State Taxes When You Live Abroad: Are You Still on the Hook?

Federal tax obligations for expats are well known, but state tax obligations are often overlooked — and some states follow you abroad. Most states stop requiring you to file once you've established residency elsewhere, but a few "sticky" states — California, Virginia, South Carolina, and New Mexico among them — may continue to tax former residents who haven't clearly severed their domicile. California in particular has an aggressive standard: simply having a driver's license, bank account, or other ties to California can be enough for the state to assert you're still a resident. To cut state tax ties cleanly, you generally need to establish domicile in another state or country, surrender your driver's license, close local bank accounts, and change all your mailing addresses. Expats who plan to return to a specific state someday should weigh the cost of maintaining those ties versus formally abandoning state residency.