and Roth IRAs (IRC §7701(a)(37))
• SEP-IRAs (IRC §408(k))
• 403(a) annuity plans
• 403(b) annuity contracts (teacher and nonprofit)
• 457 deferred compensation plans (government and nonprofit)
• Government pension plans (IRC §414(d))
• Military retired and retainer pay (10 USC Chapter 71)
• Any written plan providing substantially equal periodic payments for life, life expectancy, or periods of 10+ years

What It Does Not Protect

Lump-sum distributions (unless part of substantially equal periodic payments), non-qualified deferred compensation outside the listed categories, stock options and RSUs (employment compensation, not retirement income), and any rental, business, or non-retirement income.

The gate that everything depends on: this protection only applies if you are not a resident or domiciliary of the state. If California or New York still considers you a resident, 4 USC §114 offers zero protection. For retirees moving to Portugal or other destinations, establishing nonresidency is the prerequisite that unlocks the federal shield.

Before 1996, California was taxing pension income of retirees who moved to no-tax states like Florida and Nevada. Congress stepped in with PITLA (P.L. 104-95), later expanded in 2006 (P.L. 109-264) to cover retired partners.

Why Doesn't the FEIE Reduce Your State Tax Bill?

The Foreign Earned Income Exclusion ($132,900 for tax year 2026, per IRS Revenue Procedure 2025-32) applies to federal income tax only. California and New York both require you to add the excluded amount back on your state return. This is the most expensive mistake we see expats make.

California does not recognize the FEIE. The state uses federal adjusted gross income as a starting point, then applies California-specific modifications. A California-resident expat earning $130,000 abroad could owe $0 to the IRS but still owe California tax on the full $130,000.

New York does not allow the FEIE for state purposes either. The regulation is explicit: 20 NYCRR §151.7 requires resident individuals to file NY returns including foreign earned income regardless of the federal Section 911 exclusion.

Some expat tax websites claim New York conforms to the federal FEIE. The actual NY regulation says otherwise. We confirmed this against the Cornell Law Institute's published text of 20 NYCRR 151.7.

Virginia does conform to IRC Section 911. The FEIE exclusion carries through to your VA return. This is confirmed on the Virginia Department of Taxation's website.

Some states allow a credit for taxes paid to a foreign country, but not all — and the mechanics vary significantly. If you're paying Portuguese income tax, you may be able to claim a California credit for it. But you will need professional help navigating the dual state-plus-foreign credit interaction.

Our FEIE vs FTC Decision Matrix covers when each federal strategy works better. Factor in your state tax situation too, because a state that ignores the FEIE may change which federal election makes sense.

How Do You Properly Sever State Tax Residency?

Every sticky state requires you to do more than leave. You must affirmatively establish a new domicile and document every step. The burden of proof is on you, and state tax authorities will test that proof.

For the full financial picture of moving abroad, state tax severance is one of many costs to factor in. Professional help for a complex state departure typically runs $2,000-$5,000, and that investment can save tens of thousands in contested state tax bills.

Does California Have an Exit Tax?

No. Despite the headlines, California does not currently have an exit tax. But two proposals signal the direction Sacramento is thinking, and billionaires are already leaving.

Assembly Bill 259 proposed a California wealth tax with exit tax provisions. It failed. AB 259 died in committee in January 2024.

The more recent proposal is the 2026 Billionaire Tax Act (Initiative 25-0024), filed as a ballot initiative on November 26, 2025. It proposes a one-time 5% excise tax on individuals with net worth over $1 billion, with a phase-out between $1B and $1.1B.

The initiative contains a retroactive provision: tax liability would be based on residency as of January 1, 2026, despite voters not casting ballots until November 2026. As of March 2026, the initiative must gather 874,641 signatures within 180 days to qualify for the November ballot. It has not been enacted and is not yet qualified for the ballot.

The behavioral response is already visible. Multiple high-profile billionaire departures from California have been widely reported, reinforcing concerns about capital flight that supporters dismiss as overstated.

For regular expats, this is a wealth tax targeting billionaires, not an income tax or exit tax affecting Americans moving abroad at normal income levels. But if you are considering a move abroad from California, the legislative direction reinforces the case for clean severance. The state is looking for revenue, and aggressive enforcement of existing residency rules is far more likely to affect you than any billionaire exit tax.

For those considering the UAE as a no-income-tax destination or the Spain Digital Nomad Visa for remote work, state tax planning should happen before the move, not after.

Frequently Asked Questions

Sources

1. California Franchise Tax Board — Part-Year/Nonresident Residency Status. ftb.ca.gov
2. New York Department of Taxation and Finance — Definitions of Residency. tax.ny.gov
3. 4 USC §114 — Restriction on State Taxation of Retirement Income. law.cornell.edu
4. Virginia Department of Taxation — Residency Status. tax.virginia.gov
5. New Jersey Division of Taxation — NJ Income Tax Resident/Nonresident. nj.gov
6. New Jersey Division of Taxation — Convenience of the Employer Rule. nj.gov
7. Connecticut Department of Revenue Services — Tax Information for Nonresidents. portal.ct.gov
8. IRS — Foreign Earned Income Exclusion. irs.gov
9. PwC — California 2026 Billionaire Tax Act Analysis. pwc.com
10. California Legislative Analyst's Office — Ballot Analysis Initiative 2025-024. lao.ca.gov
11. New Mexico Taxation & Revenue — Donald K Pauly Ruling 21-08. tax.newmexico.gov
12. South Carolina Department of Revenue — New SC Filing. dor.sc.gov
13. 20 NYCRR §151.7 — NY Regulation on Foreign Income Exclusion. law.cornell.edu