Key takeaways
- Who this is for: high earners and high-net-worth households in states that are raising taxes on the wealthy, including California, Washington, Maine, Massachusetts, and others weighing similar measures.
- What is happening: a wave of new state-level taxes on top earners and large fortunes, headlined by California's one-time billionaire tax on the November 2026 ballot.
- The core question: whether moving to a lower-tax state actually lowers your bill, and what that move really requires.
- The catch: changing your tax home is a genuine life move, not a paperwork trick, and states generally audit departing residents closely.
If you earn a high income or hold significant wealth in a high-tax state, you have probably seen the headlines. A ballot measure proposing a one-time tax on California's billionaires is heading to voters in November 2026. Several other states have recently enacted or proposed new taxes on high earners. The natural question, the one advisors say they are hearing constantly, is simple: can you just move somewhere cheaper? The answer is, in principle yes, and in practice far more involved than people expect. Here is what is happening, and what moving your tax home actually takes. None of this is legal or tax advice, and the rules are specific to your state and situation.
What is actually happening
For years, the debate over taxing wealth lived mostly at the federal level, where it faces steep constitutional hurdles. States have fewer of those hurdles, and facing budget pressure, several have moved. The result is a patchwork that is changing quickly, and where it hits you depends entirely on where you live and what you earn.
The layer that reaches the most people is income surtaxes on high earners, as several states enacted new measures in 2026. Washington enacted a 9.9 percent tax on household income over $1 million in March 2026, though it does not take effect until 2028 and is currently facing a legal challenge. Maine enacted a 2 percent surcharge on income over $1 million for single filers, and $1.5 million for joint filers, effective for the 2026 tax year. And Massachusetts has levied a 4 percent surtax on income over $1 million since 2023.
The most-discussed measure is in California. Proposition 40, known as the 2026 Billionaire Tax Act, would impose a one-time 5 percent tax on the net worth of residents worth more than $1 billion. It has qualified for the November 3, 2026 ballot but is not yet law. It targets a very small group, California's roughly 200 billionaires, but it is drawing national attention for what it might signal about where other states go next.
A note on figures: state tax rules are changing fast, and the exact rates, thresholds, effective dates, and legal status vary by state and can change. Treat the specifics here as a snapshot as of publication, and confirm the current rules for your state with your own advisor before acting.
First, the distinction that decides everything: residence vs. domicile
Here is the concept that trips people up, and it is generally the whole game. There is a difference between where you live and where you are domiciled. Your domicile is your true, permanent home, the place you intend to return to. You can have homes in several states, but you generally have only one domicile, and that is typically the state that can tax your worldwide income.
So moving is not about buying a place in Florida and spending some time there. It is about genuinely changing your domicile, and being able to show your old state that your permanent home is no longer there. That is usually a much higher bar than it sounds.
What changing your domicile actually takes
Two things generally have to be true, and both matter.
- The day count. Many high-tax states apply a guideline that spending more than 183 days in the state can make you a resident for tax purposes, regardless of where you claim to live. The exact rules vary by state, so the calendar has to genuinely support the move.
- The center of your life. Beyond days, states generally look at where your life actually points: where your home of greatest value is, where your family and doctors are, where your cars are registered, where you vote, where your business and community ties sit. Changing your domicile means moving those anchors, not just your mailing address.
In plain terms, a real domicile change tends to look like a real move, because it is one. Half-measures are what get caught.
The part people underestimate: leaving can trigger scrutiny
This is the trap. High-tax states are generally aware that wealthy residents try to leave, and many audit departing high earners closely. Claiming you moved while keeping your old state as the true center of your life is often what these audits are built to catch, and losing one can mean back taxes, interest, and penalties on income you thought you had moved out of reach. The burden of proving the move was genuine frequently falls on you.
The takeaway is not "do not move." It is that a move done casually can be worse than not moving at all, because you take on cost and disruption and may still lose the audit. If you are going to do it, it generally has to be real and well documented.
Deciding whether a move is worth it, and doing it cleanly enough to hold up, is exactly the kind of question worth talking through before you act. Talk with a Lumida advisor →
Beyond moving: what else people consider
Relocating is the bluntest tool, and not the only one. Depending on the situation, some households explore trust structures that may change where certain income is taxed, timing a large one-time event like a business sale around a change in residency, or other planning. These approaches are complex, highly state-specific, and easy to get wrong, so they are worth exploring with a qualified professional rather than treating as off-the-shelf fixes. Whether any of them fits depends on your income, your assets, and your willingness to make genuine changes.
The honest bottom line
A move can meaningfully lower a state tax bill for some people, and for some it is the right call. But taxes should generally be one input into that decision, not the whole thing. Uprooting your family, your business, and your community to chase a lower rate is a life decision first and a tax decision second. The people who do this well tend to start by asking whether the move makes sense for their life, and only then work out how to do it in the most tax-efficient, defensible way.
Frequently asked questions
Can you avoid state income tax by moving to another state? Sometimes, but generally only by genuinely changing your domicile, your true permanent home, not just buying a second property. States generally tax the worldwide income of their residents, so the move typically has to be real and well documented.
What is the difference between residence and domicile? You can have several residences but generally only one domicile, the permanent home you intend to return to. Your domicile state is typically the one that can tax your worldwide income, which is why changing it is central to changing your tax picture.
What is the 183-day rule? Many high-tax states treat spending more than 183 days in the state as a factor in being taxed as a resident, regardless of where you claim to live. It is one of several tests states use, and the details vary by state.
Do states audit people who move away? Often, yes. Many high-tax states audit departing high earners and commonly place the burden on the taxpayer to prove the move was genuine. A poorly executed move can result in back taxes, interest, and penalties.
Is any of this legal or tax advice? No. This is general education. Residency and domicile rules are specific to each state and to your circumstances, and they change. Confirm the current rules and your own situation with a qualified tax advisor before acting.
Talk it through
Conflicts of interest. Lumida Wealth Management LLC ("Lumida") publishes this article to educate readers and to introduce prospective clients to its advisory services. The links above connect you with Lumida, which has a financial incentive to encourage you to become a client because it earns advisory fees from the clients it serves. This article is general education, not personalized investment, tax, or legal advice, and Lumida earns no fee from the article itself. Lumida does not provide tax or legal advice; it coordinates with, and where appropriate refers clients to, qualified tax and legal professionals. Lumida is an SEC-registered investment adviser; registration does not imply any particular level of skill or training.
Whether a move makes sense, and how to do it in a way that actually holds up, depends on your income, your assets, and your life. Connect with Lumida to think through the residency and tax-planning questions that apply to your situation.
This is for education, not tax, legal, or investment advice, and does not include any projection or guarantee of investment results. Nothing here is a recommendation of any particular fund, security, or strategy, or an offer to sell or a solicitation to buy any security. Talk to your own tax, legal, and financial advisors before acting. Information is current as of September 2026 and is subject to change. Lumida Wealth Management LLC is an SEC-registered investment adviser; registration does not imply a certain level of skill or training.