No state has a true standalone exit tax, but roughly 16 states require some form of tax payment or withholding when a non-resident sells real estate within their borders, and several other state rules can keep taxing you after you leave. When people ask how many states have an exit tax, they’re usually mixing several different provisions together: real estate withholding at closing, income tax on compensation earned before the move, and residency rules that refuse to let go. Each works differently. Only one state has seriously floated a wealth-based exit tax, and it isn’t law yet.
The 16 States That Withhold on Non-Resident Real Estate Sales
The closest thing to a real exit tax for most people is the withholding a state collects when a non-resident sells property there. About 16 states do this. The logic is straightforward: if you sell real estate in a state you no longer live in, that state wants its share of the gain up front, at closing, rather than trusting you to file a non-resident return from wherever you moved.
The states with non-resident real estate withholding are California, Colorado, Georgia, Hawaii, Maine, Maryland, Mississippi, New Jersey, New York, North Carolina, Oregon, Rhode Island, South Carolina, Vermont, and West Virginia. Connecticut reaches the same result through a different route, taxing the recognized gain on a non-resident return rather than withholding at closing.1Connecticut State Department of Revenue Services. TSSN-33, Questions and Answers on Nonresident Capital Gains Tax Withholding rates across these states generally sit between 2% and 7%, based either on the gross sale price or on the estimated gain. In every case the amount withheld is an estimate. You reconcile it by filing a non-resident return, and if you overpaid, you claim a refund.
New Jersey is the state most often accused of having an exit tax. When a non-resident sells New Jersey real property, the seller owes an estimated gross income tax payment at or before closing. The payment equals the state’s highest income tax rate (currently 10.75%) applied to the net gain, with a floor of 2% of the total sale price.2State of New Jersey Department of the Treasury. NJ Division of Taxation – FAQs on GIT Forms Requirements That 2% floor is the part that catches people. It means you pay something even on a barely profitable sale, and you don’t get it back until you file the return.
California’s Proposed Billionaire Exit Tax
California is the state generating the most “exit tax” headlines, but the proposal in question is not law. Backers of the Billionaire Tax Act are seeking a spot on the state’s November 2026 ballot for a one-time 5% tax on the total wealth of California residents with a net worth of $1 billion or more. What gives it the exit-tax label is the effective date: the measure would apply to anyone who was a California resident as of January 1, 2026, leaving almost no window to establish domicile elsewhere. Because changing domicile normally takes months of documented steps, tax attorneys have said escaping the tax by moving would be nearly impossible for most people it targets.
Reports indicate billionaires including tech venture capitalist Peter Thiel and Google co-founder Larry Page have considered cutting California ties ahead of the measure. The proposal still needs signatures, a place on the ballot, and voter approval before any of this matters. No other state has advanced a comparable wealth-based exit tax.
Income That Your Old State Can Still Tax
Beyond real estate, the most common surprise for people who move is state tax on income that arrives after they leave. Several states assert authority over compensation that was earned or vested while you were a resident, no matter where you live when it pays out.
Stock Options and Restricted Stock
Equity compensation is the classic trap. If you received stock options while working in a state and later exercised them as a non-resident, your former state will typically tax the ordinary income from the exercise in proportion to the time you worked there between the grant and the exercise. California, for instance, uses the ratio of California workdays to total workdays during that period. The same allocation applies to restricted stock that vests after you leave: income is taxable to the extent you performed services in the state between the purchase date and the vesting date.
Incentive stock options can get slightly better treatment. A qualifying disposition of ISO shares by a non-resident may not be taxed by the former state at all. A disqualifying disposition, however, is treated like a non-statutory exercise and triggers the same workday allocation.
Deferred Compensation
Nonqualified deferred compensation can also follow you. The general rule is that a state can tax deferred compensation to the extent the underlying services were performed within its borders. Lump-sum payouts from nonqualified plans and stock option exercises stay subject to source-state taxation after you move.
Retirement Income Your Old State Cannot Touch
If you’re moving in retirement, one federal statute matters more than any state provision. 4 U.S.C. ยง 114 flatly prohibits any state from imposing income tax on the retirement income of someone who doesn’t live there.3Office of the Law Revision Counsel. 4 USC 114 – Limitation on State Income Taxation of Certain Pension Income The protection covers distributions from 401(k) plans, traditional and Roth IRAs, 403(b) annuities, SEP plans, 457 deferred compensation plans, government pension plans, and military retired pay. It also covers payments from nonqualified deferred compensation arrangements, provided the payments come in substantially equal installments over at least 10 years or over the recipient’s life expectancy.
Once you’ve genuinely moved, your former state cannot tax your 401(k) withdrawals or pension payments. The protection is absolute and preempts conflicting state law. The catch is the word “genuinely,” which brings up residency.
When Your Old State Says You Never Really Left
Even after you pack up, a former state can claim you’re still a resident, and if it wins that argument it can tax all of your income rather than just what’s sourced there.
The 183-Day Rule
Many states use a day-counting threshold, often around 183 days, to establish statutory residency. If you keep a home in the state and spend more than the threshold there, the state can treat you as a full-year resident. New York’s version is especially aggressive: if you keep a “permanent place of abode” in New York and spend 184 or more days in the state during the year, you’re a resident for tax purposes even if you’re domiciled elsewhere, and any part of a day counts as a full day.4New York State Department of Taxation and Finance. Frequently Asked Questions about Filing Requirements, Residency, and Telecommuting for New York State Personal Income Tax A vacation home or an apartment where family stays can be enough to trigger it, even if you barely use it.
Domicile Audits
States like New York, New Jersey, California, and Connecticut audit residency claims aggressively when the taxpayer had meaningful income. The burden falls on you to prove your new state is your real home. Auditors typically weigh five primary factors: where you keep your home, where you have active business involvement, how you split your time between states, where you keep items of personal significance (the “near and dear” factor), and where your close family lives. Secondary factors include your driver’s license, voter registration, vehicle registration, banking, and club or religious memberships.
No single factor decides the case, but patterns do. Changing a license to Florida while keeping the New York home, the New York doctor, the country club membership, and the kids in a New York school is not going to convince anyone. People who change domicile successfully do it deliberately: license and voter registration updated, bank accounts moved, a declaration of domicile filed in the new state, and careful records of days spent in each place. Selling the former home is one of the strongest single steps you can take.
The Federal Exit Tax on Renouncing Citizenship
One genuine, unambiguous exit tax exists, but it’s federal and only applies if you give up U.S. citizenship or end long-term permanent residency. Under IRC 877A, a “covered expatriate” is treated as having sold all worldwide assets at fair market value on the day before expatriation, and any resulting gain is taxable.5Internal Revenue Service. Expatriation Tax You’re a covered expatriate if your average annual net income tax over the prior five years exceeds an inflation-adjusted threshold ($206,000 for 2025), your net worth is $2 million or more, or you fail to certify five years of tax compliance on Form 8854. An inflation-adjusted exclusion shelters part of the deemed gain, but the bill can still be substantial. Moving between states doesn’t trigger this. Only expatriation does.
So How Many Exit Taxes Are There, Really
Counting honestly: zero states have a standalone exit tax on people who move. About 16 states have non-resident real estate withholding, which is the closest analogue and the reason most Google searches lead here. A handful of high-tax states, led by New York and California, tax deferred income and equity compensation earned before you left. Several will fight you in an audit over whether you actually moved. One state, California, has a wealth-based exit tax proposal targeting billionaires that might reach the 2026 ballot. And the federal government has a real mark-to-market exit tax, but only for people renouncing citizenship. If you’re moving, the provisions worth planning around are the real estate withholding at your old state’s closing table, the timing of any option exercise or bonus payout, and the paper trail proving you actually established a new home.