Step-by-step · 3 min read
Moving states and state residency
Moving from a high-tax state can save a lot, but only once you have truly left. States look at where your life is centered, not just your new address, and can keep taxing equity earned while you lived there.
Residency audits are common for high earners who leave high-tax states. The best defense is a clean move and good records.
- Who it fits
- Anyone moving states, working remotely or splitting time between homes.
- Figures
- 2026 tax year
The key rule
Your domicile is your true, permanent home. Your old state can still tax income sourced to it, including part of RSUs and options earned while you worked there.
How it works
States look at many factors together, including:
- Where you own or rent your main home and where your family lives.
- Days spent in each state.
- Driver's license, voter registration and car registration.
- Where your doctors, accountant, gym and clubs are.
- Where your belongings and pets are.
- Where you work and where your business is.
6 steps
Pick a clean move date
Moving early in the year makes the part-year split simpler.
Move your life, not just your mail
New driver's license, voter registration, car registration, doctors, a home you live in and most of your belongings.
Cut ties with the old state
Sell or rent out the old home, change your address everywhere and spend fewer days there.
Track your days
Use a calendar or app to log where you are each day.
Understand equity sourcing
RSUs and options are generally split by the workdays between grant and vest spent in each state.
File part-year returns
In the year you move, you file in both states and allocate income.
Example
RSUs after a move
A four-year RSU grant vests after you have worked 3 years in California and 1 year in Washington. About 75% of that vest can still be taxed by California.
Common mistakes
- Remote work for an employer in a state like New York can keep your wages taxable there under its convenience rule.
- Keeping your old home "just in case" is one of the strongest signs you have not left.
Key dates
- Move date
- Start of part-year residency.
General education for TaxSquad clients, not advice for your situation. Rules and figures change. Talk to us before acting on this guide.