Moving for Work: The Complete Tax Guide

You just got a job offer:

Option A: Stay in California, $120,000 salary Option B: Move to Texas, $120,000 salary

Same salary. Different states. How much difference?

After-tax income:

• California: ~$84,000/year
• Texas: ~$90,000/year

Difference: $6,000/year ($60,000 over 10 years!)

And that's just state income tax. We haven't even talked about cost of living, property taxes, or sales taxes.

This guide covers everything you need to know about the tax implications of moving for work.

Compare your take-home in different states →

Should You Move for Work? The Tax Math

The Basic Calculation

Step 1: Calculate after-tax income in each location

Use our calculator to compare:

• Current state + current salary
• New state + new salary

Step 2: Factor in cost of living

$120K in San Francisco ≠ $120K in Nashville

Adjust for:

• Housing costs (rent or mortgage)
• Transportation (car vs transit)
• Food and groceries
• Childcare
• Utilities

Step 3: Calculate total financial impact

Formula:

Net benefit = (New take-home - Current take-home) + (Current COL - New COL) - Moving costs

Real Example: SF to Austin

Current (San Francisco):

• Salary: $150,000
• CA state tax: ~$8,500
• SF city tax: $0
• Federal tax: ~$23,000
• Take-home: ~$118,500
• Rent (1BR): $3,500/month = $42,000/year
• After housing: $76,500

New (Austin):

• Salary: $140,000 (10% pay cut, common for LCOL move)
• TX state tax: $0
• Austin city tax: $0
• Federal tax: ~$20,000
• Take-home: ~$120,000
• Rent (1BR): $2,000/month = $24,000/year
• After housing: $96,000

Net benefit: $19,500/year even with a $10K pay cut!

Over 5 years: $97,500 extra wealth

The Break-Even Formula

When a pay cut still makes sense:

You can accept a lower salary if:

(New salary × (1 - New tax rate) + COL savings) > (Old salary × (1 - Old tax rate))

Example:

• Current: $100K in NY (35% total tax) = $65K take-home
• Offer: $85K in FL (22% total tax) = $66.3K take-home
• 15% pay cut, but $1,300/year MORE take-home (before COL savings)

Rules of thumb:

Move Type	Acceptable Pay Cut
High-tax to no-tax state	Up to 15%
High-COL to low-COL	Up to 20%
Both	Up to 25-30%

Calculate your break-even salary →

Tax Implications by Move Type

Move Type 1: High-Tax to No-Tax State

Best scenarios:

• CA/NY/NJ → TX/FL/TN/NV/WA

Tax savings (on $100K salary):

• California → Texas: Save ~$5,000-6,000/year
• New York → Florida: Save ~$6,000-7,000/year
• New Jersey → Tennessee: Save ~$5,500-6,500/year

On $150K salary:

• California → Texas: Save ~$9,000-10,000/year
• New York → Florida: Save ~$10,000-11,000/year

On $250K salary:

• California → Texas: Save ~$20,000-25,000/year
• New York (NYC) → Florida: Save ~$25,000-30,000/year

Additional considerations:

• Property tax (TX and some no-tax states have high property tax)
• Sales tax (TN has highest sales tax at 9.55%)
• Overall tax burden, not just income tax

Move Type 2: No-Tax to High-Tax State

Worst scenarios:

• TX/FL/TN → CA/NY/NJ

Tax cost (on $100K salary):

• Texas → California: Costs ~$5,000-6,000/year
• Florida → New York: Costs ~$6,000-7,000/year

When it might make sense:

• Significant salary increase (30%+)
• Career advancement opportunity
• Temporary (1-3 years for experience)

Example:

• Current: $100K in Texas
• Offer: $140K in California
• TX take-home: ~$75,000
• CA take-home: ~$98,000 (after $8,000 state tax)
• Net gain: $23,000/year

Worth it for career growth? Maybe. Worth it long-term? Factor in CA's high COL too.

Move Type 3: Mid-Tax to Mid-Tax State

Examples:

• Virginia → Colorado
• Georgia → North Carolina
• Arizona → Utah

Tax impact: Usually minimal (±$1,000-2,000/year)

Focus on:

• Cost of living
• Career opportunities
• Quality of life
• Property taxes
• Sales taxes

Move Type 4: International Relocation

Moving abroad for work:

US citizens:

• Still owe US federal tax on worldwide income
• Foreign Earned Income Exclusion: $120,000 (2025)
• Foreign Tax Credit for taxes paid to other country
• May need to file in both countries

Example (US → UK):

• Salary: $150,000
• UK income tax: ~$50,000 (33%)
• Foreign Tax Credit: ~$25,000
• US tax after credit: ~$5,000
• Effective rate: ~37% (higher than US alone)

Example (US → UAE):

• Salary: $150,000
• UAE income tax: $0 (no income tax)
• US tax: ~$23,000 (after $120K exclusion)
• Effective rate: ~15% (lower than US high-tax states!)

Moving TO the US:

• Will pay US federal + state tax on all income
• May be cheaper than home country (Canada, Nordics)
• May be more expensive (UAE, Singapore, Hong Kong)

Timing Your Move for Maximum Tax Savings

The Part-Year Resident Strategy

You file two state returns the year you move:

1. Part-year resident return in old state (Jan 1 - move date)
2. Part-year resident return in new state (move date - Dec 31)

Each state only taxes income earned while you were a resident.

Example:

Move on July 1:

• Annual salary: $100,000
• Old state (CA): $50,000 earned Jan-June
• New state (TX): $50,000 earned July-Dec
• CA tax: ~$2,500 (on $50K only)
• TX tax: $0
• Total state tax: $2,500 (vs $5,000 if stayed in CA all year)

Best Time to Move: Timing Strategies

Strategy 1: Move in January

If you're going to a LOW-tax state:

• Move as early as possible (January 1st)
• Maximize days in low-tax state
• Pay minimal tax to old state

Example:

• Leave CA on January 5
• Work in TX rest of year
• CA tax: ~$250 (5 days of income)
• TX tax: $0
• Maximize savings

Strategy 2: Move in December

If you're going to a HIGH-tax state:

• Delay move as long as possible (late December)
• Maximize days in current state
• Minimize income in high-tax state

Example:

• Moving from TX to CA
• Delay until December 20
• CA tax: Only on 11 days of income ($600)
• Minimize tax cost

Strategy 3: Time Around Bonuses/Windfall

Receive bonus in low-tax state:

Bad timing:

• Work in TX (no tax)
• Move to CA in November
• Receive $50K bonus in December while CA resident
• CA tax on bonus: $6,650

Good timing:

• Work in TX
• Receive $50K bonus in November while TX resident
• Move to CA in December
• TX tax on bonus: $0
• Save $6,650

Stock vesting/sale:

• Establish residency in low-tax state BEFORE stock vests or is sold
• Can save 10-13% on large amounts

Business sale:

• Selling business for $5M?
• Move to WY/TX/FL first
• Save $500K-650K in state taxes

Establishing Residency: The 183-Day Rule

Most states use 183 days (6 months) to determine residency.

If you spend 183+ days in a state:

• You're a resident
• Pay tax on ALL income (not just income earned in that state)

Domicile vs Residency:

Domicile: Your permanent home (intent to stay indefinitely) Residency: Physical presence (183+ days)

You can only have ONE domicile, but could be a resident of multiple states if you move around.

How to establish domicile in new state:

Day 1-30:

• Get apartment/house (lease or purchase)
• Get driver's license (most states require within 30-90 days)
• Register to vote
• Register vehicle

Day 30-183:

• Open local bank accounts
• Get local doctors, dentists
• Join local organizations
• Use local address for EVERYTHING
• Spend 183+ days in new state

Day 183+:

• Keep detailed records of days in each state
• Save credit card statements (show location)
• Keep calendar of travel

Cut ties with old state:

• Change address on all accounts
• Close or change address on old bank accounts
• Resign from clubs/organizations
• Sell home or rent it out (don't keep as vacation home)
• File final resident return showing move

States that audit moves aggressively:

• California: Audits high earners ($200K+) who move to NV, TX, WA, FL
• New York: Audits NYC-area moves to FL, NJ
• New Jersey: Audits PA, FL moves

What they look for:

• GPS location data (phone, car, credit cards)
• Spouse/kids still in old state
• Property ownership in old state
• Business ties to old state
• Social media posts showing location

Moving Expenses: What's Deductible?

Bad News: Most Moving Expenses Are NOT Deductible

Before 2018:

• Moving expenses were deductible for job relocations

After 2018 tax law changes:

• Deduction eliminated for most taxpayers
• Only active duty military can deduct moving expenses

What this means:

• You pay moving costs with after-tax dollars
• Moving truck: Not deductible
• Airfare: Not deductible
• Temporary lodging: Not deductible
• Storage: Not deductible

Exception: Active Duty Military

If you're in the military and move under orders:

• Deduct unreimbursed moving expenses
• Use Form 3903
• Includes transportation, lodging, storage

Workaround: Negotiate Relocation Package

Instead of tax deduction, negotiate with employer:

Ask for:

• Relocation bonus (taxable, but you get cash)
• Covered moving expenses (company pays directly)
• Temporary housing allowance
• Travel reimbursement
• Home sale assistance

Typical relocation packages:

• Entry level: $2,000-5,000
• Mid-level: $5,000-15,000
• Senior level: $15,000-40,000+
• Executive: $50,000-100,000+

Tax treatment:

• Employer-paid moving expenses: Taxable income to you (but you don't pay out of pocket)
• Relocation bonus: Taxable income

Example:

• Moving costs: $8,000
• Company pays directly: Shows as $8,000 income, you pay ~$2,000 tax
• Net cost to you: $2,000 (vs $8,000 if you paid yourself)

State-Specific Relocation Strategies

Moving TO These States (Winners)

1. Texas

• No income tax ✓
• No capital gains tax ✓
• Growing job market (Austin, Dallas, Houston) ✓
• Moderate COL (outside Austin) ✓
• BUT: High property tax (1.60%)

Who should move here:

• Tech workers (Austin)
• Oil & gas (Houston)
• Finance (Dallas)
• Remote workers with W-2 income

2. Florida

• No income tax ✓
• No estate tax ✓
• Retired-friendly (no tax on Social Security, pensions) ✓
• Good weather ✓
• BUT: High insurance costs, hurricane risk

Who should move here:

• Retirees
• Remote workers
• Finance professionals (Miami)
• Anyone with investment income

3. Tennessee

• No income tax ✓
• Low COL ✓
• Nashville booming ✓
• BUT: Highest sales tax (9.55%)

Who should move here:

• Music industry
• Healthcare (Nashville is major hub)
• Remote workers
• Middle-income earners

4. Washington

• No income tax (except 7% on capital gains over $250K) ✓
• Seattle tech scene ✓
• BUT: High sales tax, high COL (Seattle)

Who should move here:

• Tech workers (Amazon, Microsoft, etc.)
• W-2 employees (no capital gains)
• High earners

5. Nevada

• No income tax ✓
• No corporate tax ✓
• Las Vegas, Reno growing ✓
• BUT: Limited job market outside Vegas

Who should move here:

• Remote workers
• Entrepreneurs (business-friendly)
• Gaming/entertainment industry

Compare all 50 states →

Moving FROM These States (Tax Escape)

1. California

• 13.3% top income tax (highest in nation)
• High capital gains tax (same as income)
• High cost of living

Who leaves:

• High earners ($200K+)
• Retirees
• Tech workers going remote
• Popular destinations: TX, NV, WA, FL

2. New York

• 10.9% state tax
• NYC adds 3.876%
• High property tax
• Very high COL

Who leaves:

• Finance professionals (to FL)
• Retirees (to FL, NC)
• Remote workers
• Popular destinations: FL, TX, NC

3. New Jersey

• 10.75% top rate
• Highest property tax (2.13%)
• High COL

Who leaves:

• Retirees
• High earners
• Popular destinations: PA, FL, NC

States with Special Considerations

Pennsylvania:

• Low income tax (3.07% flat) ✓
• High property tax in some areas ✗
• "Convenience rule" for non-residents working for PA employers ✗
• Reciprocal agreements with 6 states ✓

New Hampshire:

• No earned income tax ✓
• But 2nd highest property tax (2.05%) ✗
• No sales tax ✓
• Tax on dividends/interest (being phased out) ✗

Illinois:

• 4.95% flat income tax (moderate)
• But high property tax (2.07%) ✗
• High Chicago sales tax (10.25%) ✗
• Fiscal issues (high debt) ✗

Your Relocation Tax Checklist

30 Days Before Move

Research:

• Calculate take-home in new state (use our calculator)
• Research property tax, sales tax, local taxes
• Factor in cost of living differences
• Determine if move makes financial sense

Employer:

• Negotiate relocation package
• Confirm salary and benefits
• Verify remote work policy if applicable
• Get offer in writing

Documents:

• Gather tax returns from last 3 years
• Collect financial documents (for residency proof)
• Make copies of important records

Week of Move

Old State:

• File change of address with USPS
• Notify bank, credit cards of address change
• Close or update accounts (utilities, memberships)
• Get copies of property documents if selling/leaving home

New State Setup:

• Secure housing (buy or lease)
• Set up utilities in new name
• Register to vote in new state
• Apply for driver's license (check state timeline)

First 30 Days After Move

Required:

• Get new state driver's license (usually 30-90 days)
• Register vehicle in new state
• Update voter registration
• Open local bank account

Recommended:

• Find local doctors, dentists
• Join local gym, organizations
• Update address on all financial accounts
• Update address with IRS (Form 8822)
• Update address with Social Security Administration

Tax Filing Year

Track:

• Keep calendar of days in each state
• Save credit card statements showing location
• Keep receipts from new state (proves presence)
• Document date of move

File:

• Part-year resident return in old state
• Part-year resident return in new state
• Federal return (Form 1040)
• Allocate income correctly to each state

Common mistakes:

• Forgetting to file in old state
• Not allocating income correctly
• Claiming residency in both states
• Not establishing proper domicile

Special Situations

Both Spouses Work

Challenge: Spouses work in different states

Example:

• Spouse A works in NJ (lives in NJ)
• Spouse B works in NYC (commutes from NJ)

Tax filing:

• Both are NJ residents
• Spouse A: NJ tax on all income
• Spouse B: NY tax on work income, NJ tax on all income
• Spouse B gets credit in NJ for taxes paid to NY

Moving strategy:

• Coordinate move dates
• Consider one spouse going first
• Plan for dual filing complexity

Moving Mid-Year with Bonus

Example:

• Live in CA until June
• Move to TX in July
• Receive $30K bonus in December

Questions:

• Which state earned the bonus?
• Answer: The state where you performed the work

If bonus is for work done:

• Entire year: Allocate by days worked (50% CA, 50% TX)
• First half: 100% to CA
• Second half: 100% to TX

Strategy:

• Ask employer to defer bonus until after move
• Or accelerate bonus before move (if moving TO high-tax state)

Selling Your Home

Capital gains tax:

• $250K exclusion (single) or $500K (married) if:
  • Owned home 2+ years
  • Lived in home 2 of last 5 years
• Exclusion is federal, most states follow

State tax considerations:

• Some states tax capital gains on home sales
• CA: Taxes capital gains over exclusion at normal rates
• TX/FL: No capital gains tax

Strategy:

• If selling home for large gain, establish residency in no-capital-gains-tax state first
• But must meet 2-of-5-years rule

Stock Options/RSUs Vesting

Multi-state sourcing:

• Stock vesting may be taxed in multiple states
• Based on where you worked during vesting period

Example:

• Granted RSUs in CA in 2021 (4-year vest)
• Moved to TX in 2023
• RSUs vest in 2025

Tax treatment:

• 50% of RSUs (2021-2023) sourced to CA
• 50% of RSUs (2023-2025) sourced to TX
• CA can still tax their portion

Strategy:

• If possible, negotiate accelerated vesting before move to low-tax state
• Or delay vesting until after establishing residency in low-tax state

Conclusion

Key takeaways:

✅ Tax savings are real: Moving from high-tax to no-tax state saves $5,000-25,000+/year depending on income

✅ Consider total picture: Income tax + property tax + sales tax + cost of living

✅ Timing matters: Move early in year to low-tax state, late in year to high-tax state

✅ Establish residency properly: 183+ days, driver's license, voter registration, intent to stay

✅ Watch for bonuses/windfalls: Time these to occur in low-tax state if possible

✅ Part-year filing: File in both states, allocate income correctly

✅ Moving expenses: Not deductible for most people, negotiate relocation package instead

✅ Best states to move to: TX, FL, TN, WA, NV (no income tax)

✅ Audit risk: CA and NY aggressively audit high earners who relocate

Bottom line:

A strategic move can save $100,000-500,000+ over a career. But you have to:

1. Do the math (use our calculator)
2. Time it right (bonuses, calendar year)
3. Establish residency properly (avoid audits)
4. Factor in total costs (not just taxes)

Next step: Compare your take-home in your current state vs target states to see the exact savings for your salary.

Pro tip: If you're earning $150K+ and considering relocation for tax reasons, invest $500-1,000 in a consultation with a multi-state tax CPA. They can help you:

• Time the move optimally
• Allocate income correctly
• Establish residency properly
• Document everything for audit protection

The savings will pay for itself many times over.

Calculate your savings from relocating →