Tax and residency

State income tax

Also called state tax, state tax residency, state residency.

State income tax is a second layer of income tax that most US states charge their residents on all income wherever earned, with residence fixed by each state's own statute rather than by the federal residency tests or by immigration status, so an EB-5 family can become resident of a state on facts that have nothing to do with the green card.

What it decides

Each state writes its own test. Under Cal. Rev. & Tax. Code 17014(a) California treats as a resident every individual in the state for other than a temporary or transitory purpose, and every individual domiciled in the state who is outside it for a temporary or transitory purpose. New York taxes as a resident anyone domiciled in the state, subject to narrow day count exceptions, and separately anyone not domiciled there who keeps a permanent place of abode in the state for substantially all of the year and spends 184 days or more in it, with any part of a day counting as a day. Florida sits at the other end: article VII section 5(a) of its constitution bars the state from taxing the income of natural persons beyond amounts creditable against federal tax, which is why there is no individual income tax there. The planning point is timing rather than rate. The $250,000 difference between the $800,000 and the $1,050,000 investment level is paid once, while state tax is paid every year the family stays resident.

Governed by Cal. Rev. & Tax. Code 17014(a), read on leginfo.legislature.ca.gov. N.Y. Tax Law 605(b)(1), with the plain language version taken from New York State Department of Taxation and Finance, Income tax definitions, updated 6 May 2025, because the New York Senate page carrying the statute itself returned 403 to an automated fetch. Fla. Const. art. VII, s. 5(a), read on flsenate.gov. Investment amounts are 8 U.S.C. 1153(b)(5)(C), consistent with the shipped entry on the minimum investment amount.

Where this is explained properly

Pages here that go into state income tax rather than mentioning it.

Related terms

Tax treatyA tax treaty is a bilateral agreement that allocates taxing rights between two countries, and its residence tie-breaker article decides which of them may tax a person on worldwide income, a choice that for a green card holder reaches well past the tax bill into expatriation tax and into whether the green card itself survives.
Worldwide incomeWorldwide income is the rule that a United States resident for tax purposes, including a green card holder whose residence is still conditional, is taxed on income from every source anywhere in the world and not only on income arising inside the United States.
Residency starting dateThe residency starting date is the day a foreign national becomes a United States resident for income tax purposes, so that worldwide income is taxed from that day on: the first day of presence as a lawful permanent resident under the green card test, the first day of presence in the year under the substantial presence test, or the earlier of the two where both tests are met.
Exit tax and expatriationThe exit tax is the mark to market charge under 26 U.S.C. 877A that treats all property of a covered expatriate as sold at fair market value on the day before they give up US citizenship or long-term US permanent residence.
Schedule K-1Schedule K-1 (Form 1065) is the annual statement a partnership issues to each partner reporting that partner's distributive share of the partnership's income, gains, losses, deductions and credits, which the partner must then report on their own tax return whether or not any cash was actually distributed.

Checked against primary sources on 10 August 2026. Back to the glossary