Leaving the Right State: Why Your U.S. Home State Matters When Moving to Spain

If you’re an American thinking about emigrating to Spain, you might assume that once you leave the U.S., you’re done with U.S. taxes. However, that’s not entirely true. While moving abroad does change your tax obligations, the state you leave from can make a significant difference in how smooth your financial transition is. Some U.S. states are far better than others when it comes to making a clean break, and that’s why you may have heard references to the “good states” to leave from when moving to Spain or elsewhere in Europe.

The Key Factor: State Taxes Don’t Always End When You Leave

The United States is one of the few countries in the world that taxes its citizens on their worldwide income, regardless of where they live. This means that even if you live in Spain full-time, you still have to file a U.S. federal tax return every year and potentially pay U.S. taxes. However, what many people don’t realise is that some U.S. states also continue to tax you even after you move abroad—and that’s where things get tricky.

The Best U.S. States to Leave From

Some states make leaving much easier by not imposing an income tax at all. These are:

  • Florida
  • Texas
  • Nevada
  • Tennessee
  • Wyoming
  • South Dakota
  • Washington
  • Alaska

By leaving from one of these states, you eliminate state income tax from your financial concerns, making your move to Spain much simpler. You’ll still need to deal with U.S. federal taxes and Spain’s tax system, but at least you won’t have a third layer of taxation from your former state.

States That Make Leaving Difficult

Not all states let go of their taxpayers so easily. Some, like California and New York, have strict domicile rules, meaning they may continue to tax you even if you’ve left the country—especially if you still have strong ties there (such as property, business interests, or family connections). California, in particular, has an aggressive tax collection approach and may even classify you as a resident for tax purposes if you spend too much time there visiting.

The Exit Tax for Wealthy Expats

If you’re planning to renounce your U.S. citizenship to avoid federal taxation altogether, be aware of the Exit Tax. This applies if your net worth exceeds around $2 million or if your income has been high for the past several years. In this case, the U.S. treats your worldwide assets as if they were sold the day before you renounced, and you may owe a significant tax bill.

Why This Matters for Americans Moving to Spain

Spain has a high tax burden, and its tax system can be complex for expats. Depending on your income level and residency status, you may already face significant taxes in Spain. The last thing you need is to be double-taxed by a U.S. state that you no longer live in.

By ensuring you leave from a state that does not impose an income tax—and by carefully severing any lingering ties to high-tax states—you can streamline your financial transition to Spain and avoid unnecessary tax headaches.

If you’re serious about moving to Spain, it’s worth considering which state you officially leave from before making the jump. Choosing a tax-friendly state can make your move much simpler, helping you focus on settling into your new life in Spain without unnecessary financial complications. Whether you’re retiring, working remotely, or starting a business in Spain, understanding these tax implications can save you a lot of trouble—and money—in the long run.

Please note: This blog does not constitute professional financial advice, purely an overview, and in all cases we recommend you speak to a qualified tax attorney.