Moved from California to Texas: Taxes on RSUs
How California and Texas treat RSU income when you relocate mid-year, including vesting-day sourcing, CA Form 540NR, and what to document before you move.
You accepted the Texas offer, gave notice in San Francisco, and your next RSU tranche vests two months after you land in Austin. The question everyone asks in the #relocation Slack channel is simple: does California still get a cut?
Usually, yes — at least for the work you did while you were still a California resident. Texas has no state income tax, but that does not erase California's claim on compensation earned while you lived and worked there. RSUs make this messier because the taxable event is the vest date, not the grant date.
This guide walks through how each state sources RSU income, what goes on CA Form 540NR when you file as a part-year resident, and the records worth keeping before your moving truck crosses the state line.
Why the vest date matters more than the grant date
RSUs are taxed when they vest and settle, not when your company grants them. For state tax purposes, that means the state where you perform services on the vest date — and sometimes the states where you performed services over the life of the grant — can all show up on your return.
California sources equity compensation to the extent it was earned by services performed in California. If you worked in CA for 18 months of a 4-year vesting schedule and then moved to Texas, California will argue it is entitled to a proportional share of each vest while you were a resident, and potentially for workdays allocated to CA even after you leave if you have not cleanly broken residency.
Texas, meanwhile, does not tax wage or equity income at the state level. Once you are a bona fide Texas resident with no California sourcing issues, future vests are typically Texas-free at the state level — though federal income tax still applies everywhere.
Part-year residency and CA Form 540NR
When you move mid-year, you file California Form 540NR as a part-year resident (Form 540 is only for full-year residents). You report all income received during the period you were a California resident, then calculate how much of your total income is taxable by California using the sourcing rules.
For RSUs that vest after you leave, California looks at where you performed services during the vesting period. Many employers and payroll providers apply a workday allocation: total RSU income multiplied by (California workdays ÷ total workdays in the vesting period). If your company handles withholding, check your W-2 and supplemental wage statements — California sourcing is often baked into Box 16 for the CA portion.
If your employer treats the entire vest as Texas income after your move, you may still owe California tax on the CA-sourced portion when you file. Do not assume zero CA liability just because you changed your address in Workday.
Establishing Texas residency (and actually leaving California)
California's Franchise Tax Board is skeptical of moves to no-tax states, especially when the taxpayer keeps a Bay Area apartment, spouse, or kids in CA. To support Texas residency, document: a Texas driver's license, voter registration, home lease or purchase, utility bills, and the date you stopped maintaining a permanent place of abode in California.
Domicile is your true, fixed home — where you intend to return. Residency is where you actually live. You can be domiciled in Texas but still be a California resident for tax purposes if you spend enough time in CA or maintain strong ties. The FTB publishes residency guidelines; the 546-day safe harbor for certain individuals leaving California is worth reviewing with a tax advisor if you still travel back frequently for work or family.
Change your payroll work location before the next vest if possible. The cleaner the cutover date, the easier the allocation math.
Withholding surprises and estimated payments
Texas has no state withholding on RSUs, so your paycheck may look bigger after the move. California may still expect estimated payments or a balance due on the CA-sourced share of mid-year and post-move vests if withholding was not adjusted.
RSU vest income is W-2 wages, so California withholding shows up in Boxes 16/17 of your W-2 — not on Form 592-B (that form is for nonwage withholding). If you vest a large block in Q4 after moving, model the dual-state impact before year-end so you are not staring at an April bill.
Stock plan administrators (Schwab, E*TRADE, Morgan Stanley) often provide a multi-state allocation report. Request it; do not reconstruct workdays from memory.
A practical timeline for relocators
90 days before move: pull your grant agreements and vest schedule; note grant date, vest dates, and any mobility policy language.
Move week: update payroll location, tax withholding elections, and mailing address; keep a log of your last day physically working in California.
First vest after move: verify how your employer sourced income and whether CA withholding was applied.
Tax season: file CA Form 540NR as a part-year resident, attach employer allocation statements, and keep Texas as your full-year resident state (no state income tax return required in TX, but you still file federal Form 1040).
Key takeaways
- California can tax the portion of RSU income tied to services performed while you were a CA resident — the vest date controls timing, not the grant date.
- File Form 540NR as a part-year resident and verify your employer's workday allocation; do not assume Texas residency alone eliminates CA tax on earlier-earned equity.
- Document your move aggressively: domicile change, payroll location update, and last day of CA work matter for both sourcing and residency audits.
- Texas has no state income tax on RSUs, but federal tax and potential CA sourcing on prior workdays still apply.
This guide is for general education only and is not tax, legal, or accounting advice. Rules change, and your facts matter. Talk to a qualified professional before filing or making equity decisions.
Related guides
Do I Still Owe California Tax After Leaving?
How California decides you are still a resident, what income follows you after you move, and the domicile vs. residency tests that show up on Form 540NR.
Remote Work Multi-State Tax Filing
When working from another state triggers a second tax return, how convenience-of-the-employer rules apply, and how to avoid filing in five states by accident.
State Taxes If Your Company Is in Delaware and You Live in NY
Why incorporating in Delaware does not shield your paycheck from New York tax, how NY sources wage income, and what remote workers in the tri-state area should expect.