Guides · Moving

Moving between states or countries — what changes for tax

Moving within the US usually just changes your state income tax rate. Moving between countries is more complex — it can change which country taxes your income, when each one taxes it, and whether you keep the protections of your home country's tax treaty. This page walks through both scenarios with the practical steps and the common traps.

US: state to state

The federal tax position does not change when you move between US states — federal brackets, the standard deduction, Social Security, Medicare are all nationwide. What changes is the state line: which state(s) tax you, the rates that apply, and the credits and deductions available.

Two practical implications:

  1. Update your W-4 with the new state on day one of the new job. Most W-4 forms have a state line; the employer withholds based on the state you declare.
  2. Both states may want a part of your year's income. The state you left and the state you arrived in each want the income you earned while resident there. You file a part-year return in both.

A move from Texas (no state income tax) to California can raise your effective state tax by 1-13 percentage points depending on income. A move from California to Texas lowers it by the same. The math: gross $80,000 → state tax $5,520 in California vs $0 in Texas. The $5,520 is real money.

US: partial-year state returns

Most states that have an income tax require a part-year resident return if you lived in the state for part of the year. The return covers:

  • All income earned while a resident of that state (wages, self-employment, rental, etc.).
  • Any income from sources in that state if you were a non-resident but earned in it (e.g., a remote worker for a state-based company, rental income from out-of-state property).

The mechanics vary by state. Some use a formula based on days resident; others require you to allocate specific income to specific states. The department of revenue for each state publishes the rules — search "part-year resident return" plus the state name.

US: when each state claims you

State residency rules are not standardized. Most use a combination of:

  • Domicile — your permanent home, the place you intend to return to.
  • Physical presence — days spent in the state.
  • Ties — driver's license, voter registration, property, vehicles, business, family.

A worker who moves from New York to Florida on 1 July is generally a Florida resident for the second half of the year and a New York resident for the first half — but New York has famously aggressive residency rules and may claim you as a full-year resident if you retain a NY abode, even if you don't sleep there. The "you can keep your New York domicile only if you demonstrably abandoned it" rule has produced many high-profile tax disputes.

If you're planning a move that crosses state lines, document the date of the move, change your driver's license and voter registration, sell or rent out-of-state property, and end out-of-state memberships. The "ties" test is real and contested.

US: moving abroad

US citizens are taxed on worldwide income for life, regardless of where they live. Moving from California to Berlin does not change the federal tax position — same brackets, same standard deduction, same FICA (Medicare and Social Security up to the wage base).

What does change:

  • State tax goes to zero if you give up California residency. California has a worldwide income tax for residents, so leaving means severing ties (driver's license, voter registration, property, bank accounts, professional licenses) and establishing domicile abroad.
  • Foreign Earned Income Exclusion (FEIE) — up to $130,000 of foreign-earned income can be excluded for 2026, for qualifying US citizens living abroad.
  • Foreign Tax Credit (FTC) — US tax on foreign-source income is reduced by foreign tax paid. Most expats use the FTC rather than the FEIE, especially if they live in a high-tax country (Germany, France, UK).
  • Housing exclusion — for high-cost cities (London, Hong Kong, Geneva), part of housing costs can be excluded under §911.
  • Self-employment Social Security — the US has totalization agreements with 30+ countries (UK, Germany, Canada, etc.) that exempt self-employed expats from US SE tax if they pay into the host country's system.

The IRS also requires:

  • FBAR (FinCEN 114) — if you have foreign financial accounts exceeding $10,000 at any point in the year.
  • Form 8938 — foreign financial asset reporting, separate from FBAR, with different thresholds.
  • Form 5471 — if you have ownership in a foreign corporation.

Penalties for non-filing are steep: $10,000 per violation per year for FBAR, up to $50,000 for 8938. The IRS has stepped up enforcement of expat filings in recent years.

UK: moving abroad

UK tax residency is governed by the Statutory Residence Test (SRT). UK residents are taxed on worldwide income; non-residents are taxed on UK-source income only.

Two things happen when a UK resident moves abroad:

  1. The SRT determines the year of departure — typically you are UK resident for the year of departure if you spent 183+ days in the UK, or if you had only one home and it was in the UK for 91+ days.
  2. The SRT determines the year of arrival in the new country — you are non-UK resident for that year unless you trigger the sufficient-ties test.

A split-year treatment may apply for the year of departure: your UK-source income is taxed for the entire year, but foreign income is taxed only for the UK-resident portion. Claims via Form R43 (if you were a non-resident employed by a UK employer for part of the year) or via Self Assessment.

For expats leaving the UK, the "non-domiciled" status becomes relevant. A long-term UK resident who becomes non-domiciled can use the remittance basis for foreign income — pay UK tax only on UK-source income and any foreign income brought (remitted) to the UK. The remittance basis charge is £30,000 per year after 7 years of UK residence, rising to £60,000 after 12 years.

From April 2025, long-term residents (10+ years) become "deemed domiciled" for inheritance tax purposes regardless of domicile.

Moving to the US or UK

To the US

New US residents are taxed on worldwide income from their arrival date (or first day of presence if they pass the substantial presence test). A new immigrant typically:

  1. Gets an SSN or ITIN.
  2. Files Form 1040 with the worldwide income for the partial year.
  3. Updates W-4 with the new employer.
  4. Considers state tax — California, New York, and a handful of others have particularly aggressive residency tests.

Recent immigrants may claim the FEIE on foreign income earned before arrival (if they use the calendar-year arrival test). The first-year rules are complex; consult a US tax professional for first-year filings.

To the UK

New UK residents are taxed on worldwide income from their arrival date. A new arrival typically:

  1. Gets a National Insurance number from HMRC.
  2. Registers for PAYE if employed, or Self Assessment if self-employed.
  3. Updates the new employer's payroll with the assigned tax code.
  4. Decides on domicile status — non-domiciled arrivals can use the remittance basis for the first 7 years.

Treaty tie-breakers

When two countries both claim you as a tax resident in the same year (e.g., you moved in July and both countries claim part-year residency), the US-UK Double Taxation Convention provides a tie-breaker. In order:

  1. Permanent home available.
  2. Center of vital interests (personal and economic ties).
  3. Habitual abode (where you spend more days).
  4. Nationality.
  5. If all else fails, by competent-authority agreement between the two tax authorities.

Most people resolve at step 3 (habitual abode). Genuine dual-presence cases — splitting the year between two countries with no clear primary home — go to competent authority, which can take 12-24 months to resolve.

A pre-move checklist

Six to twelve weeks before an international move, work through this list.

US outbound

  • Tell your state DMV and update voter registration.
  • End any state-tax-relevant ties (professional licenses, vehicle registration, gym memberships).
  • Estimate the FEIE vs FTC tradeoff for the first full year abroad.
  • Set up FBAR and Form 8938 reminders.
  • Review totalization agreement (for self-employed).
  • Consider gifting appreciated stock before departure (US gift-tax exemptions are per-donor, per-recipient).

UK outbound

  • Tell HMRC of the new address and the departure date.
  • File Self Assessment for the year of departure if any non-UK income will be taxable in the UK under split-year treatment.
  • Decide on remittance basis vs arising basis for foreign income.
  • Consider domicile for inheritance tax planning.
  • Review pension treatment — UK pension transfers have specific rules for non-UK residents.

State to state (US)

  • Update driver's license within 30 days (most states).
  • Update voter registration.
  • Update W-4 with new state on day one.
  • File part-year returns in both states for the year of the move.
  • Document the move date with utility bills, lease, employment letters.