How Do I Change My U.S. State Residency While Living Abroad?
- Do I Still Have to File U.S. State Taxes If I Live Abroad?
- Which U.S. States Make It Hardest to Change Residency?
- Which U.S. States Have No Income Tax?
- How Do I Terminate My U.S. State Residency?
- Should I Establish Residency in a New U.S. State?
- What If I Moved Abroad Mid-Year?
- What If I'm Planning to Return to the U.S.?
- What If I'm Behind on U.S. State Tax Filing?
- Next Steps
You can change your U.S. state residency while living abroad by terminating ties with your former state and establishing residency in a new state (or choosing to have no state residency at all). According to the Federation of Tax Administrators, 41 states levy income tax on residents, but most expats can eliminate these obligations entirely by properly changing their state residency status before or after moving abroad.
While federal tax filing is required for all US citizens regardless of where you live, state tax obligations are different. You can legally sever ties with income-taxing states and either establish residency in one of the nine tax-free states or maintain no US state residency at all.
This guide explains exactly how to change your state residency while living abroad, which states make it easy (and which fight to keep you), and the specific steps you need to take.
Do I Still Have to File U.S. State Taxes If I Live Abroad?
It depends on whether your former state still considers you a resident of that state. If you’re a resident for state tax purposes, you’ll typically owe taxes on your worldwide income, just like with your federal return. This means your foreign salary, foreign business income, and even your foreign investment gains could all be subject to state income tax.
Most expats are surprised to learn that simply moving abroad doesn’t automatically end state tax obligations. Each state has its own residency rules, and some states (called “sticky states”) are notorious for using even minimal connections to claim you’re still a resident.
You’ll generally be considered a state resident if:
- You lived there for more than half the tax year
- You own a home or maintain a permanent address there
- Your spouse or children still live there
- You have a driver’s license or state ID from that state
- You’re registered to vote there
- Your vehicle is registered there
- You maintain bank accounts or business ties there
Learn more about when expats owe state taxes in our comprehensive state taxation guide.
Some states make it hard to let go. We’ll help you handle the rules confidently.
Which U.S. States Make It Hardest to Change Residency?
Five states have earned reputations as “sticky states” that aggressively pursue expat taxes:
California actively audits expats years after they’ve moved abroad, particularly high earners. The Franchise Tax Board uses sophisticated methods to maintain tax jurisdiction and often challenges residency changes. California distinguishes between “residence” and “domicile,” making it possible to be taxed even with minimal California connections. Read our detailed guide on California state taxes for expats and California domicile vs. residence.
New York focuses heavily on your “intent” to return and maintains strict residency rules. They distinguish between residency and domicile, making it challenging to prove you’ve truly severed ties.
Virginia often considers overseas moves “temporary” unless you provide substantial documentation proving your move is permanent. Learn more about Virginia state residency requirements for expats.
South Carolina requires extensive documentation to prove non-residency and may challenge your claims years after the fact. See our guide on South Carolina residency determination.
New Mexico uses complex formulas to determine residency when an individual has connections to multiple states.
If you lived in any of these states before moving abroad, changing your residency requires careful planning and thorough documentation.
Which U.S. States Have No Income Tax?
The good news is that nine states levy no personal income tax. Even if you’re considered a resident of these states, you won’t owe state income tax on your worldwide income:
- Alaska
- Florida
- Nevada
- New Hampshire
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
New Hampshire eliminated its final tax on dividends and interest effective January 1, 2025, making it fully income-tax-free. Washington has no personal income tax on wages but does levy a capital gains tax on high earners.
Establishing residency in one of these states before moving abroad (or while living abroad if possible) can eliminate your state tax obligations entirely while still maintaining the benefits of US state residency.
How Do I Terminate My U.S. State Residency?
Terminating state residency ranges from simple to complicated, depending on which state you’re leaving. For some states, living abroad for more than half the year is sufficient. Others require you to sever virtually all ties.
Basic steps to terminate residency:
- Sell property: If you own a home in your former state, selling it provides strong evidence of severed ties. If you must keep property (like a rental), this alone might maintain residency in sticky states.
- Close financial accounts: Transfer your bank accounts, credit cards, and investment accounts to a new state. Open accounts in your new state of residence or use online banks.
- Change your driver’s license: Obtain a new driver’s license or state ID from your new state (if establishing new residency) or let your old license expire without renewal.
- Move voter registration: Register to vote in your new state, or unregister entirely if you won’t maintain US state residency.
- Update vehicle registration: Sell your vehicle, transfer registration to your new state, or let the registration expire.
- Move immediate family: Some states continue claiming residency if your spouse or dependent children remain in the state, even if you live abroad.
- Resign from local associations: Leave local clubs, professional organizations, or business groups in your former state.
- Eliminate local mailing addresses: Use a virtual mailbox service in a tax-free state or your foreign address. Be strategic about this, as maintaining a mailing address in certain states can create tax obligations. Learn more about virtual mailbox considerations for expats.
- Document everything: Keep records of every action you take to sever ties. Sticky states may audit you years later, and the burden of proof is on you.
Should I Establish Residency in a New U.S. State?
You have three options when changing state residency while living abroad:
Option 1: Terminate residency and establish no US state residency. This is technically possible, though some states won’t allow you to terminate residency until you establish residency elsewhere, even if you have a permanent home abroad.
Option 2: Establish residency in a tax-free state. This is often the best choice. You maintain the benefits of US state residency (state driver’s license, voter registration, state identification) without any state tax obligations.
Option 3: Establish residency in a different income-tax state. This rarely makes sense unless you have compelling family or business reasons.
Steps to Establish New Residency in a Tax-Free State:
- Purchase or rent property in the new state, if possible. Physical presence in the state helps establish residency, though many states allow you to establish residency through other connections even while living abroad.
- Register a vehicle in the new state (if you maintain a US vehicle).
- Apply for a state driver’s license or ID card from the new state.
- Open local financial accounts in the new state.
- Register to vote in the new state.
It’s significantly easier to establish residency in a new state before moving abroad. Once you’re already overseas, proving genuine ties to a new state becomes more challenging, particularly with sticky states watching for evidence that your state change was purely tax-motivated.
What If I Moved Abroad Mid-Year?
If you moved abroad during the tax year, you’ll typically file as a part-year resident with your former state. You’ll report your worldwide income for the portion of the year you lived in the state, and only state-sourced income (if any) for the period after you moved abroad.
Part-year resident filing becomes particularly important for optimizing your federal benefits. Learn more about mid-year move tax implications and how to coordinate your federal and state returns.
What If I’m Planning to Return to the U.S.?
Many expats living abroad plan to return to the United States eventually. If this describes your situation, establishing residency in a tax-free state before returning can provide significant long-term tax savings.
Consider this strategic timeline:
- While still abroad, take steps to establish residency in a tax-free state (if your former state allows termination while abroad)
- Move directly to that tax-free state when you return to the US
- Maintain that residency even if you later move to an income-tax state
The year you return to the US, you’ll likely have a dual-status tax year for federal purposes, allowing you to optimize both expat and domestic tax benefits. Read our complete guide to returning to the US for strategic planning tips.
What If I’m Behind on U.S. State Tax Filing?
If you haven’t been filing state tax returns while living abroad, don’t panic. The specific consequences and remediation steps depend on your former state’s rules, which vary significantly.
Some expats discover they weren’t required to file at all (if they successfully terminated residency without realizing it). Others find that they owe back taxes, but can resolve the situation with minimal penalties by coming forward proactively.
We recommend always consulting qualified tax professionals rather than attempting to resolve state compliance issues on your own. Even minor mistakes when filing state taxes can be costly. Many states offer voluntary disclosure programs that significantly reduce penalties compared to waiting for the state to find you.
If you’re also behind on federal filing, you may qualify for the Streamlined Filing Compliance Procedures, which allow you to catch up on multiple years of returns with minimal or no penalties.
Next Steps
Changing your state residency while living abroad requires careful planning and thorough documentation. The specific steps you need to take depend on:
- Which state you’re leaving (and whether it’s a sticky state)
- Whether you’ll establish residency in a new state
- Your timeline for potentially returning to the US
- Whether you’re current on all state filing obligations
If you’re ready to be matched with a Greenback accountant who can help you develop a state residency strategy, click the get started button below. For general questions on state taxes or working with Greenback, contact our Customer Champions.
Changing state residency is easier with expert support.
This article is for informational purposes only and should not be considered tax advice. State tax laws are complex and subject to change. Always consult with a qualified tax professional regarding your specific situation.
