Guide
The states that really do take money when you leave
Updated
The exit tax myth has a source. Two mechanisms in two states produce what people describe, and neither is a tax on leaving.
Question 1
Which state are you leaving?
The mechanism differs completely by state, and the phrase exit tax describes different things in each.
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Which states have an exit tax?
None, in the sense of a tax charged because you leave. What people call an exit tax is one of two mechanisms, both below with the forms and the tests.
New Jersey requires a nonresident who sells or transfers New Jersey real property to make an estimated Gross Income Tax payment at closing. It is at least 2% of the consideration stated in the deed, per the Division of Taxation's GIT/REP guidance.
New York keeps taxing you as a resident if it still treats you as domiciled there. It also does if you keep a permanent place of abode there for substantially all of the year and spend 184 days or more there, as its nonresident guidance states.
The New Jersey exit tax: money held back at closing
On a nonresident's sale or transfer of New Jersey real property, an estimated Gross Income Tax payment is required.
The Division of Taxation describes the calculation. The gain on the sale or transfer is multiplied by the highest Gross Income Tax rate, 10.75% effective 8-1-2004. The payment must not be less than 2% of the total consideration stated in the deed of conveyance.
The floor is what people remember. A seller with no gain, or a loss, still pays 2% of the price on the day. That is the whole exit tax story, and it is a prepayment. The actual liability is settled when the nonresident Gross Income Tax return is filed, and an overpayment comes back then.
The New Jersey forms
GIT/REP-1 is the nonresident seller's declaration completed at closing. GIT/REP-2 is the receipt where the payment was made before closing. GIT/REP-3 is the seller's residency certification or exemption, used by residents and by nonresidents meeting an exemption. GIT/REP-4 is a waiver, and GIT/REP-4A covers corrective deeds.
Which form reaches the settlement agent decides whether money is held back, and it is decided in the week before closing. That is an unglamorous fact and it is the one that determines the outcome.
New York: the day count
New York states that you are a resident if you are domiciled in the state. Separately, you are a resident if you maintain a permanent place of abode in New York State for substantially all of the taxable year. You must also spend 184 days or more there.
That second test does not ask what you intended. It asks whether you kept somewhere to live and whether you were there. A genuine move to another state, plus a retained apartment, plus regular work trips, is the exact shape it catches.
Why the day count is worse than the withholding
The New Jersey payment is 2% of one transaction and it comes back if it was too much. Statutory residence in New York taxes a full year of worldwide income.
Count days contemporaneously, since part of a day generally counts, and treat the abode as the live decision. Giving up the place to live removes the first limb of the test entirely, and it is usually easier than winning an argument about the second.