Leaving California?
Your Tax + Real Estate Guide

Income tax comparisons dominate the leaving-California conversation. But for anyone with appreciated real estate, equity portfolios, or business interests, the state estate tax picture deserves equal attention. California’s position here surprises most people: California has no state estate or inheritance tax.

Oregon & Washington: Where “Lower Taxes” Gets Complicated

Oregon imposes a state estate tax up to 16%, with an exemption of only $1 million — not per person, total. A $3M estate in Oregon owes approximately $164,000 in state estate tax. In California: $0. Washington’s estate tax tops out at 20%, with a $2.2M exemption significantly below the federal threshold. Moving to the Pacific Northwest to escape California taxes could cost your heirs hundreds of thousands of dollars that would have passed tax-free from California.

States With No Estate or Inheritance Tax

Florida, Texas, Nevada, Arizona, Tennessee, Wyoming, South Dakota, and North Carolina all impose no state estate or inheritance tax. Combined with their no-income-tax status, these states present the cleanest picture for high-net-worth California departures from a pure tax standpoint. Property tax, cost of living, and personal fit still matter — but the tax position is genuinely favorable.

If estate planning is a factor in your decision, work with a CPA or estate attorney who handles multi-state situations. The interaction between California’s community property rules, your new state’s marital property laws, and federal estate planning is worth getting right before the move — not after.

California has the highest state income tax in the nation — up to 13.3% on income over $1 million, and an effective rate around 9–10% for tech workers earning $300K–$600K in total comp. Combined with high housing costs, some residents reach a point where the numbers favor a change. Others leave for lifestyle reasons: proximity to family, lower density, or a slower pace. Both are valid.

This guide covers what matters most from a real estate and tax perspective when you're planning a move. It's not a reason to go or stay — that's a deeply personal decision. It's a tool to make sure you understand the financial mechanics before you commit.

Why People Leave (and Why Some Stay)

The most common reasons California residents relocate: housing affordability, state income tax on high earners, cost of living, and remote work freedom. For tech workers whose employers shifted to fully remote post-2020, the calculus shifted: if the San Jose or San Francisco commute is no longer required, a $200K salary goes dramatically further in Austin, Phoenix, or Nashville.

At the same time, California has real advantages that are easy to overlook when doing spreadsheet math: world-class infrastructure, diverse communities, elite universities, cultural amenities, and a climate that most of the country simply cannot match. Many clients who run the numbers decide to stay — or buy in California while establishing a tax domicile elsewhere for part of the year.

The Tax Picture

California's income tax is progressive, with a 1% mental health surcharge on income over $1M bringing the top marginal rate to 13.3%. Capital gains are taxed at ordinary income rates — there is no preferential California capital gains rate, unlike many other states. For long-term investors and RSU holders, this is significant.

Property tax in California is governed by Proposition 13, which caps assessed value increases at 2% per year regardless of market appreciation. If you bought a Silicon Valley home 10–20 years ago, your effective property tax rate may be well under 0.5% of current market value. When you sell and move, you give up that Prop 13 cushion permanently — and your new state likely assesses at or near current market value with annual reassessments.

Selling Your California Home

If you own a Silicon Valley or Bay Area home, you likely have substantial equity. The median Silicon Valley home has appreciated significantly over the past decade. Before relocating, maximizing that sale price matters — whether that means strategic timing, pre-sale improvements, or competitive pricing to drive multiple offers.

Run your numbers with the Seller Net Proceeds Calculator to estimate what you'll walk away with after agent commissions, closing costs, and any applicable capital gains taxes. From that equity, determine your budget for a home in your destination market.

Establishing Residency in Your New State — and Surviving the FTB Audit

To stop California from claiming ongoing income tax, you must genuinely establish domicile elsewhere — and the FTB is watching. The Franchise Tax Board completed 520 high-income residency audits in 2023, up 126% from 2019. These audits target departing earners at $1M+ income and apply the “closest connections” test, not simply a day count. Living in Texas 200 days but keeping your country club membership, doctors, and social ties in California can still lose a residency audit.

The practical departure checklist — every item must genuinely move:

• Driver’s license & vehicle registration — new state, immediately
• Voter registration — re-register in new state, cancel California registration
• Bank accounts & investment accounts — update mailing address to new state
• Professional licenses & medical providers — transfer or establish new
• Social memberships, religious affiliations, clubs — join equivalents in new state
• Primary real property — ideally sell or convert CA home to rental before departing
• 183+ days per year physically in new state — keep a dated travel log

The informal 45-day guideline: after establishing domicile in your new state, most practitioners recommend keeping California visits under 45 days per year for the first two years. This is not a statutory rule — it’s a practical risk-management benchmark that reduces audit exposure while your departure record is being established.

For your departure year, you’ll file California Form 540NR (nonresident or part-year resident return). This allocates income between your California residency period and the remainder of the tax year. Keep a day-count log from January 1st through your official departure date to support this filing.

One item on the radar for ultra-high-net-worth individuals: California has seen proposed wealth tax legislation (AB 2088, AB 310) that would impose an annual tax on worldwide net worth above $30M — potentially applying even to former residents for up to 10 years after departure. Neither bill has been enacted, and both have faced significant opposition. But the direction of proposed legislation is worth monitoring if your net worth is in this range. This is a conversation for a California tax attorney, not a generalist CPA.

Moving Cost Estimates

• Nearby states (AZ, NV, OR): $3,000–$8,000 for a full household move
• Mid-distance (CO, UT, ID, WA): $5,000–$12,000
• Cross-country (TX, FL, TN, NC): $8,000–$18,000

These are rough ranges for a 3–4 bedroom household using a professional mover. Costs vary significantly by volume, timing (summer is peak season), and whether you use full service vs. container shipping.