We’ve all heard the expression “you couldn’t pay me to live there.” But what about states that find ways to make you pay more to live there, or tax you when you move away?
Though the term “exit tax” is misunderstood — no state charges a tax simply for leaving, to be clear — places like California, New Jersey, New York and Massachusetts levy taxes on those who relocate but retain ties to their former home.
Some of those same states are among those looking to impose wealth taxes on their richest residents, which critics warn could act as an inverse to an “exit tax” — forcing wealthy residents out to avoid paying it while lower earners pick up the tab for the billions in lost tax revenue (1).
And that’s important info as the nation undergoes a migration of residents from high-tax (often blue) states to those with lower or no income taxes.
The National Taxpayers Union Foundation found that, between 2015 and 2025, an exodus of residents from New York and California cost those states more than $100 billion each in net adjusted gross income, with Florida and Texas reaping many of the losses (2).
A Realtor.com analysis of the latest available IRS data (3) reported similar migration trends, with senior economist Joel Berner explaining that “people are moving in pursuit of affordability.”
While “exit taxes” don’t technically exist, there are some states where residents should be aware of tax laws that could impact them if they move away.
California: If you move out of California, you can still be taxed on any profits you earn within the state, be it rent or property gains, business you conduct within state lines and more (4).
If, however, you move away but maintain partial residency in California — even if it’s not your main home — you’re subject to the state’s tax on worldwide income accrued during the period you spend there (5). So a part-time resident working remotely from California for an out-of-state job could see the income they earn during that time taxed by the Golden State at up to 13.3% for high earners (6). Taxes also apply to things like investment earnings accrued while in California, no matter where the investment originates.
To determine your residency status, experts warn (7) California officials will look at everything from your driver’s license and registration to where you maintain a doctor or lawyer to how much time you spend in the state.
New Jersey: The Garden State’s reputation for an “exit tax” stems from a withholding law requiring residents who sell their homes and leave the state to pay the higher of these two taxes: either 8.97% of the sale profit or 2% of the sale price (8), owed at the time of sale.
The tax applies to any residence sold by a non-New Jersey resident — not just primary homes (9) — and the seller is credited that amount on their state tax return.
New York: If you spend enough time in New York, you’ll be taxed for it. Former residents must prove that their primary domicile is outside the state or be taxed as residents if they either:
As with California, those who’ve left but retain business or real estate holdings there will also be taxed for income derived from them (11).
Massachusetts: Like New York, Massachusetts considers you a resident — even if your primary home is elsewhere — if you maintain a permanent abode there and spend more than 183 days in the state (12). They also tax any income earned in the state, or derived from properties like rentals or businesses there.
One local law firm also warns the state “audits taxpayers claiming nonresidency status” regularly, requiring them to prove it’s no longer their primary home (13).
Read More: How to apply Dave Ramsey’s 7 Baby Steps to your own life
A handful of locales are also proposing wealth taxes on their richest residents to help pay for everything from social and city services to property tax relief and health care.
Washington, for example, recently passed a 9.9% tax on households making over a million dollars, beginning in 2028. Illinois is debating a similar idea, but with a 3% tax on individual income exceeding a million dollars (14).
California, meanwhile, is weighing a one-time “Billionaire Tax” of 5% on anyone worth over a billion dollars in the state, which comes up for a vote in November (15), while a Michigan ballot proposal would levy a 5% tax on individuals making $500,000 or more (16). And New York City Mayor Zohran Mamdani pitched a 2% income tax hike of 5.88% for Big Apple millionaires (17).
All such proposals are projected to net billions of dollars for those enacting them. And while critics warn of an elite exodus — pointing to billionaires like Larry Page and David Sacks, who reportedly bailed on California (18) over wealth taxes — others debate that point.
A 2025 study co-authored by the Institute for Policy Studies and the State Revenue Alliance that found previous wealth taxes in Massachusetts and Washington not only resulted in more revenue for the states, but increased the wealth of the millionaire class who, for the most part, did not end up fleeing to avoid paying it (19).
Join 250,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines.
Fox News (1),(18); National Taxpayers Union Foundation (2); Realtor.com (3); Bright Tax (4); Taxes for Expats (5); Greenback Tax Services (6),(7); Plymouth Rock (8); GTA Accounting Group (9); CBIZ (10); NYC Accounting Consulting (11); Commonwealth of Massachusetts (12); Fletcher Tilton (13); Illinois Economic Policy Institute (14); Institute on Taxation and Economic Policy (15); Mackinac Center for Public Policy (16); New York State Focus (17); Institute for Policy Studies (19)
This article originally appeared on Moneywise.com under the title: There’s no ‘exit tax,’ but these states can still cost you when you leave
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
