The short answer: a genuine move to Nevada before a sale can take the gain on stock you own outside California’s income tax. It does not reach stock options and RSUs earned while you worked in California, it does not help once the sale has closed, and it does not work as a round trip.
California has no lower rate for capital gains. A gain on company stock is taxed as ordinary income, at up to 13.3% for 2025: the 12.3% top bracket plus the 1% Behavioral Health Services Tax on taxable income over $1 million. California also does not follow the federal exclusion for qualified small business stock (IRC § 1202); its 2025 instructions say to report “the entire gain realized.” A founder who excludes most of a gain federally can still owe California tax on all of it.
Moving does nothing to the federal side. Federal income tax, and the 3.8% net investment income tax on the gain, apply wherever you live.
For a nonresident, California does not treat income from stock and other intangible property as California-source income unless the property has a business situs in California, or the seller trades so regularly through California that it amounts to doing business there (Rev. & Tax. Code § 17952). The source of a gain is fixed at the time of the sale. In the FTB’s words, the gain from selling stock “has a source where you are a resident at the time of the sale.”
So if you have genuinely become a Nevada resident before the sale, the gain on shares you already own outright is generally outside California’s reach. The same goes for growth in value after an option exercise or an RSU vest, on shares you sell as a nonresident.
| Type of equity or sale | What California taxes after a genuine move |
|---|---|
| Nonqualified stock options | The income at exercise, in proportion to your California workdays between grant and exercise (or your termination date, if earlier). |
| Restricted stock units | The value at vesting, in proportion to your California workdays between grant and vest. |
| Incentive stock options, disqualifying sale | The compensation part, allocated by California workdays between grant and exercise. The capital-gain part is not California income. |
| Incentive stock options, qualifying sale | Nothing, even though the work that earned the grant was done in California. |
| Shares you own outright, sold after the move | Generally nothing, unless the stock has a California business situs. |
| Installment sale closed while you were a resident | The gain in every later payment stays California-source after you move. Interest received after the move does not. |
| The year you move | Everything you earn while still a resident, from any source, plus California-source income for the rest of the year. |
The equity-compensation rules come from the FTB’s equity guidelines (Publication 1004), which tax this income to former residents as well as people who were never residents. If most of your value is in options or RSUs earned in California, a move protects less than you may expect.
In Appeal of Bracamonte, 2021-OTA-156P, a California couple took an apartment in Henderson, got Nevada driver’s licenses, registered to vote in Nevada, opened Nevada bank accounts and set up a Nevada trust, all before their company’s stock sale closed in July 2008, a sale worth about $16.7 million. They kept their California home and kept living most of their lives there. California’s Office of Tax Appeals held they were still California residents on the day of the sale, so the whole gain was taxable, and a 2009 installment payment stayed California-source as well.
The decision’s central sentence: “physical presence is a factor of greater significance than mental intent and the formalities that tie one to a particular state.” The paperwork was right; the move had not actually happened yet.
A California resident stays a resident while away for a temporary or transitory purpose, and California’s regulation treats a stay to complete a particular transaction as exactly that. Changing domicile takes all three of the elements the FTB lists: abandoning the California domicile, physically moving to and living in Nevada, and intending to stay permanently or indefinitely. A plan to return once the shares are sold is evidence against the third element, and the FTB’s own examples include a Nevada “declaration of residency” that did not hold up because the life stayed in California.
There is no published rule that a return after a set number of years is safe. The answer turns on the facts of the move itself. One older workaround is also closed: since 2023, California taxes the income of an incomplete-gift nongrantor trust (the “ING” or “NING” trust) to the California grantor as though it were a grantor trust (Rev. & Tax. Code § 17082).
Not with confidence. A stay to complete a particular transaction is temporary under California’s rules, and a plan to return is evidence that you never gave up your California domicile. If the FTB concludes you were still a resident on the sale date, the whole gain is California income. There is no safe number of years before a return.
No. California taxes the part of that income earned while you worked in California, allocated by your California workdays between grant and vesting (RSUs) or grant and exercise (nonqualified options), even after you move. Growth in value after vesting or exercise, on shares sold as a nonresident, is not California income.
No. California does not follow IRC § 1202, so the full gain is reported for California even when most or all of it is excluded federally. That is often the reason the California tax on a founder’s sale is so large.
Then the gain is California income. If the sale was on installments, the gain in each later payment stays California-source even after you become a Nevada resident; only interest received after the move is not.
Proposition 40 on the November 3, 2026 ballot would impose a one-time 5% tax on the net worth of billionaires who were California residents on January 1, 2026. Because it looks back to that date, a move made now would not change who owes it. I will update this answer after the election.
No. I represent you on the Nevada purchase, coordinate the California sale, and keep both on the timeline your tax adviser sets. If you do not have a CPA or tax attorney who handles California departures, I will point you to one. Any legal matter goes to my separate California law practice, Law Office of Jimmy Nguyen APC, under its own engagement.
Sources, checked October 22, 2026: California Revenue & Taxation Code § 17952, § 17041 and § 17082; Cal. Code Regs., tit. 18, § 17952 and § 17014; FTB Publication 1031 (2025), Publication 1100 (2025) and Publication 1004; FTB 2025 Schedule D (540) instructions and capital gains guidance; Appeal of Bracamonte, 2021-OTA-156P; 26 U.S.C. § 1202 and the IRS on the net investment income tax; California Secretary of State, Proposition 40.
Tell me where you are selling, where you want to buy, and how you will pay for it. I will come back in writing with a realistic timeline for both transactions and what working together costs.
Planning a golf, spa, or convention trip instead? Use the concierge form →
I read and reply to every message myself, within one business day. Prefer plain email? show email address (new inquiries get a faster reply through the form).