Income tax differences when moving state to state

On Behalf of | Feb 9, 2022 | IRS Tax Law

Every state and local jurisdiction has a unique collection of tax laws. In some states, the income taxes are more expensive, and in others, there are no income taxes at all. People who move from Texas to another state need to get a good idea of how taxes are calculated.

Income tax requirements vary

California has the highest rate of income tax in the United States. Taxpayers must pay 13.3% for income that exceeds $1 million. There is no income tax required in nine states, including Texas. However, residents who’ve lived in Texas may ignore or forget the new rules that they must follow when they move into another state.

Consider the time and intent

In some states, you don’t have to be a permanent resident to be charged tax. A common IRS tax law involves time and intent of your residency. In these states, you will be taxed if it’s proven that you spend more than 183 days in a state. A Texas resident with no income tax may have to spend tax during a business trip in California.

If you have multiple homes in multiple states, the court determines where your work and social activities occur the most and then decides in which state to apply the tax. For example, a new resident of New York may not owe taxes if he or she has a primary home in Texas.

Consider the requirements in your state

When you file your yearly tax returns, you will see the differences in the types of taxes and fees that you need to pay. In Texas, there is no income tax, but you have this rule to consider if you move into another state.