Moving to Texas? What Changes for Your Taxes

Your last return to your old state

For the year you move, you'll usually file a part-year resident return with the state you left, reporting the income you earned while you lived there. Income earned after you became a Texas resident generally isn't taxed by your old state, but some income sourced there, such as rent from property you still own or wages for work done there, can be.

Working remotely for an out-of-state employer

If you work from Texas for a company in another state, your wages generally aren't taxed by that state. A few states, including New York, can tax remote employees whose work is done out of state for their own convenience. Check with your employer that they've stopped withholding state tax for your old state and updated your work location. If too much was withheld, you claim it back on that state's return.

Show you've really moved

• Get a Texas driver's license and register your vehicles here
• Register to vote in Texas
• Update your address with the IRS, banks, your employer and retirement accounts
• Change your primary residence on any home you kept in your old state
• Keep records of your move date, lease or closing documents

Taxes Texas does have

Texas makes up for no income tax with property and sales taxes. Property tax rates here are among the highest in the country, so if you buy a home, apply for the homestead exemption with your county appraisal district. Sales tax is up to 8.25% combined. Both affect your federal return too: property taxes and, if you choose, sales taxes can be itemized deductions, subject to the state and local tax deduction limit.

Business owners

If you move a business to Texas, you may need to register it here, set up Texas sales tax and payroll accounts, and file the annual franchise tax report. Ending registrations in your old state properly avoids years of late notices.