The Tax Details on Moving From California to Reno

When you move from California to Nevada, your tax picture changes dramatically — but it’s not as simple as cutting ties one day and being free from California’s reach the next. California is notorious for keeping a close eye on former residents who still have financial connections to the state, and it’s essential to handle your move carefully to avoid an audit headache later on.

The first thing to understand is that California taxes residents on all their income, no matter where it’s earned. Once you become a nonresident, however, the state can only tax income that comes from California sources — like rental property in California, business activity within the state, or wages from a California employer. The challenge lies in proving when you actually became a Nevada resident. California’s Franchise Tax Board (FTB) uses dozens of factors to determine residency: where you spend your time, where your family lives, where your home base is, where you vote, register your car, hold a driver’s license, receive mail, and even where your doctor or accountant is located. You can’t just claim you’ve moved; you need to show it through your life’s footprint.

Nevada, on the other hand, makes things much easier because it has no state income tax. That means once you’ve established residency there — typically by getting a Nevada driver’s license, registering your vehicle, updating your voter registration, and actually living there — you’ll only owe federal income taxes. But the timing of your move matters for that first year. You’ll likely need to file as a part-year resident in California, reporting only the income you earned while living there, plus any California-source income after you left. The rest of your income for the year would go on your federal return and not be taxed by Nevada.

For example, if you worked in San Francisco until June and then moved to Reno in July, you’d file a part-year California return covering January through June. Any wages, business income, or capital gains during that period would be taxed by California. From July forward, your income would be free of state income tax as long as it isn’t connected to California. If you keep a rental property in Sacramento, though, that rent is still taxable to California, even as a Nevada resident.

One of the biggest traps for new Nevadans is keeping lingering California ties that make the FTB suspicious. Continuing to use a California address on tax documents, holding onto a California driver’s license, or spending more time in California than Nevada can lead the FTB to argue you never really left. If that happens, you could be taxed as a California resident for the entire year or longer — and the burden of proof will fall on you to show otherwise.

It’s also smart to review your business structure if you’re self-employed or own a company. If your business is still registered in California or has clients and operations there, California may still claim a share of your income. In that case, you may need to register in Nevada and make a clean break from California’s jurisdiction where possible.

In short, moving to Nevada can bring real tax savings, but only if you make the transition properly. Keep records, change your official documents, and clearly establish your new residency. For most people, the safest approach is to treat the move as a true lifestyle shift — not just a tax move — so that your day-to-day life clearly reflects Nevada as your home.

Once that’s done, you’ll enjoy one of the biggest benefits of living in the Silver State: no state income tax, fewer bureaucratic headaches, and more of your hard-earned money staying in your pocket.