If you have moved recently or are planning a move, you’re among the roughly 35 million Americans annually who change their place of residence.1 And if that move crosses state lines, you might find yourself facing a very different income tax bill. “Where you end up paying state taxes could make a big financial difference for individuals with a high amount of taxable income,” says Richard Scarpelli, Executive Director and Head of Financial Planning at UBS Financial Services.
For example, a high-income earner in California (the state with the highest tax) can pay as much as 13.3%, while that same earner would pay 0% in Nevada, one of seven states with no income tax at all.2
Given such disparities, it’s no surprise that for people with the flexibility to choose where they live, the search for lower taxes often plays a big role in that decision, Scarpelli notes. But qualifying as a resident of a new state for tax purposes may not be as simple as buying a home—especially if you plan to hold on to a home in your previous state.
Here are tips to help you make a smooth transfer of residency when relocating to a new state.