There are a lot of people who are interested in moving from a state that has a relatively high income tax to states that have a relatively low income tax. There are a lot of people who are concerned that if they do this, they may have to pay a significant amount of money in taxes just to move. To be clear, it is not legal for states to charge a tax on someone just because they are moving somewhere else. Therefore, there is no state that technically has an exit tax, but there are other maneuvers that certain states can do to try to make life a bit harder for those looking to escape certain types of taxes.
California, for example, charges a tax of 0.4% of net worth over $30,000,000 in a tax year. The worth can be located in a different state or country and is still subject to this tax. Similarly, New Jersey requires those leaving the state to withhold either 8.97% of the profit made on their home sale in New Jersey or 2% of the sale price, whichever is higher. While neither of these is an official exit tax, they do affect former residents.
One of the things that some states have tried to do is to charge taxes on visitors. For example, there are some people who try to be snowbirds in certain states. That means that they do not necessarily live there, but they try to spend a significant amount of time there because they like the weather. There are some states that are saying that if someone spends a certain amount of time in a certain location during a given year, they will have to pay taxes just as if they were a resident. It is unclear if this is legal, but this is a maneuver that some states are trying to get away with.
On the other hand, the United States has an exit tax. For example, if you are a citizen, and you are trying to sell all of your assets in the United States in an effort to move somewhere else, then you may have to pay a significant amount of money in taxes when you decide to sell your assets and go somewhere else. On the other hand, if you are not a legal permanent resident of the United States, then you should not be subject to an exit tax. This is something that you will have to discuss with an accountant to make sure you understand exactly what your legal obligations are.
There are some states that are becoming more popular because they do not have an income tax at all. Even though there are some states, such as Connecticut, New Jersey, and California that have very high state income taxes, there are plenty of other locations that do not have an income tax at all. These include Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming.
If you live in one of these locations, then you should not have to pay any money in income taxes. On the other hand, these states have different ways of getting their money, so you will have to take a closer look at what their other taxes are to make sure there are not excessive taxes in other areas.
Exit Tax Exists
|California||Yes||0.4||The California exit tax is 0.4% of an individuals' net worth over $30,000,000 in a tax year, no matter where said worth is located—within CA, other states within the US, or overseas.|
|District of Columbia||No|
|New Jersey||Yes||8.97||The New Jersey exit tax requires former resident to withhold either 8.97% of the profit/capital gain made on the sale of their home or 2% of the total sale price: whichever is higher.|
|Pennsylvania||No||Pennsylvania does not have an official exit tax, but it does have a "deemed sale" provision that can result in a tax liability for some residents who move out of state|