Published by Joe Webster
Last updated Dec, 26 2025
In California, there is no universal "exit tax" applied to all residents moving out of the state. However, individuals with a tax year valuation of assets exceeding $30 million (or $15 million if filing separately) may face what's colloquially known as an "Exit Charge." This charge is specific to high-net-worth individuals and does not affect those with assets below these thresholds when relocating to different parts of the country.
The concept of an "exit tax" or "departure tax" when moving out of California is a topic of concern for many residents contemplating relocation. While the state does not impose a standard exit tax on all departing residents, individuals with significant assets may encounter specific tax considerations. Specifically, for those with a fee year valuation greater than $30 million, or $15 million for spouses filing separately, an Exit Charge may apply. This measure aims to duty the unrealized gain on assets for high-net-worth individuals, making it a critical factor for a select group planning to move out of California.
Impact on State Taxes When You Leave California
Relocating from California has immediate tax ramifications, starting with state taxes. The state has high charges, with income bracket-based State Income rates from 1% to 13.3%. After leaving, you may not be exempt from state taxes.
Depending on your stay, you may be a toll resident in different states. California taxes residents who stay longer than six months. You must still pay state taxes if you have significant property or income in California. Thus, these charge responsibilities must be considered while arranging your move and your relocation services informed.
How Leaving California Affects Your Federal Taxes?
Federal fees can change when you leave California. IRS taxes residents' global income regardless of state. If you permanently move or live in another state while temporarily in California, you'll only pay federal charges on California income. Nevada may attract a tech executive to dodge wage taxes.
California residency affects federal fee bills. Every day counts for high-earners since these amounts add up. Thus, a reputed moving and relocation business is necessary for a smooth move and accurate records. After moving, recording the timing might reduce federal fees. Impost consultants can ease this process.
Relocating: Change in Property Rates
When leaving sunny California, property taxes matter. California has some of the highest property charges. Even after relocating out of state, these fees affect property owners. Moving companies can help with the move, but the property owner must handle the charge payment transfer.
Your property charge duties may alter once the taxing authority moves from California to your new state. Your property fee cost might drop significantly in locations with reduced property taxes. Lower property taxes may reduce or degrade public services. Moving requires knowledge of your new state's property charges. Adjustment assistance is available from property tax specialists and moving companies.
Frequently Asked Questions
California does not charge a direct penalty or official exit tax for moving out. However, the state aggressively enforces residency and source income rules. If California determines you remained a resident or earned California source income after leaving, you may owe back taxes, interest, and penalties. Key factors include date of move, ongoing California income, property ownership, and business ties. Many moves qualify as interstate relocations with no tax penalty when properly documented. See our interstate moving service guide.
The California exit tax is not a single law or fee. It is a nickname for California’s practice of taxing former residents if income is still considered California sourced. This often affects stock options, deferred compensation, partnerships, and business owners. Audits typically review last day of residency, income vesting dates, and economic nexus. Planning your move date and income timing is critical, especially for long distance relocations. Learn more about planning a compliant move with a long distance moving service.
California can tax you indefinitely on California source income, but not on out-of-state wages once residency ends. There is no automatic 10-year rule. Instead, the Franchise Tax Board applies a facts-and-circumstances residency test reviewing physical presence, primary home, family location, and economic activity. Most clean breaks occur within the same tax year when documentation is clear and the move is permanent.
Yes, but only for part of the year. Most movers file a part-year resident return. California taxes income earned while you lived in the state and any California source income earned afterward. Income earned after establishing residency elsewhere is typically excluded. Keeping moving contracts, lease agreements, and utility records helps prove your move date. A structured move using a local moving service or interstate provider can support clear documentation.
Yes. California frequently audits former residents, especially high earners and business owners. Audits often occur 1 to 4 years after departure and focus on residency intent, travel days, property use, and income sourcing. Maintaining a documented moving checklist, updating voter registration, and changing licenses immediately reduces audit risk. Use a detailed moving checklist to avoid common red flags.
Owning California property alone does not make you a resident, but it can create California source income. Rental income, capital gains from sales, and frequent personal use can trigger tax obligations. Property taxes remain due regardless of residency. The Franchise Tax Board evaluates usage patterns, income generated, and time spent at the property when determining tax exposure.
There is no fine simply for leaving California. Penalties only apply if taxes are underpaid or residency is misrepresented. These penalties can include accuracy-related penalties, interest, and late filing fees. Properly timing your move, updating legal documents, and severing California ties minimizes risk. Most penalties arise from poor planning rather than the move itself.
