US State Taxes for Expats: California, New York and Virginia's Sticky Residency Rules

US state taxes for expats depend on your former state's residency rules, not on where you live now. California, New York and Virginia can all keep taxing an American in the UK as a resident until their own domicile tests say the person has left, and none of them is bound by the US/UK tax treaty. The federal return is only half of the US picture.

Every American in the UK files a federal return, because the US taxes its citizens wherever they live. The IRS guidance for citizens abroad deals with that side. States are different. A state taxes its residents, and each state decides for itself who its residents are. Most states that levy an income tax tie residency to domicile, and domicile does not move just because you boarded a plane. This guide looks at the three states whose rules cause the most trouble for Americans in the UK, and at how to leave each of them properly.

Do US expats pay state taxes?

A US expat pays state income tax only if a state still treats them as a resident, or if they have income sourced in that state, such as rent from a property there. Whether you are still a resident is decided by the state's own law. Your federal filing status, your UK residence and the treaty do not decide it.

That is why two Americans who move to London in the same week can end up in different positions. One who moved from a state with no broad personal income tax has nothing to file at state level, except on income sourced in another state. One who moved from California, New York or Virginia may be filing a state resident return for years, reporting worldwide income, often with no credit for the UK tax already paid on it.

The real question is not "do I have to pay?" but "have I actually stopped being a resident of my state?" The answer turns on two ideas that every one of these states uses: domicile, and presence.

Domicile and statutory residence in plain terms

Domicile is your permanent home: the place you intend to return to when you are away. You can have only one domicile at a time, and you keep it until you both abandon it and set up a new one somewhere else. Statutory or "actual" residence is a separate test based on how long you spend in the state and whether you keep a home there. A person can be taxed as a resident under either test.

How California treats Americans who move abroad

California's Franchise Tax Board (FTB) says you are a resident if you are present in California for other than a temporary or transitory purpose, or if you are domiciled in California but outside the state for a temporary or transitory purpose. As a resident you are taxed on all income regardless of source, according to the FTB's residency page.

The key phrase for expats is "temporary or transitory". A two-year posting to London, with a house kept in San Diego and a firm plan to return, can look temporary. If the absence is temporary, a California domiciliary stays a California resident while abroad.

The California 546-day safe harbor

California has a statutory safe harbor for people who leave under an employment contract. According to FTB Publication 1031 (2024), a California domiciliary who is outside California under an employment-related contract for an uninterrupted period of at least 546 consecutive days is considered a nonresident, unless either of these applies:

• the individual has intangible income (such as interest, dividends and gains on investments) exceeding $200,000 in any taxable year during which the contract is in effect; or
• the principal purpose of the absence from California is to avoid personal income tax.

Return visits to California totaling no more than 45 days in any taxable year covered by the contract are treated as temporary. A spouse or registered domestic partner who accompanies the employee for the 546 days is also treated as a nonresident. Days under two separate contracts cannot be combined to reach 546. The safe harbor applies to employees under contract; a self-employed person or a retiree moving to the UK has to rely on the general facts-and-circumstances test instead.

What California looks at when there is no safe harbor

Publication 1031 says your residence is usually where you have your closest connections, and that it is the strength of the ties, not their number, that counts. The FTB's list of factors includes the time you spend in and outside California, where your spouse and children live, where your principal residence is, the state that issued your driver's license, where your vehicles are registered and you vote, where your bank accounts and professional advisers are, and where your social ties are. California also presumes you are a resident for any year in which you spend more than nine months in the state.

California does not follow the foreign earned income exclusion

This is the expensive part. The 2025 Schedule CA (540) instructions tell residents to add back, as a positive number, the amount excluded on federal Schedule 1 under the federal foreign earned income and housing exclusion. Salary that the foreign earned income exclusion removes from federal tax comes straight back into California income. And the 2025 Schedule S instructions exclude taxes paid to any foreign country from California's other state tax credit, so UK income tax on that salary does not reduce the California bill. Our guide for clients of our San Francisco cross-border team covers California's other departures from federal rules in more depth.

What is the New York 548-day rule?

The New York 548-day rule is a statutory exception that lets a New York domiciliary be taxed as a nonresident while working or living abroad. It does not change your domicile. It simply switches off resident taxation for as long as you keep meeting its conditions, which makes it the most useful tool for New Yorkers on a long UK posting.

New York first defines residents in two ways. According to the New York Department of Taxation and Finance, you are a resident if New York is your domicile, or if you maintain a permanent place of abode in the state for substantially all of the year and spend 184 days or more there. The department adds that domicile changes only on clear and convincing evidence that you have abandoned New York and established a new domicile elsewhere.

The department's Nonresident Audit Guidelines (December 2021) set out the three conditions of the 548-day rule, under Tax Law section 605(b)(1)(A):

1. Within any period of 548 consecutive days, the taxpayer is present in a foreign country or countries for at least 450 days.
2. During that 548-day period, the taxpayer, the taxpayer's spouse (unless legally separated) and the taxpayer's minor children are not present in New York State for more than 90 days.
3. In the nonresident portion of the tax year in which the period begins, and of the year in which it ends, the taxpayer's New York days do not exceed 90 multiplied by the number of days in that portion divided by 548.

Full and part days both count. The taxpayer can choose any 548-day window, including overlapping windows, but must prove all three conditions. The third condition is where people fail most often: a short first or last year abroad allows only a small number of New York days. The guidelines also describe a separate 30-day rule for domiciliaries who keep no New York home, keep a home elsewhere all year and spend no more than 30 days in the state.

New York examines domicile through five primary factors: home, active business involvement, time, items "near and dear" and family connections. Keeping the Manhattan apartment, the art collection and a role in a New York business while in London all point toward New York domicile. Our New York cross-border tax guide covers the city-level rules that sit on top of state residency.

Why Virginia's residency rules are so sticky

Virginia has no safe harbor and no day-count exception for people living abroad. Virginia Tax states plainly that the fact that you are living abroad does not mean you are no longer considered a Virginia resident for tax purposes, and that unless you establish residency in another state you remain a domiciliary resident who must file Virginia returns.

Virginia law, Va. Code § 58.1-302, recognizes two kinds of resident. Domiciliary residents are those whose legal residence is Virginia. Actual residents are those who live in Virginia for more than 183 days of the year. A domiciliary resident is taxed on all income, from inside or outside Virginia.

A move abroad can still end Virginia domicile. In Ruling 21-8, the Tax Commissioner accepted that a US citizen changed his domicile from Virginia to another country when he moved there. The ruling applies a two-part test: actual abandonment of the old domicile with an intent not to return, and acquisition of a new domicile through physical presence and an intent to stay indefinitely. The burden of proof sits with the taxpayer, so the ties you keep in Virginia, and the ones you build in the UK, decide the outcome.

Two Virginia rules soften the blow. Virginia Tax says taxpayers who exclude foreign income under Section 911 receive the same exclusion on their Virginia return. And if you are outside the US or Puerto Rico on May 1, you do not have to file until July 1, provided you attach a statement certifying you were abroad on the original due date. But Virginia also says no credits are allowed for income taxes paid to foreign countries, except on foreign source pension income, so UK tax on income that is not excluded does not reduce the Virginia bill.

US state taxes for expats compared: California, New York and Virginia

Question	California	New York	Virginia
Who is a resident?	Present for other than a temporary or transitory purpose, or domiciled and away only temporarily	Domiciled in New York, or permanent place of abode plus 184 days or more	Domiciled in Virginia, or living there more than 183 days
Expat exception	546-day employment contract safe harbor	548-day rule (450 days abroad, 90-day New York limit) and 30-day rule	None; domicile must actually change
Foreign earned income exclusion	Not followed; added back on Schedule CA	Check the current-year return instructions	Followed; same exclusion as federal
Credit for UK income tax	No; Schedule S excludes foreign taxes	Check the current-year return instructions	No, except on foreign source pension income
Treaty relief	Not bound by the US/UK treaty	Not bound by the US/UK treaty	Not bound by the US/UK treaty

The treaty row matters. Article 2 of the US/UK double taxation convention lists the US taxes it covers as the federal income taxes imposed by the Internal Revenue Code. A treaty position that works on your federal return, such as a residence tie-breaker or relief for a UK pension, does not automatically carry over to a state return. On the federal side, UK tax can usually be credited through Form 1116; our comparison of the FEIE and the foreign tax credit in the UK explains which federal route suits which client.

What people get wrong about state tax when they move abroad

• Assuming the federal answer is the state answer. Excluding salary on Form 2555 or using the treaty does not settle the state position. California adds the exclusion back, and no state is bound by the treaty.
• Keeping the driver's license "just in case". A home-state license, car registration and voter registration are among the first things a state auditor checks. Renewing a license while abroad is hard to square with a claim that you have left for good.
• Keeping the house empty and ready. A home kept available for your return is strong evidence of continuing domicile, and in New York a permanent place of abode is part of the statutory residence test.
• Ignoring the family's days. New York's 548-day rule counts your spouse's and minor children's New York days toward the 90-day limit, not just yours.
• Stopping filing without a final return. Simply going quiet invites the question of whether you ever left. A final part-year resident return is a clear record of the date you say your residency ended.

Illustrative example: Dana, a software engineer domiciled in California, signs a two-year contract with her employer's London office and moves in January with her husband. They rent out their Oakland house on a long lease, spend three weeks in California each summer, and have about $30,000 a year of investment income. Because the contract keeps her outside California for more than 546 consecutive days, her visits stay under 45 days a year and her intangible income is well under $200,000, the FTB safe harbor treats both of them as nonresidents for the contract period. California can still tax the California-source rent from the Oakland house, so they file nonresident returns reporting that income. Had Dana's posting been for one year, the safe harbor would not apply, and she would need to show on the facts that her absence was not temporary.

How to break state tax residency before you move to the UK

Breaking state residency works best when it is planned before the move, not argued about after an audit letter arrives. The steps below are the ones we work through with clients leaving high-tax states; the order matters less than doing all of them and keeping the evidence.

1. Check which test you need to pass. Work out whether you can rely on a statutory exception (California's 546-day safe harbor, New York's 548-day or 30-day rule) or must show a full change of domicile, as in Virginia.
2. Deal with the home. Sell it, or let it on a long lease to an unrelated tenant. Keep the lease and the move-out records.
3. Move the paper trail. Surrender or let lapse the state driver's license and car registrations, update voter registration under the federal overseas voting rules, and move banks, doctors and professional advisers.
4. Build the UK side. A UK home, a UK employment contract, children in UK schools and UK memberships all support a new domicile.
5. Keep a day count. Record every day spent in the state, and for New York, the days of your spouse and minor children too. Travel records, card statements and phone data all help.
6. File a final part-year resident return. Report the date your residency ended, then file nonresident returns only if you still have income sourced in the state.

The same exercise belongs on any moving-abroad tax checklist, alongside the federal and UK steps covered in our guide to pre-move tax planning.

Getting help with state residency from the UK

State residency is decided on facts, and the facts are usually built in the months around a move. US/UK Cross Border Tax — US CPAs and UK tax advisers working as one team; London, Manchester, New York, San Francisco — reviews state ties before a move, prepares final part-year and nonresident state returns, and coordinates them with the federal return and UK Self Assessment. Our US state taxes for expats and multi-state filing service covers California, New York, Virginia and every other state, and our Americans in the UK page explains how the federal and UK sides fit around it. If you are unsure whether your old state still treats you as a resident, contact us with your move date and the ties you still have.