The question of whether or not an individual is a resident of a particular state has always been an important issue in the area of state personal income taxation. California, because of its top marginal personal income tax rate of 13.3 percent1, and the large number of high-wealth individuals living in the state, always has been one of the most significant jurisdictions for this issue. Indeed, California, at 13.3 percent, currently has the highest personal income tax rate of any state.2 The significance of the high California rate, and the residency issue in general, recently has taken on added significance as a result of two federal tax law changes.

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  1. See FTB 2017 California Tax Rates and Exemptions (Oct. 19, 2017), stating the maximum rate for individuals is 12.3% and the Mental Health Services Tax Rate is 1% for taxable income in excess of $1,000,000.
  2. Other high rates are, e.g., Or. Rev. Stat. 316.037(1)(a) imposing Oregon’s top personal income tax rate of 9.9%, and N.Y. Tax Law § 601(a)(1)(A) imposing New York’s top personal income tax rate of 8.82%.