Is California imposing an exit tax
Executive summary
California currently does not levy a general, statewide “exit tax” on people simply for moving out, but multiple proposed wealth-tax bills and analyses in 2024–2025 would create an “exit”-style charge targeting ultra‑high‑net‑worth residents (commonly described as 0.4% on net worth above $30 million, or $15 million for separately filed married taxpayers) — these proposals had not been enacted as of early-to-mid 2025 [1] [2] [3]. Reporting and tax-advice outlets agree: there is no ordinary exit tax today, though California can and does tax certain income of former residents in limited circumstances [4] [5].
1. No blanket exit tax today — what the practical law says
Longstanding tax and legal summaries emphasize there is no universally applied one‑time “exit” levy simply for moving out of California; practitioners and commentators explicitly state “there is no such thing as an exit tax” in current law, while warning former residents can still owe California tax on specific income sources tied to the state [4]. Greenback’s expat guidance likewise states “California has no exit tax in 2025” and focuses on residency rules as the key risk for continued California taxation [1].
2. Why readers keep hearing “exit tax” — proposed wealth tax bills
Multiple outlets and law‑firm writeups describe a proposed California wealth/exit tax that would function like an exit charge for very wealthy individuals: typical bill language or summaries in 2024–2025 targeted net worth thresholds of $30 million (reduced to $15 million for married taxpayers who file separately) and a rate often cited at 0.4% on net worth above those limits [3] [6] [7]. Forbes and other analysts frame these measures as part of a broader push to capture unrealized gains and wealth accumulated while residents, not an across‑the‑board tax on ordinary movers [5].
3. Variation in reporting and the danger of loose terminology
Coverage differs in tone and specificity: tax‑service blogs and real‑estate sites repeat numeric specifics (0.4%, $30M/$15M thresholds), law‑firm pages explain the legislative rationale, and consumer‑facing sites emphasize that the proposals were not enacted as of early 2025 [3] [6] [2]. This mix fuels confusion: outlets may headline “exit tax” while most legal summaries call it a proposed component of a wealth tax and stress it wasn’t law at the latest dates in the available reporting [2] [6].
4. How California can still tax former residents — concrete mechanisms
Even without a one‑time exit tax, California has tools to tax former residents where income or gains have a California “situs” or arose while a person was resident — for example, capital gains tied to in‑state businesses or property and apportionment rules for income earned from California sources [4] [5]. Practitioners warn that California’s residency rules are “aggressive,” so failing to establish non‑residency can leave a former resident subject to worldwide California taxation unless carefully documented [1].
5. Stakes, likely targets, and political context
The proposed exit/wealth tax language repeatedly targets the ultra‑wealthy: individuals with net worth far above typical thresholds, and proposals often emphasize recouping value that allegedly accrued while the person benefited from California infrastructure and incentives [6] [5]. That political framing explains why reporting focuses on wealthy taxpayers and why most ordinary movers would not be affected even under the proposals [3] [5].
6. What sources do not confirm
Available sources do not say the proposed exit/wealth tax had become law as of the reporting dates cited; they also do not claim California is currently withholding an across‑the‑board exit fee on all departing residents. Nor do the provided sources offer enacted statutory text or official Franchise Tax Board rules imposing a universal exit tax [2] [1] [4].
7. Practical takeaway for residents and planners
If you are a typical taxpayer leaving California, current reporting indicates no one‑time state “exit tax,” but you must plan carefully to document change of residency and review whether particular assets, in‑state business interests, or unrealized gains could trigger California tax claims [1] [4]. If you are high‑net‑worth and near the cited thresholds, follow legislative developments closely: multiple outlets flag a recurring proposal (0.4% above $30M/$15M) that would materially change obligations if enacted [3] [5].
Limitations and sources: This analysis relies solely on the provided reporting and tax‑service articles; those sources span law‑firm posts, tax‑service guides and business press that agree on the distinction between current law (no general exit tax) and proposed wealth‑tax measures that have been called an “exit tax” in public commentary [1] [2] [4] [3] [6] [5].