Moving to Texas Is the Easy Part: What Leaving California or New York Actually Requires

Texas has no state income tax. It is in the constitution — Proposition 4, approved by 74% of voters in 2019, added Article VIII, Section 24-a, which prohibits the legislature from taxing individual income. Not a procedural hurdle. A prohibition.

There is no state estate tax either. Texas repealed its inheritance tax provisions entirely in 2015.

For a family in California paying 13.3% at the top, or in New York City paying up to 14.8% combined, the arithmetic on a $20 million liquidity event writes itself.

None of that is the hard part.

Texas does not audit whether you are really a Texan. It has no residency statute, no day-count test, and no agency checking. Why would it — there is nothing to tax.

The state you left is a different matter entirely. California and New York both have residency rules, both run audit programs built specifically to find people who left on paper and not in fact, and both put the burden of proof on you.

Arriving in Texas takes a weekend. Leaving California or New York takes a year of documented behavior — and if you are selling something, the sequence matters more than the move.

What Texas Actually Costs

Worth being straight about the tradeoff before anything else.

Property tax is the real offset. On a $4 million house in Dallas, roughly 2.2% of taxable value is meaningful money every year, and it does not go away. Some relief arrived recently — Proposition 13, approved in November 2025, raised the school district homestead exemption to $140,000, and Proposition 11 raised the additional over-65 exemption to $60,000, a combined $200,000 for a qualifying senior.

The net is still strongly favorable for a family with substantial investment income. It simply is not the clean zero that gets quoted.

The Departure State Is the Whole Game

California taxes two separate categories of people: anyone in the state for other than a temporary purpose, and anyone domiciled in California who is temporarily elsewhere. You have to break both hooks.

The governing framework comes from an appeal called Bragg, which laid out nineteen factors — registrations and filings, personal and professional associations, physical presence and property. Two things about it matter more than the list itself. The factors are explicitly not exhaustive, and it is the strength of ties, not the count. You can win most of the factors and still lose.

There is a statutory safe harbor, and it will not help. It covers a California domiciliary absent for at least 546 consecutive days under an employment contract — and it is unavailable to anyone with more than $200,000 of income from stocks, bonds, or other intangible property in a contract year. For the family this article is written for, that exclusion is automatic.

New York runs two independent tests, and you have to survive both.

Statutory residency catches you if you maintain a permanent place of abode in New York for substantially all of the year and spend more than 183 days there. Any part of a day counts as a day.

And “substantially all of the year” quietly changed. New York's 2021 audit guidelines redefined it from more than eleven months to more than ten, effective for tax years beginning in 2022 — a change made without announcement, while the Department's own website still displayed the old rule. For a mid-year move this is consequential: dispose of the New York apartment in early November and you now trip statutory residency where previously you would not have.

Domicile is the second test, and the harder one. New York applies a leave and land rule — you must leave with no intention of returning and land in Texas intending to stay indefinitely. Failing either half means you never left. The burden is yours, at a clear and convincing evidence standard, and the state's determination is presumed correct.

The Case That Should Worry You

In October 2025, the New York Tax Appeals Tribunal decided Matter of Hoff.

The couple claimed a change of domicile from upstate New York to Naples, Florida. They registered to vote in Florida. They obtained Florida driver licenses. They filed Florida declarations of domicile. In one year they spent fewer than 165 days in New York.

They lost.

The Tribunal found their intent was clear but that “the manifestation of that intention” was not. What sank them: they kept the New York house. They maintained full memberships at two New York country clubs while joining only one in Florida. They moved almost none of their personal effects, buying new furniture for Naples instead. And Mr. Hoff kept drawing a significant salary from his New York business, maintained accounts for it, and traveled on its behalf.

If You Are Selling Something, the Sequence Matters More Than the Move

This is the section that costs people the most money, and it turns on a distinction that sounds technical and is not.

Gain on intangible property — C corporation stock, an LLC or partnership interest, goodwill — is generally sourced to where you live when you sell. Gain on real property is sourced to where the property sits, no matter where you live.

So moving before a sale can eliminate state tax on the gain from a business whose value sits in intangibles. It does nothing at all for a building in Manhattan.

Four traps, each of which has caught people who thought they had planned properly.

An installment sale does not work the way people assume. California's own publication addresses it directly: sell stock while a California resident, move to Florida, receive proceeds later — the capital gain is taxable by California, because you were a resident when you sold. Only the interest component escapes. The move must precede the sale, not the payments. California runs it the other way too: sell as a nonresident, then move to California, and the later proceeds become taxable there.

Stock options follow the work, not the residence. The Franchise Tax Board's own example is worth reading closely, because the FTB chose Texas for it: options granted in California, all services performed in California, taxpayer permanently relocates to Texas, options exercised after the move. Taxable by California. The spread is compensation for services performed there, allocated by workdays between grant and exercise. The same logic applies to most forms of equity compensation.

Entity structure can override the timing entirely. A Texas resident selling C corporation stock in a California business generally escapes California tax on the gain. A Texas resident selling an LLC or partnership interest, or an S corporation with a Section 338(h)(10) election, frequently does not — the transaction is treated as an asset sale and the gain is apportioned to where the business operated. New York has a statute applying exactly this to nonresident shareholders. Holding-company structures do not reliably solve it.

Deferred compensation has a federal shield, but only in one shape. Federal law bars a state from taxing the retirement income of someone who is neither resident nor domiciliary. For nonqualified deferred compensation, that protection applies only if it is paid as substantially equal periodic payments over at least ten years. A lump sum after the move gets no protection and is sourced to where the services were performed.

What You Bring With You Does Not Become Community Property

This one surprises people, and it interacts directly with estate planning.

Texas follows an inception of title rule: the character of property is fixed when and where it is acquired. Assets a couple owned before moving to Texas do not become Texas community property by crossing the state line. Property acquired after the couple is domiciled here, from community earnings, is community.

There is a wrinkle worth knowing. Texas applies a quasi-community property rule in divorce — a Texas court dividing a marriage treats out-of-state acquisitions as if they had been community. But there is no equivalent at death. At death, quasi-community property remains separate.

Here is why that matters. Under Internal Revenue Code Section 1014(b)(6), community property receives a new basis on both halves at the first spouse's death — the decedent's and the survivor's. Separate property adjusts only the decedent's share.

A couple arriving from New York with $30 million of low-basis assets holds separate property. At the first death, only half steps up. The other half keeps its original basis, and the built-in gain survives. We covered how that basis rule works in more detail in our article on what comes first after losing a spouse.

It can be fixed, deliberately. Texas Family Code Section 4.202 lets spouses agree to convert separate property to community. The agreement must be in writing, signed by both, identify the property, and state that it is being converted. It is unenforceable without fair and reasonable disclosure of what conversion actually means.

And conversion carries real costs that belong in the same conversation. Converted property becomes divisible on divorce. It becomes reachable by community creditors. A poorly documented conversion can be unwound later by a divorcing spouse or a surviving spouse's family. Whether it is worth doing depends on the size of the built-in gain, the stability of the marriage, and the family's creditor exposure — which is a conversation for your attorney, not a checkbox.

If You Are Keeping the New York Apartment

The hardest decision in any domicile change is what to do with the residence you are leaving, and it long predates any particular tax.

Keeping it is the single strongest piece of evidence the departure state has against you. The Hoff decision turned partly on a retained house. New York's statutory residency test hangs on maintaining a permanent place of abode. Selling removes the evidence — but people do not want to sell, and a forced sale on someone else's timetable is its own cost.

As of 2026, New York added a direct price to that decision. On May 27, 2026, the state enacted a pied-à-terre surcharge on New York City residential property where the owner's primary residence is outside the city. The first $5 million of value is exempt, then 0.8% from $5 million to $15 million, 1.05% from $15 million to $25 million, and 1.3% above that, assessed on a five-year average valuation. Roughly 10,000 properties, projected at more than $500 million a year, sunsetting June 30, 2031 unless renewed.

The planning tension survives all of this, which is the durable point. Keeping the apartment strengthens the state's case that you never left, and may carry a recurring surcharge. Selling weakens their case and removes the surcharge, on a timetable you did not choose. Trading down to something under the $5 million exemption may read to an auditor as precisely the kind of deliberate restructuring worth a closer look.

There is no clean answer. There is a decision that needs tax counsel and someone holding the whole balance sheet in the same conversation, rather than either one alone.

As a footnote for readers who value privacy: a municipality publishing a searchable roll of 900,000 homeowners' names, addresses, and property values — before a court ordered it removed — is worth remembering the next time someone describes a filing as routine.

The Evidence File

Auditors do not take your word on where you were.

The single most valuable item on that list is the contemporaneous day log, kept daily during the year rather than assembled afterward. A log reconstructed once a notice arrives carries very little weight, and auditors know precisely what one looks like.

The Texas-side deadlines are worth meeting early for the same reason. Not because Texas requires proof of anything — it has no reason to ask — but because a driver license issued in March and a homestead exemption approved in April are dated records created by someone other than you. The homestead exemption is particularly useful evidence, because the appraisal district independently verified that the address on your Texas license matches the property.

How to Choose Who Helps

Relocation planning sits at the intersection of three disciplines that usually do not talk to each other. A CPA who understands multi-state sourcing. An attorney who can execute a conversion agreement and re-paper the estate documents under Texas law. And someone holding the whole picture — who understands that the option exercise, the installment note, and the apartment decision are all the same conversation.

Most families assemble the first two and skip the third. Then an option gets exercised in the wrong year because nobody was watching the calendar across all of it.

Some questions worth asking anyone you are evaluating:

1. Have you handled a residency change out of California or New York specifically? Ask which state, and what went wrong. Anyone with real experience has a story about something that nearly went badly.
2. What is the right sequence for my situation, and what determines it? A good answer distinguishes between the sale date and the payment date without being prompted.
3. What in my compensation is still sourced to my old state after I move? Options, restricted stock, deferred compensation, and carried interest all behave differently.
4. How will we document the year? If there is no answer involving a contemporaneous log, they have not done this before.
5. Should we convert any separate property to community, and what does that cost us? The right answer names the divorce and creditor exposure without being asked.
6. Who coordinates — you, my CPA, or nobody? This is the question that most often has no good answer.

If you are moving to Dallas and working through any of this, we are glad to talk it through — including if what you need is a referral rather than an advisor.