Has California recently enacted an exit tax for residents leaving the state?
Executive summary
California has not enacted an exit tax as law; reporting and tax-advice sites consistently state there is currently no statutory “exit tax” imposed on residents who leave, though multiple proposed wealth-tax bills have included exit-tax provisions targeting very high net worth individuals (thresholds commonly cited: $30 million individual/$15 million married filing separately, 0.4% rate) [1] [2] [3] [4].
1. No enacted one‑time “exit tax,” but proposals have circulated
Available reporting and tax-advice sites state explicitly that California does not currently have a one‑time exit tax imposed when a resident departs the state; guides aimed at expats and corporate taxpayers say “there is no ‘exit tax’ when leaving California” while warning other tax traps remain [1] [5] [2].
2. What people mean when they say “exit tax” — proposed wealth tax language
Many of the pages that discuss a California “exit tax” are referring to provisions in proposed wealth‑tax legislation or past bills (often called a “wealth tax”) that would levy a small annual tax on net worth above very high thresholds and would include apportionment or post‑departure obligations — essentially an exit mechanism for wealthy former residents [6] [3] [4].
3. Common figures in reporting on proposed measures
Multiple sources repeat the same draft numbers: a threshold of $30 million in worldwide net worth for individuals (sometimes $15 million for married filing separately) and a rate around 0.4% on net worth above the threshold; some descriptions say the rule could reach back for years after a taxpayer leaves or apply for up to ten years [3] [7] [2] [4].
4. Divergence between reputable guidance and commentaries
Authoritative tax‑help pieces (expat guides, corporate tax advice) emphasize “no exit tax” but warn California’s residency tests and taxation of California‑sourced income can produce ongoing tax exposure if you don’t properly establish non‑residency [1] [5]. By contrast, law‑firm blogs and advocacy or marketing pages sometimes describe proposed bills as if already enacted or state specific rules without noting legislative status; that creates the impression of an existing exit tax in some corners of the web [8] [9].
5. Practical implications for people leaving California today
Even in the absence of an enacted exit tax, California can tax income with California “situs” or source — for example rental income from in‑state property, businesses with California nexus, or sales of California real estate — and the Franchise Tax Board uses a “close connection” or residency‑facts test that may keep former residents on the hook for some income [5] [1]. That is why many advisers advise meticulous documentation when changing domicile [1].
6. Legal and constitutional questions flagged by commentators
Legal commentators note proposed wealth/exit taxes raise due‑process and commerce‑clause questions because they seek to tax people who no longer live in California; defenders of proposals frame them as protecting the tax base from wealthy residents who accumulated gains while using state infrastructure [10] [6] [4].
7. Where confusion and misinformation arise
Confusion stems from a mix of: (a) draft bills and long‑discussed proposals that were widely covered in press and lawyer blogs; (b) some summaries that fail to state legislative status; and (c) the difference between a one‑time “exit” levy and normal rules taxing California‑source income or unrealized gains under other jurisdictions’ expatriation regimes — all of which lead to headlines and brochures that overstate the present state of the law [1] [8] [9].
8. Bottom line and next steps for readers
If you’re planning to leave California, the immediate legal situation in available reporting is that no codified California exit tax has been enacted, but proposed wealth‑tax bills with exit provisions have been widely discussed and carry specific thresholds and a 0.4% rate in many descriptions; also, California will still pursue taxation of in‑state sources and litigate residency claims [1] [2] [4] [5]. For decisions tied to domicile, asset sales, or international moves, available sources recommend consulting a tax professional and tracking legislative developments because proposed measures and enforcement priorities can change [1] [5].
Limitations: my article relies solely on the provided collection of reporting, law‑firm pieces, and tax guides; those sources uniformly report the current absence of an enacted exit tax but also repeat draft numbers from proposed legislation — which is the primary source of public confusion [1] [3] [6].