What are the tax and legal implications of changing domicile from states like California and New York?

California and New York, among a few other states, are known as “sticky states” due to the additional challenges residents may face when leaving. 

The tax and legal implications of changing domicile from these states can be significant due to their stringent tax laws.

In general, it’s still possible to be a resident of Florida or South Dakota yet still be considered by another state (e.g., CA/NY) as a “taxable resident.”

It’s important, whenever changing your domicile, to start creating new ties with your new state. In addition, with sticky states in particular, it is also extremely important to break ties with your old state. 

For example, when changing your domicile from CA to FL, some such tactics would include:

• Filing a Declaration of Domicile in the county where you reside.
• Using a high-quality physical address instead of a P.O. Box.
• Documenting casual references to your residency, such as emails and texts.
• Being employed by a company based in Florida or recognized by your employer as a resident of Florida.
• Register as a voter in Florida.
• Secure a Florida driver's license.
• If you own property in Florida, ensure you pay the necessary property taxes.
• List a Florida address on all official documents.
• Employ your Florida address for income tax purposes.
• Register your vehicles in Florida.
• Update your passport with your Florida address.
• Relocate significant personal possessions, like art or jewelry, to Florida (or at least out of your old state).
• Apply for a homestead exemption if applicable.
• Inform your professional contacts (lawyers, accountants, financial institutions, insurance agents) of your new primary residence.
• Switch to a local primary healthcare provider in Florida.
• Withdraw from any non-Florida social clubs or memberships.
• Consider selling any out-of-state properties.
• Alert federal and state agencies, such as Social Security and Medicare, of your address change.
• For professionals, verify your qualifications to practice in Florida.
• Update your estate planning documents to reflect Florida law.
• Adjust insurance policies for any out-of-state properties to reflect non-resident status.
• Move your safe deposit box to a bank in Florida.
• Choose a local veterinarian in Florida for your pets.

In addition, the year of changing your domicile, you may need to file part-year resident tax returns in both your old and new states. For example, it’s a red flag to change domiciles on January 1st.

We also recommend you to read our guides:

How to leave New York residency [Guide + FAQ]

How to leave your California residency? [Guide + FAQ]