PE State Tax Migration Calculator

For a PE professional earning $1M–$20M in management fees and carry distributions, state income taxes are often the largest controllable tax expense — larger than many federal planning strategies. Moving from California (13.3%) or New York + NYC (13.5%) to Texas or Florida (0%) can save $200K–$2M+ per year depending on your income mix. But the calculation isn't simple: California and New York both assert taxing rights over carry income earned before you left, even after you move.

This calculator models the state tax savings on your two primary income streams — management fees and carried interest — and accounts for the nonresident sourcing rules that determine how much of your existing fund carry California or New York can still tax after your move.

How CA and NY tax carry after you leave

Moving to Texas does not automatically eliminate your old state's claim on carry income. Both California and New York use source-based taxation for nonresidents: they tax income earned from services performed within their borders, even if you no longer live there when you receive the money.

California: FTB Pub 1100 and the sourcing fraction

Under CA Revenue and Taxation Code § 17951 and CA FTB Publication 1100, carried interest income is sourced to California based on the fraction of investment management services performed within the state.¹ If you managed a fund from San Francisco for six years of an expected twelve-year fund life, then moved to Austin, the FTB's position is that approximately 50% of any carry distributions from that fund are California-source income — taxable at 13.3% on your CA nonresident return even after you've left.

The sourcing fraction typically uses a time-based apportionment: California workdays (or months) during the fund's life ÷ total workdays (or months) during the fund's life as of the distribution date. The exact methodology can be fact-specific and is worth discussing with a CA tax specialist before your move. The FTB has been aggressive in auditing high-income departures since 2022.

New York: similar rules, with the NYC overlay

New York taxes nonresident partnership income based on New York-source income allocation. For a PE fund managed primarily from Manhattan, the NY Department of Taxation takes the position that carry is sourced based on workdays in NY as a fraction of total workdays during the investment period.² NYC residents also face the city income tax (top rate 3.876%) on NYC-source income while they remain a city resident — this disappears immediately upon moving out of the city.

Management fees: the cleanest savings

Unlike carry, management fee / W-2 income re-sources immediately after you establish domicile in your new state and update your ManCo employment records. If you live in Texas on January 1 and your ManCo payroll reflects that, Texas (0%) taxes the fees — not California. This is the clearest, most immediate savings from moving. For a partner earning $500K in management fees, the day-1 savings are $500K × 13.3% = $66,500/year from California alone.

What the move requires: a genuine domicile change

California and New York have the most aggressive nonresident audits in the country. A California "safe harbor" domicile change requires:

• Establishing a permanent place of abode in the new state (own or rent)
• Registering to vote, obtaining a driver's license, and moving financial accounts to the new state
• Spending fewer than 546 days in California over any consecutive 24-month period (CA statutory residency rule differs from domicile)
• Moving your primary personal possessions, family, and social connections
• Not maintaining a California home as a "permanent place of abode" — this is the key risk for those who want to keep a CA vacation home

For New York, the 183-day statutory residency rule can make you a NY resident even if you've changed domicile elsewhere — if you have a NY place of abode AND spend 183+ days in NY in a calendar year, you owe NY tax as if you were a resident regardless of where you're domiciled. PE professionals who travel frequently should track their NY days carefully for several years after the move.

Timing the move around carry distributions

The highest-value play is to change domicile before a major carry distribution, not after. Once a distribution is received, the sourcing fraction is locked — the carry that arrived while you were a CA resident is 100% CA-taxed, and there is no retroactive benefit from a subsequent move. The ideal sequence is:

1. Identify that a fund is approaching distribution (typically 12–18 months out)
2. Execute domicile change — establish new-state presence, update all records, document the move thoroughly
3. Receive carry distribution as a nonresident of old state (only the CA-sourced fraction taxable in CA)

For large carry events ($5M+), even a partial reduction in the CA-taxable fraction — from 100% to 60%, for example — can be worth $265,000 in avoided CA tax on a $5M distribution ($5M × 40% × 13.3%). The 90-day planning window detailed in our PE liquidity event guide overlaps directly with domicile-change timing.

State-specific planning notes

California → Texas or Florida

This is the highest-dollar migration for most PE professionals. The 13.3% CA rate on carry is often the largest single tax line on a PE partner's return in a distribution year. Texas has no personal income tax and no capital gains tax. Florida has no personal income tax. Neither state has an estate or inheritance tax, adding additional long-term planning benefits for illiquid wealth. The primary risk is the CA FTB audit — document your departure meticulously and file a CA part-year resident return in the year you leave.

New York + NYC → Miami or Austin

Combined NY state + NYC rate is 13.5% for most PE professionals earning $1M–$5M. Moving to Florida eliminates both. The NY nonresident sourcing rules for carry are similar to CA's, but NY's 183-day statutory residency trap is more aggressive — if you retain a Manhattan apartment and spend even 184 days in NY, you owe NY taxes as a full-year resident despite having changed domicile to Florida. Many NYC professionals keep a studio in Manhattan for professional convenience and inadvertently fail the 183-day test.

New Jersey → Florida or Texas

NJ's 10.75% top rate applies to income over $1M. NJ nonresident sourcing is based on the NJ-to-total income ratio. Unlike CA, NJ does not have as aggressive a nonresident audit posture for carry, but the savings are still material ($500K carry × 10.75% = $53,750/year). NJ → FL is a common move for Princeton/NYC metro PE professionals.

Massachusetts → Florida or New Hampshire

MA's 9% effective rate (5% + 4% surtax on income over $1.08M) is significant but lower than CA/NY+NYC/NJ. The MA capital gains tax rate is the same as ordinary income — 9% — for most investment income. NH has no income tax on wages or investment income (and is nearby for those who want to stay in the Northeast). The MA sourcing rules for partnership income are based on the "income apportionment percentage" — the fraction of services performed in MA.