These days, it is very common for wealthy families to own residences in more than one state, making relocation even easier. In practical terms, having domicile in a state means that state can impose its respective income tax on all the income reflected on the individual's federal income tax return, regardless of the source of that income. But before you call the moving van, understand that state taxation, including state income tax as well as state estate and inheritance taxes and potential wealth taxes, is only one factor to consider as you assess changing your domicile. Some who redomicile to a state with no income tax may find that they are paying the state in other ways, such as higher inheritance, property and/or fuel taxes. That decision is even more challenging considering that states often have different rules defining what they consider domicile.

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