Moving to Washington: domicile, the day count, and the stock sale

Moving to Washington ends state income tax on wages, pensions and investment income from the day the move is real, and the state asks nothing of a newcomer in return: no return, no registration with the Department of Revenue, no declaration. Two things make the date matter anyway. The first is Washington’s capital gains tax, which allocates gain on stock and other intangibles to Washington if the seller was domiciled here on the date of sale, and presumes anyone domiciled here at any point in the year was domiciled here on that date. A person who sells a large position in the year of a move, in either direction, needs to know which side of the move the sale fell on and be able to prove it. The second is the state left behind, which keeps taxing everything until the person stops being its resident under its rules, and which audits people who file a last resident return and vanish to a no-tax state.

The two tests are the same words used by different parties. Domicile is the one place a person treats as a permanent home and intends to return to. A statutory day count catches people who keep a home somewhere and spend too many days there regardless of what they call home. Washington uses both in its capital gains statute; the former state uses both to decide whether to let go.

Domicile as the Department of Revenue sees it

The Department defines domicile as “residence in fact, coupled with the intent to make the place of residence one’s home.” It is the place a person intends to return to after being away, and physical presence alone does not establish it. Once established, a domicile is presumed to continue, and the person who claims to have changed it carries the burden of proving the change, which requires both physical presence in the new place and the intent to make it permanent. The Department’s list of what it weighs is long and familiar: time spent in each location and stated intent; where the person works; where bank accounts, the tax address and the mailing address are; where real and personal property is owned; the state of the driver’s license and vehicle registration; where the children go to school; voter registration and professional licenses; in-state tuition and resident hunting or fishing licenses; and any claim of Washington residency made to run for office or in court. No single factor decides it. The interim statement that set this out expired in July 2024 and was replaced by a rule, WAC 458-20-301, which carries the same definitions.

The rule that matters for a mover is the presumption. If a person was domiciled in Washington at any time during a year, the Department presumes the person was domiciled here when any intangible asset was sold that year. The presumption is rebuttable only by proving that the permanent home was somewhere else on the sale date. Someone who sells $2,000,000 of stock in March and moves to Washington in September has to show the March domicile was elsewhere; the facts will usually support that, but the burden is on the seller. Someone who leaves Washington in March and sells in September has the harder case, because every month of a Washington domicile before the sale strengthens the presumption and every tie left behind, the house kept, the business still run from here, weakens the rebuttal.

The 183-day resident

The capital gains statute also defines a resident to include anyone who was not domiciled in Washington but maintained a place of abode here and was physically present in the state for more than 183 days of the year. That definition governs the allocation of tangible property and the residency questions on the return; the allocation of stock and other intangibles turns on domicile, not the day count. A person who keeps a Seattle condo and spends seven months a year in it while claiming domicile elsewhere is a Washington resident for the tax’s purposes, and the condo, the days and the stated domicile will all be examined if a large sale is reported to another state. Any part of a day in Washington is a day.

Washington has no part-year return and no credit for taxes paid to another state on ordinary income, because it has no tax on ordinary income. The capital gains tax does credit income or excise tax another jurisdiction imposed on the same gain from an asset located there.

What the former state will ask

States with an income tax do not accept a change of address as a change of residence. Each publishes the factors it weighs, and they are the same ones the Department of Revenue lists: where the home is and whether the old one was sold or kept; where the days were spent, with any part of a day counting; where the spouse and children are; where the doctors, the accountant, the safe deposit box and the family heirlooms are; and the easy items, license, registration, voting, that count for little when present and a great deal when absent. Most such states also have a statutory test that makes a person a resident regardless of domicile if a home is kept there and the person spends more than a set number of days, often 183, in the state. A person who keeps the old house for family summers and spends five months a year in it has not left, whatever the Washington paperwork says.

The year of the move produces a part-year return in the old state, covering income received through the move date plus any income with a source there afterward: rent from a house kept back, wages for days worked there, a business still operating there, the gain on property located there. Washington produces nothing. Pensions and IRA withdrawals cannot be taxed by a former state once the person is a nonresident under federal law; wages for remote work for an old-state employer sometimes can, under that state’s rules on where work is performed. The move date on the old state’s return should match the date on the Washington driver’s license, the voter registration and the closing statement or lease, and a date on the return that is earlier than the date on the license invites the question of what the person was waiting for.

Washington’s paperwork for a new resident

Washington’s requirements are administrative, not tax, and they are the evidence the former state will ask about. A new resident must get a Washington driver’s license within 30 days of moving and register vehicles here. A vehicle brought into the state is subject to use tax at the local rate unless it was owned and used elsewhere long enough before the move; the Department’s vehicle use tax guidance sets the period, and a car bought shortly before moving to avoid Washington sales tax does not qualify. Voter registration follows the license. There is no Washington declaration of domicile and no homestead exemption to file for; the only residence-based property tax application is the senior and disabled exemption at 61, which is income-tested and goes to the county assessor.

A new resident who sells services, including a sole proprietor who moves a consulting practice here, registers for a business license and files Washington business and occupation tax returns once gross receipts pass the filing threshold, and collects sales tax if the services are among those taxed since October 1, 2025: advertising, IT services, custom software, website development, temporary staffing, security and live presentations. The B&O tax is on gross receipts, with no deductions for expenses, and it is often the first Washington tax a self-employed newcomer meets.

If you work in Oregon

Oregon taxes nonresidents on wages for work performed in Oregon, and a Clark County resident who commutes to Portland files an Oregon nonresident return every year and pays Oregon tax on those wages. Washington has no income tax and therefore no credit to give, so the move across the river saves state tax only on the income that is not Oregon-source: the spouse’s Washington wages, investment income, pensions. Working from home in Washington for an Oregon employer is governed by Oregon’s rules on where the work is performed, and the day count of Oregon workdays should be kept.