State Tax When You Move From Canada: What Changes by State

Do US states tax Canadian income when you move from Canada?

Yes, in most states. A state with a personal income tax taxes its residents on income from everywhere, Canada included, from the day they become residents. The Canada–US treaty does not stop that: Article II covers US federal income taxes, and California says income a treaty exempts federally stays taxable unless the treaty names California (FTB Publication 1031).

So the state you pick can change the tax on your pay, your Canadian investment gains and your RRSP growth. California's top bracket rate for 2025 was 12.3%, plus 1% on taxable income above US$1,000,000; Florida and Texas have no personal income tax.

A move is not simple when you:

• sell Canadian shares, crypto or a Canadian home after arriving;
• rent out a Canadian home or condo after you leave;
• hold RRSPs or TFSAs and settle in a state that does not follow the treaty's RRSP deferral;
• keep working for a Canadian employer that withholds no state tax;
• keep a home or family in Canada while living in the US.

Gather your move date and proof of it; each Canadian account and investment with its cost and its value on that date; your Canadian departure-tax calculation if Canada charged it; any planned sales; rent records for property you keep; your Canadian pay records; and the federal and provincial Canadian tax you expect to pay after the move.

Which states have no income tax for someone moving from Canada?

Florida and Texas have no personal income tax. The Florida Department of Revenue says there is no personal income tax and so no individual filing requirement; the Texas Governor's office states Texas has no personal income tax.

Washington has no wage tax but is not tax-free:

• A capital gains tax on long-term gains by individuals: 7% on the first US$1,000,000 of taxable gains, 9.9% above that, after one annual standard deduction per individual or married couple (US$278,000 for 2025, indexed each year) (Washington DOR).
• A new income tax scheduled to start January 1, 2028 for adjusted gross income above US$1,000,000 (Washington DOR). It is scheduled, not yet in effect; check the DOR page before relying on its start date.

Do states follow the Canada–US tax treaty?

Not automatically. Each state decides. California follows a treaty only where the treaty specifically excludes the income from California tax, and the Canada–US treaty covers federal taxes only (FTB Publication 1031). Other income-tax states set their own rules; check your state's tax department before assuming a treaty benefit carries over.

The most common case is RRSP growth. The treaty lets the US defer tax on it federally, but California taxes residents' RRSP earnings each year. See California tax on RRSPs and TFSAs for the detail.

What state return do you file in your first year after moving from Canada?

A state with an income tax generally treats you as a part-year resident from the day you become its resident under its own test, usually the day you settle there to stay. You file its part-year resident return: Form 540NR in California, Form IT-203 in New York.

• California: part-year residents are taxed on all income received while a resident, and only on California-source income while a nonresident (FTB Publication 1031). The tax rate is figured as if all your income for the year were California income, then applied to the California part.
• New York: the New York part is all income on your federal return for the resident period, plus New York-source income before it (IT-203 instructions). If you settle in New York City, the city taxes residents too; a part-year city resident adds Form IT-360.1, Change of City Resident Status, to Form IT-203.

Canadian income from before your move date depends on the state's test. California taxes everything received while you are a resident, so a Canadian bonus, final pay or pension lump sum paid after your California start date is California income even if earned before it (FTB Publication 1031). New York puts items that accrued before you became a resident in the nonresident period unless they are New York-source, so pre-move Canadian pay generally stays off its resident period (IT-203 instructions). The California return is due April 15; the New York return is due April 15. For the federal side of the same year, see the dual-status return guide. A state you lived in only briefly or earned income in may also want a return; see nonresident state filing thresholds.

Does the state give a credit for Canadian tax you still pay?

Often not, and you have to check your state. California's other-state credit excludes taxes paid to any foreign country (Schedule S instructions).

New York is different. It has a separate credit for tax paid to a Canadian province, claimed on Form IT-112-C, not on the other-state Form IT-112-R (IT-112-R instructions). Limits from the IT-112-C instructions:

• only provincial tax counts, not Canadian federal tax;
• only income sourced to and taxed by the province while you were a New York resident;
• no credit for provincial tax on interest or dividends, unless from an asset connected with a business in that province;
• only provincial tax not used for your federal foreign tax credit: the province's tax is treated as claimed last federally, so the New York credit may be small or nothing;
• one form per province.

After you leave Canada, a province generally taxes only your pay for work done in that province and business income earned there. Tax on Canadian rent, interest or dividends goes to Canada's federal government, not the province, so New York's IT-112-C credit does not cover it (Income Tax Act s. 120, Income Tax Regulations s. 2602). Rent from a Canadian property you keep is still income on an income-tax state's resident return; see renting your Canadian home after moving to the US.

Washington's capital gains tax has its own credit for tax paid to another taxing jurisdiction, which its law defines to include a foreign country, on gains from assets within that jurisdiction (RCW 82.87.100). Whether Canadian tax on a given sale qualifies depends on the asset; check before counting on it.

Which states tax a gain on Canadian investments sold after the move?

A state with an income tax generally taxes a resident's gain on Canadian shares, funds or crypto sold after the move, usually on the whole gain, including growth from your years in Canada. Washington's capital gains tax reaches a long-term gain on stock or crypto when Washington is your permanent home (your domicile) at the time of the sale (Washington DOR FAQ). Washington exempts real estate, so a Canadian home sale is outside it (Washington DOR).

If Canada charged departure tax on these assets when you left, the treaty lets you elect to treat them as sold and bought back at their value on that date for the federal return. You elect with Form 8833 on your timely filed US return for the first tax year ending after the move (Article XIII(7), Revenue Procedure 2010-19). The treaty covers federal tax only, so a state such as California may still tax growth Canada already taxed, with no credit for that Canadian tax. See claiming Canadian tax on your first US return.

The trap is timing: a large sale in the first months after arriving in an income-tax state lands on that state's return. The sale date against your move date also changes the Canadian and federal results, so a planned sale is worth checking before either date is fixed. California taxes residents on all income regardless of source, so a gain on a Canadian home sold after the move is California income (FTB Publication 1031). For the home, see selling your Canadian home after moving to the US.

Does your state tax RRSP and TFSA growth?

It depends on the state. California taxes residents' RRSP earnings every year even without a withdrawal, because it does not follow the treaty deferral. TFSA growth is covered in the same state guide, linked below. Florida and Texas have no personal income tax to apply. Washington has no income tax on the growth; its capital gains tax exempts a retirement savings vehicle, "whether foreign or domestic, that penalizes withdrawals until the legal or beneficial owner reaches a certain age" (RCW 82.87.050); the state has not said whether an RRSP meets that test. For other states, check how the state treats foreign retirement accounts. The full California rule is in California tax on RRSPs and TFSAs.

How is pay from a Canadian employer taxed by your state?

Your state of residence taxes your pay, including pay from a Canadian employer for work done from home there; pay counts as earned where you do the work (FTB Publication 1031). A Canadian employer may not withhold any state tax, which leaves you to pay it through state estimated payments. In Florida or Texas there is no state return for the pay. Which country taxes the pay, and payroll deductions, are in working for your Canadian employer from the US; work split between US states is in remote work and state income tax.

How do you prove the date you became a state resident?

A state looks at where you actually live and the ties you build. California lists factors such as your principal residence, where your spouse and children live, your driver's license, vehicle registration, voter registration and bank accounts (FTB Publication 1031). Keep the lease or deed, license date, voter registration and the date you changed your bank address.

A Canadian home you keep does not decide your US state, but it can keep you a Canadian resident. See Canadian tax residency and, if family stays behind, spouse still in Canada after you move to the US.

Florida, Texas, Washington, California and New York compared

Example

Figures are illustrative, in Canadian and US dollars as stated.

Same share sale, three states

Two movers each sell C$200,000 of Canadian shares with a large long-term gain three months after arriving. In Texas, no state tax arises. In California, the gain is income on the part-year resident return because it was received after the move, and it may run from your original cost rather than your departure value. In Washington, the gain may fall under the capital gains tax to the extent it exceeds the annual standard deduction.

New York resident with Ontario pay

A mover settles in New York, keeps a Toronto employer and spends some weeks working in Toronto. Because a Canadian employer pays for those days, the treaty lets Canada tax that pay (unless it is C$10,000 or less), and Ontario tax applies to it (Article XV(2)). The route to check is New York's credit for tax paid to a province on Form IT-112-C, counting only the Ontario tax on pay earned during the New York resident period, not the Canadian federal tax, and only Ontario tax not already used for the federal foreign tax credit. Rent from a Toronto condo would not help here: as a non-resident of Canada it draws federal tax, not Ontario tax.

Remote worker in Florida

A remote worker settles in Florida and keeps working for a Vancouver employer. Florida has no personal income tax, so there is no state return for the pay. The federal return, Canadian withholding and payroll questions remain.

Different for you?

• You plan large sales of Canadian shares, crypto or a business: timing against your move date can change which state and country tax the gain; get cross-border tax help.
• You keep working for a Canadian employer: see working for your Canadian employer from the US and plan state estimated payments with cross-border tax help.
• You and your spouse split time between a Canadian home and a US state: residence in both countries may be in question; see the treaty tie-breaker and get cross-border tax help.
• You rent out a Canadian property: Canada and an income-tax state both tax the rent, usually with no state credit for the Canadian tax; see renting your Canadian home after moving to the US and get cross-border tax help.
• You hold RRSPs or TFSAs in California: see California tax on RRSPs and TFSAs.
• You are still planning the whole move: start with moving from Canada to the US.
• You later move from a high-tax state to Florida or Texas: see moving to Florida or Texas.