State taxes: the return that doesn't know you left.
Moving abroad ends federal residence questions — you're taxable regardless — but states play by their own rules, and several are famously reluctant to let go. The state return is the part of an expat file most often wrong, because everyone forgets it exists.
Figures relate to tax year 2025 (US) · 2025-26 (UK)
Domicile is stickier than residence
States tax on residence and on domicile — your permanent legal home, which survives a move abroad unless deliberately replaced. California, New York, Virginia, New Mexico and South Carolina are the classic 'sticky' states, reading a kept driver's licence, voter registration or storage unit as an intention to return.
Most states also decline to copy federal expat relief: the foreign earned income exclusion and foreign tax credits often simply don't exist at state level, so lingering state residence means real tax, not just paperwork.
- Residence and domicile tested separately
- Sticky states scrutinise abandoned ties
- Federal expat reliefs often unavailable at state level
- State-source income can stay taxable after you leave
Leaving properly is a checklist
A clean break is built from facts: licence and voter registration moved or surrendered, home sold or let commercially, accounts re-addressed, the final part-year return filed to close the record. Done before the move, it's an afternoon; reconstructed three years later, it's a dispute.
Where ties legitimately continue — a rental property, deferred compensation, state-source income — we file the nonresident returns that keep the position clean.
Primary sources
Official guidance from the IRS, FinCEN and GOV.UK. Thresholds and rates on those pages are updated annually — check the current tax year before relying on a figure.
Questions, Answered.
What clients ask about us state tax returns
Which states are hardest to leave?
California and New York lead the list, with Virginia, New Mexico and South Carolina close behind — states that emphasise domicile and audit departures. States with no income tax, and those with clear statutory tests, are far simpler exits.
Do I file a state return if I've been abroad for years?
Only if you remained a resident or domiciliary, or have state-source income like a rental. If you never formally broke ties with a sticky state, filings may technically still be due — which is exactly the situation worth reviewing and closing.
My employer still withholds state tax. Can I stop it?
Usually, once your residence facts support it — a corrected withholding certificate and, where needed, a nonresident filing to recover what was over-withheld. Withholding is an assumption, not a verdict.
Which US states have no income tax?
Florida, Texas, Washington, Nevada, Tennessee, South Dakota, Wyoming and Alaska levy no personal income tax (New Hampshire taxes only certain investment income). Establishing domicile in one before moving abroad is the cleanest exit there is.
Do states accept the foreign earned income exclusion?
Many follow federal taxable income and inherit it, but notable states — California among them — don't conform, taxing income the federal return excluded. It's exactly why state residence matters more abroad than people expect.
Next Step.
Tell us what you hold — the scope and a fixed fee follow in writing.