Moving to France eliminates the federal income tax on certain income through the Foreign Earned Income Exclusion and Foreign Tax Credit, but does not automatically end state income tax obligations. The US federal income tax system and state income tax systems are legally separate. A US citizen who moves from California to France has left the United States for federal purposes but has not necessarily left California for California tax purposes.
States impose income tax based on their own residency rules, which vary significantly. Some states follow domicile as the primary test: if you have abandoned your domicile in the state, you are no longer a resident. Others apply a statutory residency test based on days spent in the state and maintenance of a local abode, which can create residency independent of domicile. A US citizen in France who maintains an apartment in New York and visits for extended periods may owe New York income tax regardless of what their intent was when they relocated.
The consequences of unaddressed state tax obligations include penalties, interest, and the accumulating difficulty of back-filing state returns years after departure.
How States Determine Residency
Domicile
Domicile is the primary basis for state income tax residency in most states. Your domicile is the place you consider your permanent home and to which you intend to return, even when living temporarily elsewhere. A US citizen living in Paris who intends to return to California after a few years abroad may still be domiciled in California if sufficient connections to the state remain.
Facts that support continued domicile in a state:
- Home or apartment maintained in the state
- Family members remaining in the state
- Driver’s license and voter registration in the state
- Bank accounts, investment accounts, professional licenses registered in the state
- Social and community ties
Facts that support termination of domicile:
- Sale of the home in the prior state
- Voter registration updated to a new location
- New driver’s license obtained in a different state or foreign country
- Bank and investment accounts transferred
- Professional licenses moved to new jurisdiction
Statutory Residency
Some states impose a separate statutory residency test that can create tax obligations regardless of domicile. The most prominent example is New York:
New York statutory residency: A person is a New York statutory resident if (1) they maintain a permanent place of abode in New York and (2) they spend more than 183 days in New York during the tax year. A US citizen domiciled in France who owns an apartment in Manhattan and spends more than 183 days there in a year is a New York statutory resident for that year. New York taxes statutory residents on all worldwide income, not just New York-source income.
Source Income
A US citizen who is not a resident of a particular state may still owe state income tax on income sourced to that state. Common examples include:
- Wages from a former US employer for work performed before moving to France
- Rental income from property located in the state
- Business income from operations in the state
- Gains from the sale of real property in the state
High-Scrutiny States
California
California does not have a statutory residency test based on days, but the California Franchise Tax Board (FTB) scrutinizes the circumstances of departure carefully. California considers a long list of factors to determine whether domicile has genuinely been established outside California, including the location of family, property, bank accounts, professional connections, and social memberships. Maintaining a home in California (even if rented to others) or returning frequently to California can support a FTB finding that domicile was not abandoned.
California taxes former residents on all income from California sources regardless of domicile. A US citizen in France who continues to receive California rental income or wages from a California employer owes California income tax on that income.
New York
New York applies both a domicile test and a statutory residency test. The statutory residency test is strict: maintaining a permanent place of abode (which can include an apartment owned or rented by a family member) and spending more than 183 days in New York produces a statutory residency obligation. New York source income is taxable regardless of residency.
Virginia
Virginia uses a domicile standard and actively pursues former residents who retain connections to the state. Virginia requires specific affirmative steps to establish a change of domicile, and has been known to issue questionnaires to former residents.
Other States
Most other states with income taxes follow domicile rules and terminate the resident obligation when domicile is properly established elsewhere. The quality of documentation of the change of domicile determines whether an audit challenge can be successfully defended.
States with No Income Tax
| State | Income Tax |
|---|---|
| Alaska | None |
| Florida | None |
| Nevada | None |
| South Dakota | None |
| Texas | None |
| Washington | None |
| Wyoming | None |
| Tennessee | None on wages and most earned income (investment income subject to limited tax; verify current rules) |
| New Hampshire | None on wages and most earned income (investment income subject to limited tax; verify current rules) |
A US citizen who was domiciled in one of these states before moving to France, and who properly maintained or changed that domicile, has no state income tax obligation. Many US citizens planning a long-term move abroad establish domicile in a no-income-tax state before departing. The change of domicile from a tax state to a no-tax state requires the same affirmative steps as any domicile change and must be completed before the year of departure.
The Year of Departure
The year in which a US citizen moves to France typically produces a part-year resident return in the state of prior domicile. The part-year return covers the period of state residency; income earned after establishing foreign domicile is generally not subject to the state’s tax. The exact treatment of income earned or received during the transition period depends on the state’s rules.
Important: Some states require notification of departure. California, for example, does not have a formal departure notification but the FTB may send a residency questionnaire to taxpayers who stop filing. Other states have specific procedures.
Treaty Non-Application to States
The US–France income tax treaty is a federal agreement. Its provisions — including the allocation of taxing rights and the treaty-based reductions in withholding — apply only to the US federal income tax. Individual states are not parties to the treaty and are not bound by its terms.
A US citizen in France who is treated as a non-resident of their former state through the treaty’s tiebreaker provisions cannot rely on that treatment for state income tax purposes. State residency is determined independently under state law.
Technical References
Domicile standard: The legal concept of domicile derives from common law principles adopted by each state. There is no federal definition controlling state income tax. Each state’s revenue authority applies its own facts-and-circumstances analysis.
New York statutory residency: N.Y. Tax Law §605(b)(1)(B) defines a statutory resident as an individual who maintains a permanent place of abode in New York State and who spends in the aggregate more than 183 days of the taxable year in New York. New York City has a parallel rule under N.Y.C. Admin. Code §11-1705.
California residency: Cal. Rev. & Tax. Code §17014 defines a resident as every individual who is in California for other than a temporary or transitory purpose, and every individual domiciled in California who is outside California for a temporary or transitory purpose. The FTB publishes guidelines on the factors considered in residency determinations.
Treaty and states: The Supremacy Clause of the US Constitution (Art. VI, cl. 2) makes federal treaties binding on states in their capacity as federal law, but states have generally asserted the right to tax their own residents independently of treaty provisions. The IRS Chief Counsel and various court decisions have confirmed that state income taxes are generally outside the scope of US income tax treaties. Verify current state rules with a state tax specialist.
Part-year resident returns: Each state has its own rules for part-year residency. Most states allocate income based on the period of residency, but the rules differ on how specific types of income (deferred compensation, stock options, retirement distributions) are allocated between resident and non-resident periods.